1. MERCHANDISE
MANAGEMENT
STRATEGY,
PROCESSES,
PLANNING,
CULTURE
AND
EXECUTION
BY RIC ANDERSON
MERCHANDISE MANAGEMENT:
MERCHANDISE 1
MANAGEMENT

2. STRATEGY, PROCESSES, PLANNING, CULTURE AND EXECUTION
By Ric Anderson
These Processes are a living document of the methodology for the management and execution
of running a strong Merchandise Category.
CUSTOMER VALUE PROPOSITION
 What is the CVP for that Product Category?
 Does it build the Product Category as a Brand?
 Does it align with the Stores CVP?
 What are the goals of each Division? Purple Cows?
 Service Level by type of Revenue Channel or Store Profile.
MERCHANDISING
 Brand Profile for each Private Brand with comparisons to National Brands
 Goals by brand as to purpose, penetration, financial and future
 Goals by Division as to purpose, sales, profit, ROI
 Goals of Category by Channel? What adjustments need to be made?
 Pricing Strategy: High/Low, Mid/High, Everyday pricing
 Clearance Strategy: When to markdown goods, how to make it a traffic driver, numerical
ending of pricing, synergistic to other categories.
SALES, GM$
By Time: Broken down to Days, Weeks, Quarters, Seasons. Year
 Regular Sales to Clearance Sales by Division by Week.
 By Sub Categories: Dresses, Denim, Shoes etc.
 GMROI by Division by Month
 GMROI by Customer Profile
 GM$ broken down by Division by Week sub totals to month, quarter, season year. With
% to total: Forecast, plan, actual, LY.
 By Category by Geography
 By Top Doors penetration and learning’s
 By Revenue Channel by Week by Division: Sales, GM%, GMROI, Marketing Expense
 By Division by class for 3 years: Sales, GM$, GM%, GMROI – where have been the
dramatic changes and what action is taking place
STORES
 Sales, GM$, Sq. Ft. Sale per Sq. Ft. , GM$ per Sq. Ft. ROI Year, Season, Quarter
 Adjustments by Season to Sq. Ft.
 By Geographic Region
 By Large Metro with Marketing by Region
 By Demographics: Urban, Suburban, Rural
 Sales and GM$ by Sq. Ft. compared by each Apparel Category.
 Grouped by traffic flow in Store. Back vs. Front
 Consultative vs. Open Sell vs. 50/50
PLANS
MERCHANDISE 2
MANAGEMENT

3. • Store Plans that rolled to total Sales, GM%, GM$, Inventory
• Vendor Plans – Forecast, Plan, Act, LY
• By Division by month: Sales, inventory(cost & retail), Turn, Reg MD’s, Promo MD’s,
• TOP DOOR: Plans by Division for top percent of Doors.
CULTURE
 Individual Reviews and Goals
 Brand building Classes
 Classes on Marketing to achieve goals.
ANALYSIS
 Customer profiles percent by Division.
▫ By Type of Customer: Fashion, Comfort, Career, Casual,
 Colors, fabrics, body types
 Aged Inventory by Division by Month
 Top 100 Items
▫ Top 50 items by Division
▫ Top 20 by Customer Profile
 Number of Items needed by Product Category and Customer Profile.
 Top 10 Vendors by Division: Sales, GM$, GM%, GMROI, Penetration %
 Market-basket
▫ Other Apparel Categories down to Sub-Division level, in Basket by dollars and
percent
▫ Break Down by Month
▫ Market Basket for Shoes by Division
▫ Frequency by Apparel Category down to Sub Levels.
▫ Most Profitable Customer vs. Most Sales vs. Frequency.
▫ Market Basket results with different Product Marketing.
MERCHANDISE PROCESSES
 Good, OK, Ugly: Review of past season by Category
 Semi-Annual Competition Review
 Big Ideas: by Category
▫ Why, When, How Big? Which Vendors, Marketing, Financials, Bonus Item.
 Line Reviews
▫ Sales by week
▫ GM$
▫ Marketing
▫ Breakdown by Customer Type
▫ Competition
 Template for Vendor Meetings.
▫ Checklist of information, expectations, plans,
 Critical Thought Process
▫ What do we want to know? When, How,
▫ From whom?
▫ In what form?
INVENTORY REVIEWS
 OTB:
▫ Review current Inventory
MERCHANDISE 3
MANAGEMENT

