8/3/2019 Merchandising Class3 (1)
1/36
Introduction
8/3/2019 Merchandising Class3 (1)
2/36
Merchandising is generally defined as a set of activities
designed to provide the right goods at the right placeat the right time through the right medium at theright price in the right mix of the right quality fromthe right source in the right quantity as per the
requirements of the business.
It ensures that the smooth occurrence of any activity isnot hindered for want of any material or service.
What is Merchandising ??
8/3/2019 Merchandising Class3 (1)
3/36
The term Merchandising in fashion
retailing refers to the total process ofstock planning, management and
control. The job requires highly
developed numeric skills and an innateability to spot trends, relationships and
co-relationships within regular salesand stock figures.
8/3/2019 Merchandising Class3 (1)
4/36
The merchandisers job combines
support for the buyer (in terms ofproviding the buyer with
information) with responsibility foreffectively managing the flow of
stock into and around the businessafter the suppliers have completed
the range.
8/3/2019 Merchandising Class3 (1)
5/36
The merchandiser ensures that the businessde-risks itself by making the best decision at a
point of time.De-risking refers to the process of optimisingsales performance and minimising stock risk,
by making informed decisions.
Tip: Stock is money- it must be in theright quantity, in the right place at the
right time.
8/3/2019 Merchandising Class3 (1)
6/36
Main areas of merchandising management activity:
1. Planning stock to be delivered in to the business:
a. Analyzing historical sales patterns and trends.b. Recommending forward fabric buying levels.
c. Recommending forward garment buying levelsd. Monitoring and managing delivery of new stock in to the distribution centre.e. Ensuring that overall stock levels and buying are in line with the organization
sales plans.
2. Moving delivered stock around the business:
a. Initial allocations of new stock to shops- what quantity to each?b. Store replenishment as garments start to sell how much more stock andhow quickly do we send to individual branches?
a. Recommending the level of repeat buys of best selling lines.b. Transfers and recalls of faulty or non-seasonal stock.
8/3/2019 Merchandising Class3 (1)
7/36
The merchandiser, like the buyer, is often trying towork on many seasons at once. They will be helping
the buyer plan ahead for distinct seasons colour
ratios; they will also be helping the buyer to decide onhow many garments to buy within each category for
the coming season.
In addition they will be controlling the currentseasons stock flow into the business and advising on
whether or not repeat buying will be necessary.Whether late deliveries need to be cancelled orwhether or not poor selling lines may have to havetheir price reduced, to ensure that they will sell out.
8/3/2019 Merchandising Class3 (1)
8/36
The role and responsibilities of the merchandiser:
To estimate sales and plan stock levels to achieve theplanned sales and margin for a specific garment type.
To provide regular analysis and progress reports referring tostock levels, sales performance and stock purchases to seniormanagement.To work with buyer on range planning to maximise
commercial opportunities for products.To manage intake and commitment to accommodate thestock requirements of the business at any given time and theopen to buy requirements of the garment type.To manage stock distributions to stores optimisingcustomer demand, available selling space and seasonalselling opportunities.
To effectively manage and develop the merchandisingdistribution team.
8/3/2019 Merchandising Class3 (1)
9/36
The key merchandising competencies:Personal Characteristics:
Logical, rational
Multi tasking flexibilityIT-orientedNumerate
AnalyticalDetail conscious But aware of bigger pictureAssertiveRetentive Memory
AwarenessData awarenessCommercial awareness
PlanningAction
8/3/2019 Merchandising Class3 (1)
10/36
Fashion merchandising
Factors that make fashion merchandising
Unique:
1. Obsolescence factor
2. Higher markdown
3. Faster turnover
4. Seasonal factors
5. Sales promotion
8/3/2019 Merchandising Class3 (1)
11/36
Obsolescence factor
Obsolete = no longer in use or discarded fashion
In many categories of merchandise utility value is a strong factor.
But in fashion the emotional pull is an all consuming element.
It can be readily seen that what is not accepted becomes obsolete.
Merchandise is initially priced at a level that will make for a desired
profit
Consumers acceptance = buyers success
Lack of acceptance means slow or non selling style
New selling price to move it out of stock
8/3/2019 Merchandising Class3 (1)
12/36
Higher markdowns:
Right merchandise at right price level is the key to success
Product obsolescence leads to mark down
First markdown should be deep enough so that there is an
immediate appeal to consumers and that the stock can be moved
out quickly
Strong relation between the item and time of the season it is
marked down
Faster turnover:
Fashion change fast
By constantly changing styles in stock, the merchandise is kept
in good condition
8/3/2019 Merchandising Class3 (1)
13/36
Seasonal factors:
Fashion depends on the season of the year, when the
season is over, the merchandise fades with it.
Very rarely merchandise is kept in storage for the
following year. It is entirely dangerous
Each buyer therefore follows the principle
what is purchased must be sold
Sales promotions: fashion products sales promotions arean important part.
