DEVISING MERCHANDISE PLANS
INNOVATIVENESS
FORECASTS
MERCHANDISE
PLAN
TIMING
ASSORTMENT
PLANNING PROCESS
COMPANY
DEPARTMENT
CATEGORY
SUB CATEGORY
STYLE,PRICE POINT
SKU
MINUTES OF DISCUSSION
• THE CONCEPT OF MERCHANDISE PLANNING
• THE NEED FOR MERCHANDISE PLANNING
• FACTORS AFFECTING THE MERCHANDISE
PLANNING PROCESS
• THE PROCESS OF MERCHANDISE PLANNING
• TECHNOLOGY TOOLS THAT AID
MERCHANDISE PLANNING
MERCHENDISING
PLANNING
• IT EMBOIDED IN 7 “RIGHTS”……….
1.
2.
3.
4.
5.
6.
7.
THE RIGHT PRODUCT
THE RIGHT PLACE
THE RIGHT QUANTITY
THE RIGHT QUALITY
THE RIGHT PRICE
THE RIGHT MIS OR ASSORTMENT
THE RIGHT TIME
6/28/2011
THE CONCEPT
• PLANNING & CONTROL OF THE MERCHANDISE INVENTORY OF
THE RETAIL FIRM IN A MANNER WHICH BALANCE THE
EXPECTATION OF TARGET CUSTOMERS & THE STRATEGY OF
THE FIRM.
NEED & OBJECTIVE
•
Merchandise planning is one of the biggest challenges that any multi store retailer
faces. Getting the right mix of product, which is store specific across your
organization, is a combination of customer insight, allocation, and assortment
techniques.
Domain experts understand this and help clients in making the right forecast by
SKU and ensuring that the consumer finds the right product, at the right place, right
time and right price. The entire merchandise planning lifecycle in a systematic and
integrated way in order to facilitate an end-to-end merchandising functions including
optimizing merchandizing assortments, allocating products, providing planning and
analytics capabilities and lastly, providing solutions to maximize value from
promotions and price management.
The benefits of Merchandise Planning accrued by reducing unplanned discounts
and promotions, properly utilized floor space, fewer store transfers, and increased
turns throughout the chain helping the bottom line immensely.
IMPLICATION
FINANCE
WAREHOUSE
& LOGISTIC
MERCHANDISE
PLANNING
STORE
OPERATION
MARKETING
PLANNING STAGES
• DEVELOPING THE SALES FORECAST
•
HOW MUCH ??????(determining
requirement)
• WHAT PRICE ??????(control-0tb)
• SHOULD NEW PRODUCT ????? (ASSORTMENT
PLANNING)
DETERMINING THE REQUIRMENT

CREATION OF BUDGET

SALES PLAN

STOCK SUPPORT PLAN

THE PLANNED REDUCTION

THE PLANNED PURCHASE LEVEL

OVERALL PROFITABILITY
ASSORTMENT
THE SELECTION OF MERCHANDISE
CARRIED BY A RETAILER IS REFERRED TO
AS ASSORTMENT.
 VARIETY
WIDTH OF ASSORTMENT
 DEPTH OF ASSORTMENT
CONSISTENCY (Merchandise line, Model stock
plan
SIX MONTH PLAN
SIX MONTH PLAN
• PLANNED PURCHASE= PLANNES SALES+PLANNED
REDUCTION+PLANNED E.O. M-B.O.M
• PLANNED REDUCTION
 PLANNED MARKDOWN
 EMPLOYEE DISCOUNT
I. SHRINKAGE
II. MARKUP
IN RUPEES= SP –CP
IN %
= MARKUP IN RUPEES/RETAIL PRICE
III. GROSS MARGINE
IV. B.M.O & E.M.O PLANNED INVENTORY
INVENTORY PLANNING
• STOCK- TO –SALE………
 S/S RATIO= STOCK ON HAND E.M.O/SALE FOR THE MONTH
BASIC STOCK METHOD
 BS= AVG STOCK FOR THE SEASON-AVG MONTHLY SALES FOR THE





