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Managing the merchandise planning process - Coggle Diagram
Managing the merchandise planning process
Step 1: Forecasting Sales
Understanding the category Product Life Cycle
Variations in the Category Life Cycle
Fashion Merchandise
Charateristics
Factors Affecting
Personal awareness
How do fashion buyers know the trends?
S-C-A-N
Fashion and trend services
Buyers subscribe to forecasting services and fashion publications
Previous sales data
Vendors
Work with them
Traditional market research
Staple Merchandise
Characteristics
History of Past Sales
Predictable Demand
Relative Accurate Forecasts
Factors Affecting
Controllable
Uncontrollable
FAD
Step 2: Developing an Assortment Plan
Step 1: Determining Variety and Assortment
Consider
GMROI
Effects of Assortment Size on Buying Behavior
Retail strategy
Physical characteristics of the store
Complementary Merchandise
Step 2: Product Availability
Maintain Backup (buffer) stock
Too low -> loose sales and customers
Too high -> scare financial resources will be wasted
ABC Analysis
Factors considered
Fluctuations in demand (XYZ)
Lead time
ABC Classification
Frequency of store deliveries
Service Level for each product
Step 3: Determining the appropriate inventory level
For Staple Merchandise
Determines
Basic stock or assortment plan
Cost of Carrying Inventory
Lost Sale due to Stockout
Level of backup inventory
More Backup Stocks Needed with
Greater fluctuations in demand and lead time
Longer lead time
Higher products availability
Fill rate of vendor
System
Monitors Inventory levels
Automatically reorders
Order point
= sales/day (lead time + review time) + buffer stock
For Fashion Merchandise
Financial Target Plan, Inventory Turnover, GMROI
System: Merchandise Budget Plan
Using Inventory turnover GMROI, Sales Forecast
Compare afer selling season
OTB system
Keep track of merchandise flows
Allocating merchandise to stores
Type?
When?
How much
Step 4: Analyzing performance
ABC analysis of assortments
Multi-attribute analysis of vendors
Sell through analysis
Some note:
Assortment Planning - A key to Financial Success
Reality