Presentation: in case of fashion products presentation of
product to consumer is of utmost importance.
8/3/2019 Merchandising Class3 (1)
14/36
Where?
Retailers
Wholesalers
Buying houses / buying agencies
Export houses
Wholesaler retailer consumer
Exporter buying house Retail chain
8/3/2019 Merchandising Class3 (1)
15/36
Basic functions of merchandising
1. Planning
2. Buying
3. Selling
The fundamental consideration of fashion
merchandising is to stock
What consumers are likely to accept.
Right with respect to styles, colors, price, place
time, etc
8/3/2019 Merchandising Class3 (1)
16/36
Marketing and merchandising
Marketing: identifies customers, determines
what products to offer to customers and how to
do so, while meeting the financial returnobjective of the company
Merchandising: process through which
products are designed, developed and promoted
to the point of sale.
8/3/2019 Merchandising Class3 (1)
17/36
Steps in fashion merchandising
1. Planning: fashion is subject to change and the
planning must have flexibility
Planning based on how much we expect to sell and
how much inventory it will take to secure that selling
Planning the assortments Customer orientation : knowing what people want,
when they want and how much they would pay for it.
Preparation of six month buying plans which requirethe knowledge of fashion trends and market
conditions and economic factors
Most important factor in planning is flexibility.
8/3/2019 Merchandising Class3 (1)
18/36
2. Buying: buying is done by classifications
Price lines
Sizes
Quantities
Buying is dependant on customer demand
estimated by study of customer wants and
needs
The successful buyer knows what customer
wants, when they want it and how much they
want to pay for the goods.
8/3/2019 Merchandising Class3 (1)
19/36
Buying involves the following functions
1. Choosing the resource
2. Selecting the merchandise
3. Securing the best terms
4. Actual placing the order.
The buyer is responsible for not only what to buy and when to
buy, but also where to buy and how much to spend.
Buying responsibilities includes:
Establishing and maintaining effective buying relationship
with vendors.
Adequately stocking the departments price lines and securing
the best possible mark up on all purchases
8/3/2019 Merchandising Class3 (1)
20/36
Supervising the physical inventory or stock counts
to verify the accuracy of the stock records.
1. Selling: buying is dependent on customer demand.Demand determined best by the actual customer
response to the to goods made available by the
buying function. So buying function cannot exist
without involvement in selling function. Thisfunction includes communication and promotional
activity.
Goods well bought are half soldTrend towards central buying- merchandise
presentation to the customer is becoming a function
of sales manager rather than buying
8/3/2019 Merchandising Class3 (1)
21/36
A store regardless of its size, cannot and should
not stock, all the merchandise available in the
market.
The crux of merchandising :
Selecting the merchandise with certaincharacteristics that are indicative of tastes of
customers of a store and in such assortments ,
depths and price levels that make for a properrate of sale decided upon by the customer.
8/3/2019 Merchandising Class3 (1)
22/36
Department attachedto
Focus
Design Procuring materials as desired by design dept.Scouting for new materials & making dataavailable to the designers on excess or slowmoving items of raw materials & trims in stock.
Production Procuring material as per the production plan atthe right time & the right price & for rightquantities to ensure that production process isnever hampered.
Retail Ensuring that the merchandise available at the
stores is what is selling or is likely to sell andwithdraw slow moving items.
Overall To overview the flow of goods and services withinthe organization.
8/3/2019 Merchandising Class3 (1)
23/36
Merchandising
Top Management
Design
Procurement
Production
Warehouse Logistics
ERP
Accounts
Marketing
8/3/2019 Merchandising Class3 (1)
24/36
Tech pack received
Proto sample /development sample
1st fit sample
size set sample
submitted
Size set approval
sealer sample (WithComments)
sealer sample toproduction
Production
Finishing
Shipment
2nd fit
3rd fit
REJECT
Initial fabric is ordered
Bulk fabric is received
If sample approved
Process Flow in Export House
8/3/2019 Merchandising Class3 (1)
25/36
merchandising
sampling
production
finishing
packaging
shipping
financeHRD
R&D
Security
fabric
accessory
Role of Merchandiser in Export House
8/3/2019 Merchandising Class3 (1)
26/36
2
Costing - best price quotations - desired markups.
3
For all the approvals whether Proto / Fit , Size Set , sealer, TOPsamples or gold sealer
4
Once the orders are finalized, pass on all the concerned details to theplanning.
5
Conducting PP meeting and preparing Time and action calendar and
reviewing them on daily basis.
6
Coordinating with production deptt & updating them about variousapprovals received from buyer to ensure timely delivery.
