1. Merchandising-
• Introduction and definition- each retailer competes for C’s
attention and share of wallet. products to b sold r also very
important besides right location and communication for the
store. e.g. Or else C switches to other store if right size of shirt
or any other merchandise is not available.
• Success of store is largely based on its ability to provide right
goods to C at right- time, and right price
• Process of merchandising or merchandise mgt covers all
functions involved in identifying the right product , sourcing
it and then ensuring that it reaches the end consumer- i.e.
merchandising
• merchandising is an art and also a science as retailer takes
analytical and disciplined approach to merchandising function,
• Retailer can place right product in front of right customer at right
times leading to growth in revenues and profits thru significant
gains in gross margins and hefty reduction in inventories.
• Merchandising covers–planning, buying and selling of
merchandise. “Goods well bought r half sold”. Achieving 5
rights-1-product,quantity,,place,time and price is key to success
to successful merchandising.

2. • Merchandise management termed as analyzing, planning
acquisition, handling and control of the merchandise investment
in retail operation.1-analysis -correct identification of needs and
requirements of target C enabling a good buying decision.2-
planning -estimation of future requirements,3-aqusition
-prcurement from producers, 4-handling- reaching where it
needed that to in sound condition,5-control- money involved in
buying products so necessary financial system /controls .
• Merchandising refers to entire process of inventory planning
and management in retail organization leads to increase in ROI
and finally more profitability.
• Steps in merchandise planning Achieve 7 rights in order to
satisfy every C’s needs. Retail store must have right products
in the right place in store, in the right quantity, with right
quality, at the right price ,with the right mix of sizes or
variants at the right time. It also involves forecasting sales,
estimating consumer demand, and forecasting impacts of any
change in retail environments. So the sales r high with an ideal
level of inventory holding in store and thus more profit.

3. • Objectives of M. planning- Profit improvement. Buyer plans
procurement for each dept.Entire process of M planning
involves finance dept, marketing etc.
Stages in M planning- stage -1-developing sales forecast,-
includes-1-review of past sale. for the same period 2-Changes
if any in economic conditions like slow downs, c’s spending
patterns etc 3-analysing changes if any in sales potential,
demographic changes4-analysing changes if any in mktg
strategies, i.e. if any new store or new merchandise introduced
by comp store,5-creating sales forecast-estimates of projected
increase for various categories r arrived-outline for what sales
2 b achieved.
stage 2- determining m requirements- plan required for serving
C with all rights. 2 levels of planning i.e. 1st at creation of
budgets and 2nd at assortment plan. 2 methods of m planing-1st-
top down 2nd-bottom up. i.e. either from mktg head or from each
dept Then budgets r made for planning inventory levels,
investments etc which includes-1-productwise sale, 2-stock
supports 2 achieve those planned sales, 3-stock reductions if
not getting sold,4-purchase levels-procurement levels, 5- gross
margins (diff sales revenue and cost of goods. Next stage after
budgeting is assortment planning as per hierarchy

4. • Merchandise Hierarchy M. mix clarity of hierarchy is necessary.
(fig)
• M.H. is a disciplined way of grouping the m.mix at different levels
starting from a high level grouping at Div/dept level to the lowest
level of stock keeping unit (SKU).
• Grouping may at times b at 4-5 levels (fig) forming platform
needed to create suitable mix inline with the vision of store .
• Building M.mix on fallowing concepts of hierarchy has
advantages- a) define in terms of ratios the mix of elements at
each level of hierarchy, b) analyze and drill down thru rungs of
hierarchy to the problem areas if any up to sku level. c) based on
level of performance related to merchandise, may not b at sku
level but at category levels
• SKU- unit at lowest level of hierarchy, div-food,-dept-packaged
food,-category-sauces-sub-category-tomato,- brand-magi- last
options-250 gms, and so on
• Range planning- 1st step in planning is merchandise assortment
planning. Mix in percentage terms at every rung of the store’s
M.H.
Range plan step is strategic step normally taken at high levels as
a critical success factor for merchandising in terms of sales,

5. • Category level margin plans is also created to compare and
know the gross margins that each level up to sku contributes to
the store.
• Clear definition of merchandise and the assortment planning is
based on hierarchy levels helps in analyzing weekly sales, stock
and intake plan etc at the category, sub-category, brand or sku
levels. store manager can identify problem if any in sales or
inventory holding at each level and take corrective actions. So
OTB system needed in buying process. assortment plans helps
replenish items after sold and at min and max levels arrived at.
• Another way generally for high turnover categories is to trigger
off reorders as and when the merchandise is sold with a cap on
max stock holding. fmcg in volumes.
• Planogram – A graphical/visual presentation of range plan
instead of numerical. digitally stored data changed to images.
Like space planning software packages graphic based stock
mapping -planograms -helps in easy replenishment planning and
effective store space utilization
• Merchandise assortment planning, base stock mapping—
numerical and visual numerical methods enables calculating
returns on footage.

