Planning Reductions in Merchandise Budgeting

This is a very significant stage in developing the merchandise budget namely planning of reductions. “Retail reductions” are the difference between the merchandise item’s original retail value and its actual final sales value. This difference is the result of three major factors namely, mark-downs, discounts and shortages. “Mark downs” are the reductions in the original retail price for the purpose of stimulating the sale of merchandise. The amount of markdown can vary considerably depending on the type of merchandise and the condition under which it is sold. “Discounts” are reduction in the original retail price that are granted to store employees as special fringe benefits and to special customers in recognition of their special status say senior citizens, disadvantaged customers and religious personalities like clergy, priests, and so on.… Read the rest

Sales Planning in Retail Merchandising

Majority of retailers use a form that summarizes the basic budgetary information for a given merchandise grouping during a specified  period  normally for a period of six months.  The retailer must select the control unit for which projections will be made, before making sales estimates. The “control unit” is the merchandising grouping that serves as the basic reporting unit for various types of information namely, past, present and future. The retailer has the choice to estimate future sales for an entire store, for a merchandise division or department, or for an individual product-line or item. The most three acceptable control units can be merchandise groups, merchandise classes and merchandise categories of all these three, experts recommend merchandise categories as the basic control unit as it is generally much easier to aggregate the information than it is to disaggregate information, i.e.,… Read the rest

Concepts of Merchandising and Merchandise Planning in Retail

Retail Merchandising

Merchandising is a process involving developing, securing and managing the merchandise mix to meet the firm’s marketing objectives. The merchandise ­mix stands for the retailer’s total offering, be it goods or services or both. The merchandising process is a three tier structural set of activities. The following configuration gives the idea of merchandising process.

The first stage or tier is to do with developing the merchandise-mix which is composed of two elements namely product and service-mix. The second stage or tier is securing the merchandise-mix which involves two highly skillful and  specialized  activities namely the buying process and the procurement process.… Read the rest

The Concept of Retail Sites and it’s Classification

A retail site  is the actual physical location from which a retail business operates. According to retail specialists, retail site is one of the principal tools obtaining and maintaining a competitive advantage through spatial monopoly. A given site is unique when its “positional qualities” serve a particular trading area consumer in way that no other site can match. That is why, retailer’s site problem has solution in its identification evaluation and final decision of perfectly matching site.

The first step in appraising retail site locations is to identify all potential site alternatives. The number of site alternatives in any given trading area can range from an extremely limited to a very large selection.… Read the rest

Growth Potential of Retail Trading Areas

Every retailer must answer one more question before completing the trading area evaluation process. That is what holds for the future for the retail trading area ? In other words he is to foresee the growth potentials of trading areas. It is because, the marketing opportunities can change quickly or dynamically growing trading areas might turn either static or decline. The retailer either must fight to maintain present market share or be willing to survive on a smaller share without future growth. However, with the growth, the retailer has an opportunity to expand sales and market share at a reasonable amount of cost and effort.… Read the rest

Out-shopper Analysis in Retail Management

It is very clear that not all the consumers who are within the trading area shop exclusively from that area. A group of consumers known as “out-shoppers” frequently and regularly shop outside their local trading area. These consumers spend a considerable amount of time, money and effort making inter-trading area shopping trips. Some out-shoppers look for economic gains arising from lover prices in larger trading  centers  where assortments are better and the level of competition is more intense. Some shoppers simply seek the diversity of unfamiliar or more stimulating surroundings. Demographically  out-shoppers  are younger and are relatively well educated and their relative income is high; psychologically,  out-shoppers  are active and are on the “go”, urban-oriented who are neither time conscious nor store loyal shoppers.… Read the rest