Merchandise range planning is part of the overall assortment planning process and involves making decisions about the amount of merchandise choice - the variety (or breadth) and the depth – that will be available to customers.
The breadth of stock is the number of different types of merchandise and the depth of merchandise is defined as the number of SKU’s per type.
Determining the right merchandise range is critical to meeting financial targets and satisfying customers.
In the real world, the margin we place on product is eroded by many factors.
Problem lines, promotions and damage incurred in the store are all markdowns, which reduce the first margin that is being achieved on a range of items.
The margin that is achieved after markdowns is usually referred to as Final Margin (but may also be known as maintained margin, achieved margin, gross margin or net margin
It is a sad irony that a business can be profitable and yet fail.
The business might make good margins, but not have the cash to pay the bills when they fall due or have the cash to expand the business when the time is right.
A high level of borrowing in order to pay creditors could end up sending it broke.
Many a retailer has suffered such indignity. Indeed cash flow is the greatest problem that many businesses face in today’s tough economic conditions.
Merchandise Analysis is part of many segments in the seasonal cycle, from setting the bottom up budgets and evaluating initial sales to conducting post seasonal analysis.
It is imperative that a retailer conducts merchandise analysis by dealing with a responding to data that is collected on a daily basis.
By using analysis and by correctly contextualising and interpreting the data we collect by using the SOFIA approach we can be sure that we are not making assumptions on isolated pockets of data and there for this is turn will drive our retail profits.
Before buyers set the price on an individual product, there is a need to think strategically about pricing.
Product pricing, especially of popular items that are commonly purchased has an important bearing on the consumer’s perception of the value of goods and the market position of retailers.
Pricing must be :
Stock is usually the largest single asset in a retail business and therefore its productivity is critical to retail prosperity.
Merchandise generates revenue, whiles tock is invested.
The profitability and financial viability of the retailer depends on the return obtained from that investment.
No stock or wrong stock, means no sales & no income.
Markdowns are often associated with margin degradation and profit loss—and some companies believe that cutting prices for their products could negatively impact their brand image.
Although inevitable, retailers have historically viewed markdowns as a necessary evil designed to help sell old or slow-moving inventory.
In an era of intense competition, growing demand or consumer price transparency and the mounting threat of inflation it’s time to rethink pricing strategies, and take a proactive approach on markdowns.
The profitable management of retail merchandise is an absolutely crucial stage in the seasonal buying and selling cycle.
In fact, the accumulation of ‘aged stock’ is the single biggest factor in the destruction of profitable retailing.
By optimizing how to handle your inventory you will increase
Open to buy, allow for the flow of fresh seasonal stock and gain assess to more storage space.
One of the secrets to retail success is pricing your products appropriately.
Correctly priced products can enhance how much you sell, creating the foundation for a business that will prosper.
When it comes to Retail buying the contribution to margin (CTM) and open to buy (OTB) concepts are essential.
It is also useful for determining the profits that will arise from various sales levels
Being productive in retail is all about managing and turning your stock.
Being able to keep just the right amount on hand and yet avoiding a stock out is crucial if one is to maximise sales and profitability.
Many retailers will manage their inventory holdings based on a predetermined optimal week’s cover of stock.
We also need to determine if all our other assets and activities are giving us the return we expect.
Whilst leaders need to motivate and mobilise their troops they also need to be able to understand and measure the important financial formulas and ratios.
These ratios assist in understanding the financial health of the company and to be able to compare it with industry benchmarks.
Having an efficient supply chain means that it needs to be measured and monitored at all times.
Supply Chain Management (SCM) requires management of complex dependencies between teams, departments and partner companies across international boundaries. It is a natural area for formulas and metrics
Supply Chain Metrics may include measurements for procurement, production, transportation, inventory, warehousing, material handling, packaging and customer service.
There are hundreds of metrics that can be used to score Supply Chain Management performance.
Retailers that understand and leverage key data within their business are not only aware of their store's past performance and current standing, but position themselves to be able to forecast and make the right choices and adjustments for their business to improve efficiencies and their bottom line
Retail Store KPI’s and Formulas give you a clear picture of your store’s retail performance and assist you in sharpening your competitive edge in the future
When it comes to Retail buying the contribution to margin (CTM)and open to buy (OTB) concepts are essential. It is also useful for determining the profits that will arise from various sales levels
These formulas can be applied throughout a business, for individual products, product lines, profit centers, subsidiaries, distribution channels, sales by customer, and for an entire business tp determine the cash resources , profitability and stock levels in a retail business.
EBIT is another powerful indicator that every retailer must keep their eye on, this is a measure of a company’s earning power from ongoing operations.