MERCHANDISNG
Introduction:
How Does Merchandise Get In Your Store?
What Questions Should I Ask Myself When Ordering?
OBJECTIVE Be able to define merchandising
Merchandising is being able to:
get the right merchandise
(color, size, style,quality,etc.)
at the right time
MERCHANDISNG
Where does it come from?
Who ordered the merchandise?
Does it sell?
Is it good quality stuff?
How many should we stock?
What sizes should we have?
at the right price
at the right place
in the right amount
What does the competition have?
Is it a fad or a trend?
What kind of price are people willing to
pay?
Etc. etc. etc.
THE JEANS ACTIVITY
With two partners, spend $10,000 to stock a jean store.
Have 5 brands/styles
Cost is $20 each
Identify sizes to be carried
Identify the # of jeans to be stocked in each size
With a partner, spend $10,000 on stocking a jean store. (Cont.)
Calculate the total dollars spent per style/brand
Present your plan to the class & turn in to me
OBJECTIVE: Be able to outline the buying process used by most marketing businesses
The Buying Process
Prepare a merchandise
Find the best supplier
Choose the assortment
(quality vs. price)
(color, type, size, variety, etc.)
Negotiate the order
OBJECTIVE: Be able to describe the factors that effect a business’ merchandise assortment
Merchandise Assortment Considerations
Image
Brand Policy
Pricing Policy
Buying Policy
Merchandise Plan
Customers
“Experts”
How do Buyers Know What to Buy?
Marketing Research
Customer Contact
Want Slips
OBJECTIVE: Be able to define & complete a purchase order
Purchase Orders
A business form used to tell a vendor that you want to buy merchandise
Purchase OrdersTerms:
To
Date
Shipping Date
Via
FOB
Ship. vs. Dest. Point
Terms
Order #
Items #
Description
Quantity
Unit Cost
Total Cost
Total Order
OBJECTIVE: Be able to calculate Purchase order terms
Why do vendors offer terms?
For Paying Cash
For Buying Regularly
For Paying Early
For Buying Out of Season
For Buying in Volume
Sample Terms
2/10 NET 30
The 2 is the amount of discount available
The 10 is the number of days available to get the discount
The 30 is the total number of days available to pay the bill
Sample Terms
EOM
ROG
Advance Dating
Sample Problems
Assume a $1,000 purchase dated on 4/1/01 w/ the following terms
Due Date =
__________
Discount =
__________
5/10 Net 30
__________
5/10 Net 30 EOM __________
5/10 Net 30 6/1/01 __________
OBJECTIVE: Be able to complete an invoice
INVOICE TERMS:
Invoice #
Pieces
Weight
Backordered
Unit Cost
OBJECTIVE: Be able to define & complete the following forms:
Bill of Lading
Also called a shipping order.
Used to request that a transport company come pick up & deliver merchandise.
Serves as a contract
Consignor vs. Consignee
Physical Distribution Forms
Waybill
Used to keep track of merchandise as it moves through the “Channel of Distribution”
Freight Bill
An invoice (bill) for the shipping charge
Tells who should be paying for the shipping charge
Delivery Receipt
Form used to verify that merchandise has arrived
Signed by the buyer
Packing Slip
Used to compare merchandise delivered w/ what was supposed to be in the carton
Condition, number of items, correctness of order
Shipping
Cost
Tax
OBJECTIVE: Be able to Define “Retail Pricing”
Assigning a Dollar Value to Goods & Services
The Importance of Proper Pricing
Attracts Customers
Determines Sales
Determines Profit
Keeps Up With the Competition
OBJECTIVE: Be able to Define the Terms Associated with Retail Pricing:
Retail Price: The amount that customers pay for a product or service
Cost :
The amount a business pays to get merchandise into the store
Markup:
The amount a business pays for expenses (overhead) & desired net profit
FORMULA
RP = C + M
DO SAMPLE PROBLEMS #S 3, 4, & 5
But What do Business People Generally Know?
Retail Price = 100 %
Cost of Goods (C$)
Markup %
(M%)
DO SAMPLE PROBLEMS #S 7, 9, 10
OBJECTIVE
Be Able to Calculate Markdowns
MARKDOWNS
MD$ = RP$ x MD%
MD$ = $10.00 x 40%
MD$ = $4.00
New RP$ = Old RP$ - MD$
RP$ = $6.00
DO SAMPLE PROBLEM # 12
OBJECTIVE
Be Able to Calculate a Store’s Markup Policy
Consider a store that has business expenses of $125,000 (Heat, Electric, Salaries, etc.)
and spends $200,000 on merchandise. The owner wants to take home a modest $50,000
income. How much merchandise must he/she sell this year? Per month?