SEASON
B.O.M. STOCK= PLANNED MONTHLY SALES + BASIC STOCK
THE % VARIATION METHOD
WEEKLY SUPPLY METHOD
AVG WEEKLY SALES= ESTIMETED TOTAL SALES FOR THE PERIOD/THE
NO OF WEEKS IN THE PERIOD
B.O.M STOCK= AVG WEEKLY SALES* NO OF WEEK TO BE STOCKED
MERCHANDISE CONTROL
• STAGE-III
• OPEN-TO-BUY(OTB)= PLANNED EMO STOCKPROJECTED EMO STOCK(ACTUAL BMO
STOCK+ACTUAL ADDITION TO STOCK+ ACTUAL
ON ORDER-PLANNED MONTHLY SALE-PLANNED
REDUCTION FOR THE MONTH)
• OTB SYSTEM HELPS THE CATEGORY MANAGERS
TO ADJUST THE INVENTORIES ACCORDING TO
THE FLUCTUATION IN THE ACTUAL SALES.
ASSORTMENT PLANNING
• THE PROCESS OF DECIDING UPON AND THEN
ARRIVING AT THE QUANTITY OF EACH PRODUCT
OR CATEGORY OF MERCHANDISE IS CALLED AS “
ASSORTMENT PLAN”.ASSORTMENT PLANNING
INVOLVES DETERMINING THE QUANTITIES OF
EACH PRODUCT THAT WILL BE PURCHASED TO FIT
INTO THE OVERALL MERCHANDISE PLAN.DETAILS
OF COLOUR,SIZE,BRAND,MATERIAL HAVE TO BE
SPECIFIED TO CREAT A BALANCE ASSORTMENT
FOR THE CUSTOMER.
RANGE PLAN
• Retail planning is complex – buyers and
merchandisers have much to consider when
developing and planning the range

the right depth and width of range – ensuring
sufficient choice and range completeness
 the right price architecture – guiding the
customer through the options available
 the right quality and value – ensuring the brand
and product propositions fit your business
• great on shelf availability (with minimal stock
investment) – ensuring you maximize your sales
potential off the lowest possible cost base
Whilst Delivering
• A flexible, responsive, agile supply base – to
ensure you can follow consumer trends
quickly
• A better return per square foot than the last
range – to mitigate the ever increasing cost of
property
• A better shopping experience for the
customer – to secure their loyalty, repeat
business and increased basket size…
Merchandise Planning – Central to
Profitable Retailing
• Most world-class retail businesses have some form of range
planning / merchandise planning process at the centre of all their
commercial planning activities. Merchandise or range plans
articulate the financial targets in terms of how the range should be
built up, what proportion of the total business mix a range should
take, associated store and DC space allocations, etc. Moving along
the time line closer to the time of range launch, merchandise /
range plans become a key document for buyers and merchandisers,
a living document, that captures all key information as products are
developed and data is gathered that ultimately influence buying
price, selling price, store distribution and store position, promotion
planning, markdown budget, supply chain flow, sourcing strategy,
rate of sales etc.
Effective Range Performance
Measurement – Plan vs. Actual
The Range Plan or Merchandise Plan as they are equally well
known, form the basis for the development of the store / store
cluster level assortment plan and in a fully integrated planning
process are the trigger for both the demand planning and visual
merchandising processes. A good range plan also allows the buyer
and merchandiser to measure the effectiveness of their ranges
against the original budgets and against plan. It allows for hard
and soft constraints to be applied in operations, such as Open To
Buy (OTB), management of intake, delivered margins,
promotional activity and markdown .
MODEL STOCK PLAN
MEN’S SHIRTS(1,000)
DRESS(100)
SMALL(100)
CASUAL(400)
FORMAL(200)
MEDIUM(160) LARGE(100)
FULL SLEEVS(48)
SPORT(300)
EXTRA LARGE(40)
HALF SLEEVES(112)
BUTTON DOWN(45) SAVILLE(67)
WHITE(18) BLUE(14) CREAM(9)
COTTON(4)
COTTON BLEND(14)
GREY (4)