MODULE 2
BUYING AND MERCHANDISING
Write down your own observations about the first impression of the merchandise mix of the Store and unique things that you observed in the merchandise mix.
ANSWER:-The merchandise mix comprises of products which the retailer terms as staple classic or basic; combined after taking into consideration fashion, fads and seasonal preferences. Staple/ classic merchandise lines includes those products that are always in demand. Often, the make for the basic necessities of life such as sugar, salt, pulses, etc.
QUESTION:-Write a brief note on the merchandise line and merchandise mix that is offered by the Retail Store to its customers.
ANSWER:-Merchandise refers to the complete range of products that the retailer chooses to offer to its customers. Merchandise mix covers the breadth and depth of products sold by the retailers, often, it is also referred to as the product assortment over a period of time, the merchandise mix may change in keeping the market condition, and may very even during the course of the year.
QUESTION:-Write down the process of buying the merchandise in the Store.
ANSWER:-
1. To help identify the right source of supply among the alternative available based on the criteria predefined for a given product or category.
2. To ensure that there is a constant flow of supplies of the fiven material or services at the right frequency and quantities.
3. To identify the right price or cost of material or service, i.e. it must buy the material or service at the most competitive price.
There are number of different models that describe the process or teps consumers engage in as they prepare to make a purchase, often depicted as a sales funnel.
- Recognition of an issue or need
- Information gathering
- Evaluation of options or Alternative.
- Selection.
- Purchase.
- After purchase evaluation.
How is Assortment Plan Prepared in the Store?
ANSWER:-Assortment Planning is the process of trading off variety, assortment, and backup stock. An assortment plan is a list of merchandise that indicates in general terms what the retailer wants to carry in a particular merchandise category. Example are:- an assortment plan for girls levi's jeans styles/fabric/colour/size combination that a retailer has inventory.
QUESTION:-How does the Store manage its brnad name?
ANSWER:-Brand name is one of the brand elements which helps the customers to identify and differentiate one product from another. It should be choosen very carefully as it captures the key theme of a product in an efficienty and economical manner. It can easily be noticed and its meaning can be strong and trigged in the memory instantly.
QUESTION:-Critically analyse the category management process of the Retail Store. Give your suggestions for further imporvements.
ANSWER:-
Category management is critical to optimizing the way your retail organization accesses products, understands product relationship, and executes the procurement process with increased efficiency, 5 best tools, for further improvement:-
1. Sure Front Unified Collaboration Management Software.
2. Assortment Optimization Software.
3. Planogram Software.
4. Promotion Planning Software.
5. Retail Analytics Software.
Does the Store forecast its sale? If yes, which method does it use to forecast sales? If no, which method will you suggest and why?
ANSWER:-Sales forecasting is projection of achievable sales revenues, based on historical sales data, analysis, of market survey and trends and sales person. Estimates, Yes, method is if you offer say, three types of goods plus two types of extra cost services, estimate sales revenues for each of the five product/ service lines. Make an estimate of where you think you will be in six months and calculate the gross sales per day, then multiply by 30 for the month.
QUESTION:-Analyse the process of annual budgeting of the Retail Store. What will you suggest for better budgeting?
ANSWER:-
Process of annual budgeting:-
1. Gather data for accurate forecasting.
2. Analuze data and look for opportunities.
3. Write a sales budget to provide to your store.
4. make a cost budget to optimize your dollar.
5. Create your P&L sheet to provide a full picture.
6. Design a cash flow plan to stay on track.
Write down the components that Store considered while preparing the merchandise plan.
ANSWER:-
The merchandise planning components are as follows:-
a. Receipt plans - Cost of goods that needs to be received to sell in the store.
b. Sales plans - Contains the objectives of the sale process.
c. Mark up plans - Adding on to price to cover costs.
d. Mark down plans - Reducing price to move goods.
e. Stock planning - Planning for the material to be stored.
Does the Store analyze the performance of inventory? If yes, how does it analyze and if no, which techniques will you recommend for analyzing the inventory performance?