4. ▫ On Order
▫ Old Age
▫ Performing and Non-Performing items with Action accountability.
 Monthly reviews of performance of category – sales to inventory. Do in-season
adjustments need to be made.
MARKETING
 Sales by Week % to total with Marketing by week by channel % to total.
 Footwear Events geared toward fashion or Category.
▫ Template on elements needed for each event.
▫ Goals: Financial and Branding.
 Competition Marketing by Week with Ad Book.
 Marketing Plans by Week 6 months in advance.
▫ Events and Themes of Ads
▫ Types of Footwear in Ad
▫ Actual Samples and Colors.
▫ Partner with any apparel categories
COMMUNICATION: MEETINGS AND PROCESSES
 Master Calendar of meetings, due dates and responsibilities
 Weekly Merchandising meeting with Best/Worst Sellers
 War Room with Advertising by Week
 Monthly Results and Goals
 Monthly Phone call to RVP
 Monthly Phone Call to Managers – invitees change monthly. Discuss Best Practices
 Monthly News Letter to Stores: Best Sellers, Advertising, Best Practices
 Website on Training, Best Practices, Questions.
 Semi-Annual Survey to Stores on what they want, need, don’t need, issues, competition
practices
 Semi-Annual Support Group Form: Presentations by Division to Stores, Marketing, Internet,
Senior Management, Sourcing etc. on the results, goals and needed support
 Quarterly Merchandise Trips to Stores in different Regions
EMPLOYEE RECOGNITION and AWARDS
 Fire Breathing Dragon
 Best Practice
 Thank You Awards
 Quarterly Division Outings
VENDOR SEMINARS
 Bring in best vendors by Category
o Round Robin with each support group: Marketing, Logistics, Internet,
Merchandising, Inventory Planning.
MERCHANDISE 4
MANAGEMENT

5. RETAIL STORE AND MERCHANDISE ANALYSIS
QUESTIONS TO BE ASKED
 SALES
 Total
 By Store, Growth by year
 By Category
 Per Square Foot
 Per GM$ Sq. Ft.
 Average sale transaction- Clearance and Regular
 Amount of Regular Vs. Clearance
 Units per transaction
 By Time Period
 Month
 By quarter
 By season
 By Channel: Regional Stores, Outlet Stores, Catalog, E-commerce
STORES
 By volume, Average per store
 Profit by store, City, State
 Number of Mall Stores, Number of Strip Malls
 Year Opened
 Square Foot
 Manager’s name, Time in position
 Customers in surrounding Zip Codes
 Store Leases: Rates by store, Dates of ending leases.
 Planned new stores?
CUSTOMERS
 Demographics for products
 Affinity sales
 Number of customers in surrounding Zip Codes
 Lifestyle of Customer – purchase patterns.
FINANCIALS
 Sales Total, Category, SKU
 Gross Margins Total, Category, SKU
 GM$ Total, Category, SKU
 Average Stock Total, Category, SKU
 Turn Total, Category, SKU
 Fixed Expenses
 Expenses related to revenue
 Sales per Sq. Ft.
 Financials by store Sales, margins, overhead,
 Age of inventory by store, by product
PRODUCTS
MERCHANDISE 5
MANAGEMENT

6.  Categories
 SKU’s by Category
 Sales by Product, by SKU
 Growth rate by Product, by Sku
 Percent to total by Product, by SKU
 Per of SKU to Category
 Which products are made?
 Which products do we buy?
 Relationship of overhead, product costs and volume on each Product?
 Pricing Policy: Markup? $.95 endings? 1st markdown? When and how much?
 Multiple pricing?
 Lead time for each product we make.
 Decisions about buying outside vendors? Who, Where, When, Why?
 New products in work?
 Average price per SKU
 % by categories
 Basic Stock items
 How to reorder, When, Who
 Top Ten by Channel: Stores, Catalog, E-commerce, B2B
OPERATIONS
 Manager
 Bonus system for Manager, Salespeople
 Commission
 Store Hours
 Fixed Expenses
 Expenses tied to sales
 Employees per store
 % Full time, % Part time
 Store Hours, Change at Christmas
 Deliveries to stores. How often? Direct ship other product?
 What do we empower our employees to do?
 Guarantees
 Types of Bags per product
 Turnover of employees
 Moral
MARKETING OF THE BRAND
 What is the Brand today?
 What is the Customer Value Proposition and should it be changed?
 Different in Stores from Catalog
 Strengths & Weakness
 Advertising Budget
 Media currently being used by the company and competition
 In House Credit Card
 Loyalty Rewards system
MERCHANDISE 6
MANAGEMENT

7. CHANNELS OF REVENUE
 Stores: Number of Stores, Locations, Size of Stores
 Internet
 Direct to Customer
 B2B
 Catalog
 Lead-time for the Catalog
 How many catalogs
 Any catalogs specifically for stores?
 Number of mailings per catalog.
E-COMMERCE
 Sales per transaction
 Units per transaction
 Sales per category, Sku’s
 Number of hits
 Customer Experience on Site
 E-mails Strategy
PERSONNEL
 Evaluation of current management
 Training of staff
 Current culture of business
COMPETITION
 Who is best in class – Nationally and Regionally?
 Strengths
 Weakness
MERCHANDISE 7
MANAGEMENT