7
Providing best service to the buyers by taking quick actions andfeedback to maintain healthy buyer vendor relationship
Fabric, lab ,trims and accessories,pattern making department, CAD
Sampling and IE department
Accounts and planning department
Production and finishing
department
HODs of all concerned department
Merchandising Department
Role of Merchandiser in Export House
8/3/2019 Merchandising Class3 (1)
27/36
Fabric store
QC
Cutting Department
Sewing Department
Trims & Accessory store
Laces, zippers, labels
QC
Kaj button Department
Finishing Department
QC
QC
Packaging DepartmentTags, price tickets
QC
For warehousing
Checking for defects, width, color
For cutting, recutting, bundling & ticketing
Checkingof cut panels
For stitching
For end table checking (measurement checking)
For buttoning
For washing, thread cutting, spot removing , ironing & tagging
Final checking
For getting packed in poly bags
For getting packed in cartons
For shippingShipping Department
Metal detection
AQL -1.5
AQL 2.5
Production process
8/3/2019 Merchandising Class3 (1)
28/36
Acceptable Quality Levels for Normal Inspection (% defective)
Lot Size/Sample Size .01 .015 .025 .04 .065 .10 .15 .25 .40 .65 1.0 1.5 2.5 4.0
Lot Acceptance (Ac) Number (maximum number of rejects to accept the lot)
LS=2 to 8SS=2
0 0 0 0 0 0 0 0 0 0 0 0 0 0
LS=9 to 15SS=3
0 0 0 0 0 0 0 0 0 0 0 0 0 0
LS=16 to 25SS=5
0 0 0 0 0 0 0 0 0 0 0 0 0 0
LS=26 to 50SS=8
0 0 0 0 0 0 0 0 0 0 0 0 1 1
LS=51 to 90
SS=13
0 0 0 0 0 0 0 0 0 0 0 0 1 1
91 to 150SS=20
0 0 0 0 0 0 0 0 0 0 0 0 1 2
151 to 280SS=32
0 0 0 0 0 0 0 0 0 0 0 1 2 3
281 to 500SS=50
0 0 0 0 0 0 0 0 0 0 1 2 3 4
501 to 1200SS=80
0 0 0 0 0 0 0 0 0 1 2 3 5 7
1201 to 3.2KSS=125
0 0 0 0 0 0 0 0 1 2 3 5 7 10
3201 to 10KSS=200
0 0 0 0 0 0 1 1 2 3 5 7 10 14
10001-35KSS=315
0 0 0 0 0 0 1 2 3 5 7 10 14 21
35001-150KSS=500
0 0 0 1 1 1 2 3 5 7 10 14 21 -
150001-500KSS=800 0 0 0 1 1 2 3 5 7 10 14 21 21 -
8/3/2019 Merchandising Class3 (1)
29/36
Two primary types of Buying Offices are:
Independent &Store Owned
Independent Resident Buying Offices are independently owned & operated. Theycharge fees to noncompeting stores for market services.
Store-owned Resident Buying Offices are of two types:
Associated Buying Office: Jointly owned & operated by a group of stores.Membersusually have similar volumes, store policies & target customers. Operating expensesare allocated as per stores sales volume & the amount of service rendered.
Corporate Buying Office:
8/3/2019 Merchandising Class3 (1)
30/36
Role of Merchandiser in a Buying House
International Buyer
Export HouseExport House
Inquiry
Export HouseExport House
Quotation
BUYING HOUSEMERCHANDISER
Inquiry Quotation
Export HouseExport House Export HouseExport HouseExport House Export HouseExport HouseExport HouseExport House
CONFIRMATION
CONFIRMATION
R l f M h di i B i H
8/3/2019 Merchandising Class3 (1)
31/36
B
U
Y
I
N
G
H
O
U
S
Merchandiser
Export HouseMerchandiser
B
U
Y
E
R
Approvals
Proto, 1st Fit, Size set,
Gold Seal
Approvals
Proto, 1st Fit, Size set,
Gold Seal
Approvals
Proto, 1st Fit, Size set,
Gold Seal
Approved Approved
Inspection/Follow -upUpdating Info.
ShipmentShipment
Shipment
Role of Merchandiser in a Buying House
8/3/2019 Merchandising Class3 (1)
32/36
Personal Requirement: Expression To think in numbers
Getting along with others Enthusiasm Alertness Creativity
Curiosity Physical stamina and emotional stability A good memory Managerial skills
8/3/2019 Merchandising Class3 (1)
33/36
Educational requirement:
The formal programme
On-thee-job training programme The job rotation program
8/3/2019 Merchandising Class3 (1)
34/36
Remuneration Advancement
Opportunity of economic growth Opportunity of personal growth Transferability Travel Self expression Equal opportunity Lifetime career opportunity
8/3/2019 Merchandising Class3 (1)
35/36
Hard work and long hours Competition
Pressure Accountability Travel
8/3/2019 Merchandising Class3 (1)
36/36
Knowing your product Understanding fashion dynamics and
principles Knowing your customers Knowing your resources Understanding management goals and
policies Understanding basic merchandising
arithmetic