ANSWER:-
Inventory analysis helps you to determine the right amount of stock to keep on-hand to fill demand, while avoiding spending too much on inventory storage. Inventory is an asset on a balance sheet and represents the product a company plans to sell to its customers eventually. In addition to finished goods, inventory includes the row materials needed to produce those goods and work-in-progress goods ( a washing machine that workers are assembling, for example).
1. Vital essential desirable analyzing technique
2. Score difficult easily available analyzing technique
3. Material requirement planning analyzing technique.
Write down the pricing methods which are practiced by the Store. Does the store have any unique pricing methods in comparison with its competitors? If yes, list them, if no, which methods do you think are suitable for the Store.
ANSWER:-
1. Skimming Pricing:- This method of pricing aims at products where there is a competitive advantage but not sustainable, since it can be replicated. Soon, High Price tends to attract greater competition and therefore till the time oversupply situation is reached, Price can be skimmed. Generally, customers for these products are early adopteds. They are willing to pay premium to own newly launched products which are innovation, improved product or style statement.
2. Penetration Pricing:- In order to "Penetrate" the market price is artifically set low so as to gain market share. Once this is achieved, price is increased to the desired level.
Write down the process of vendor selection of the Store.
ANSWER:-
The process of vendor selection:-
1. Awareness:- The first step is to know the firm so that we can have a better understanding of what is it that you are looking for.
2. Need:- Once we got to know the firm better work out your needs and the ways in which we can source merchandise. Armed with this background, we will club what we have learnt about your firm with the information that we have about the industry to seek out the most appropriate vendor to work with.
Write down your own observations about the quality of the merchandise of the Store.
ANSWER:-Loyalty is a phenomenon that has always received a great deal of interest among marketers, specifically from retailing side. The study tries to further the understanding towards this phenomenon by trying to test the inclusion of merchandise and service quality, and satisfaction as the determinants of store loyalty. The paper tries to answer the question whether merchandise quality and service quality are independently associated with store loyalty a long with customer satisfaction or associated through interaction.
QUESTION:-Does the Store practice vendor evaluation parameters? Narrate your own observation.
ANSWER:-\It is important for every business to develop its own vendor evaluation parameters depending upon the industry, type of business, product and policy requirements. Having a standard parameter list or checklist helps you access vendors by asking key questions about organizational background, financial information, alliances and partnerships, product support, product information, technical architecture, industry experience and miscellaneous.
QUESTION:- MEASURING PROFITABILITY OF THE STORE
- Provide the following details (last financial year).
- Inventory at the beginning and at the end of the year.
- Average Inventory
- Inventory Turnover
- Cost of goods sold
- Net Sales
- Conversion level (how many customers bought) as % .
Inventory at the beginning and at the end of the year.
(COGS) Cost of Goods Sold = (Beginning inventory + purchases) - closing inventory.
Average Inventory:-
Average inventory(month)=(Beginning of month inventory + End of month inventory) /2
Inventory Turnover:-
Inventory turnover = (Beginning inventory at cost + Purchases at cost - End inventory at cost - cost of lost or scrapped item) divided by cost of sales.
Net Sales:-
Net Sales=Gross Sales - Returns and allowance
Conversion level:-
Conversion rate = (conversions/total visitors) * 100%
Compare the merchandise of the Store with the other stores.
ANSWER:-
Let us assume that there are two retail stores which sell the same product. One of them is a large departmental store and the other is a small retailers like a general store. The difference between the selling of the products is explained below:-
The general store is usually located in a nearby market place, usually located near one's area of residence. it might be easier to have access to the concerned good, say rice if required quickly. A departmental store is usually located in the center of the market. At tiem is might not be convenient to travel there if the product is required quickly.
Your suggestions to improve the buying and merchandising system of the Retail Stores.
ANSWER:- 1. Group different products on display.
2. Do not display the products for which a customer came to your shop, display the products that the customer desires.
3. Display new products near the entrances.
4. Change the location of products in your shop.
5. Communication is important.
6. Keep an eye on weekly product sales and inventories.
7. Provide your salespersons with display-related trainings.