What is the Business’ Sales Goal?
What is the Business’ Sales Goal for the Year?
What is the Business’ Sales Goal for the Month?
What is the Business’ Sales Goal for the Month?
What is the Business’ Markup Policy?
OBJECTIVE: Be able to define stock turnover and its importance
The Retail Price of each product sold represents the company’s cost of goods, total expenses, &
desired net profit. If you multiply the number of items sold by the $ value of profit it represents, you
can calculate how much profit a company has earned. Therefore, the faster you sell your product, the
more profit your company can make. Plus, every additional product sold results in more profit for the
business. Obviously, however, if you are selling out your merchandise to fast, the expense of ordering
& shipping merchandise will eat into your net profit, so you can’t order to little merchandise.
Calculating a business’ stock turnover ratio, therefore, is an art as well as a science.
S T = Total Sales / Average
Inventory
Stock Turnover (ST) Ratio
Sales: The total amount of merchandise sold during a specific period of time.
Average Inventory: The approximate amt. of merchandise in the store at any given point in time.
Average Inventory =
BOM Inv. + Inv.2 + Inv.3 + Inv. 4 + . . . Divided By the # of Inventories Taken
“Story Time”
A small business has sales of $400,000 in a year. They took inventory 12 times. The
average inventory was $50,000. What was their stock turnover ration?
X
= $400K / $50K
X = __?__
Stock Turnover (ST) Ratio
“Story Time”
A small business has sales of $400,000 in a year. They want a stock turnover of 10
because a 10 ST ratio will make them the profit they want and need. What should their
average inventory be?
10 = $400K /__?__
X = __?__
OBJECTIVE
Be able to describe methods to increase a product’s stock turnover ratio
Better Buying: Get merchandise that people want
Better Pricing: Charge what people are willing to spend
Better Stock Control: Get rid of the “slackers”
Proper Stock Care: Make it look good
Better Promotion: Sell the product better
OBJECTIVE
Be able to define terms and describe procedures for the proper stocking of merchandise
Film: “Stocker Interactive Program”
Stocking Terms
Face - Bringing merchandise forward
Salvage - Material used in stocking that can be used again
Floats - Carts used to haul merchandise around the store
Rotation - “F I F O” Bringing old merchandise to the front
Code Dated - Expiration dates
Mass Stacking - Using one product to form large display
Signage - Informational signs
Broken Down - to collapse boxes for ease of storage
Blocking - Creating space on a shelf for products
Back Stock - Merchandise that doesn’t fit on a shelf and must go back to storage
End-cap - A display built at the end of an aisle
Vertical vs. Horizontal – How products are placed on shelves
“Damaged” - Merchandise that can be fixed and sold
Stocking Procedures
Customer Service:
Customers come first. Help whenever possible
Wear your uniform
Take customers to product vs. pointing in general direction
Safety:
Keep aisles clear
Don’t overstock shelves or floats
Be able to see when pushing floats
Remove out of date merchandise
Lift properly!!!!
Stocking Procedures (Cont.)
Efficiency:
Stock using two hands
Use teamwork
Use your product knowledge!!!
Properly stocked merchandise uses less space allowing more profitable products to be
stocked and sold
Appearance:
Shelves should always look full and orderly
Keep shelves neat & clean
Repair damaged fixtures and products
Keep yourself looking neat & clean
Increased Sales:
Signage is critical. It is the salesperson!!!
Rotate products on the endcaps
Place your most profitable merchandise at eye level
Being neat, clean, & orderly helps to sell also!!!
OBJECTIVE
Be able to define terms and describe procedures for the proper inventory of merchandise
Inventory Control Terms
Unit Control
Inventory Control
Dollar Control
Book Inventory
Basic Stock List
Physical Inventory
Model Stock List
Book Inventory
A paper record
Subtract Sales
Add purchases
Doesn’t allow for Shrinkage
Information is collected by POS systems or paper records
Physical Inventory
Simply counting the products
Tedious & costly
Accurate
OBJECTIVE
Be able to calculate the amount of profit earned per square foot of selling space allocated
Gross Profit
Year
Net Profit
Per Sq. Foot
Item
Floor Plan
Stock Turn
Sq. Feet of Selling Space
Month
Store Owners are faced w/ a limited amount of space
He/She wants as much profit as possible (Mgrs. Job may depend on it!) from that space
Products take up space!!!
Profit Calculation Terms
Products that make profit stay
Products that do not make profit leave
Most profitable products get the best space
Profit Calculation Formula