6. • Buying process- A critical function of merchandising.
• It begins with preparation of buying plan called OTB. which
helps retailer for projections of merchandise requirement and
control future buying to maintain uninterrupted flow of each M
matching its anticipated sales at desired stock turn rates to
give positive cash flow.
• OTB as organized buying plan prevents over buying, eliminates
confusion and enables retail org to make more profits.
• OTB-refers to merchandise budgeted for purchase during a
certain period of time for which stocks have not yet been
ordered.
• It is also a process of forecasting sales and purchases.
• It is a planning tool that assists in setting budgets for sales and
merchandise inventory levels and in monitoring the current
status of the otb quantity remaining to b ordered to meet the
budget.
• It helps to fix the ideal quantity of stock that shd b in hand at the
beginning of any given month and new quantity to b received
during the month.

7. • Elements of efficient otb plan–a) forward sales planning i.e.
sales forecast to b prepared in monthly break-up for the entire
year and also flexibility to react and reschedule deliveries., b)
forward cover i.e. planned stock turns, if 4 stock turn planned
/year then stock holding at any point of time is 3 months
quantity. c) stock required- based on forward cover planned for
the month ,d) opening stock-closing stock of previous month. e)
Intake requirement- difference between required closing and
opening stock, f) on order-ordered stock, g) open 2 receive, h)
closing stock
• Advantages of otb-1-enables to estimate working capital req for
inventory,2-ensure inventory levels supporting planned sales
and GMROI.3-ensures right buy, 4-enables continuous flow,5-
enables comparison of stock performance and more profit.
• Factors affecting merchandise function -1-retail org- buying
function centralized or decentralized geographically as per
regional preferences contrary to direct mktg or e-tailing which
needs all advanced buying only of unique products at
competitive price.2-buying of basic i.e. core merchandise 2 b
always kept in stock, 3- role of buyer and role of merchandiser
in large org.

8. • Role and responsibilities of merchandiser-
Responsible at category or sub-category level for planning-sales
forecast and budgets, directing- guiding buyers, coordinating-
2/3 buyers and controlling-buyers performance and maintain
performance levels. Some large org have Div-MM, who also
carry somewhat same responsibilities.
• Buyers role- select and orders m 2 b sold at
store/dept/category level with the help of comps.1-developing m
strategies for category,2-planning ad sorting assortments as
per demand trends ,economics.3-vendor selection development
and management 4-pricing of merchandise- in terms of gross
margins,5-inventory mgt- thru timely procurement and avoiding
stock- outs, markdown for slow moving m.
• Merchandise planning – and control of the merchandise
inventory of the retail firm in a manner which balances between
expectations of target C and strategy of the firm.
• Proper merchandise planning and buying is beneficial to both
customer and retailer. Retailer gets benefit as planned buying
process enhances 1-the possibility of right assortments with
adequate depth and width, 2-posibility of increased stock
turns,3- so better working capital mgt as funds gets released on
time to time.

9. • The process of merchandising management- (Fig)
• Implications of M. Planning- (fig), fallowing functions in
retail org r involved with M planning-
1. Finance- finance dept involved as soon as purchase order is
placed in line with overall objective of profit of the store. who
make payment and calculate projected profitability of the
merchandise p.o.
2. Marketing- they need to create suitable campaigns for c.p.
3. Warehousing and logistics- get ready to receive and physical
verification of fresh stock. discrepancies to b informed to
finance with dispatch details as per assortments if chain of
stores for redistribution from rdc.
4. Store operation- communicate to store manger so as to plan
space and avoid duplication if purchase powers r authorized
at each store levels.
• An interaction with sales staff is needed by the buyer of M to
make aware of needs and wants and to get valuable insights
as to why particular product is selling and not-selling.
• An analysis of trade info thru journals, surveys needs to b
gathered and analyzed by the buyer.

10. • Merchandise classification- on the basis of hierarchy e.g.
Household electronics is one class and its categories could
b kitchens appliances, home entertainment etc
• Few terms generally used in merchandising-
1. staple/basic/classic m- which r always in steady demand in
store e.g. sugar, or white shirts, or stationary etc in different
classifications
2. Fashion m-high demand for short/limited period. excessive
buying may result in mark downs. e.g. short and long jeans
etc a style of a time, get outdated as per trends..
3. Seasonal m- sells over non-consecutive periods- rainwear's,
winter wears
4. Fad m.- enjoy popularity for a short period.
5. Style- unique shape or form of any product, specialized type
of expression, taste etc
6. Assortment- selection of m carried by retailer including
breadth and variety. Variety- different lines stocked- m/w/c
wears ,Width- number of m brands in m line, Depth of
assortment- variety in one catgory-10 designs of shirts in 5
different sizes, in 4 colors.