Purchasing Products
and Services
•
•
•
•
Explain the role of a merchandising plan
Explain the elements of a merchandising
plan
Compare merchandising strategies of two
stores with similar products
Analyze forms used in purchasing
Role of the Buyer
•Industrial Marketsmanufacturing and service
businesses
•Resellers’ Market- wholesale
and retail operations
Re-Sellers’ Markets
• Purchase Goods for Resale
• Forecast Customers’ Needs
• Buy Necessary Products
• Plan far in advance of selling
season
• Know how much of each item to
purchase
Six Month Merchandise Plan
• Budge that estimates planned purchases
for six month period of time
• Allocates funds
• Determines WHAT is purchased
• Determines HOW MUCH is purchased
• Must analyze target market in planning
PRIOR to completing six month plan
Parts of Merchandise Plan
• Planned Sales – based on previous year sales data; sales
goal
• Retail Stock BOM (Beginning of Month Inventory) –
Used to ensure enough stock to accommodate sales
volume; Buyer checks previous year data for stock
needed in relation to sales
• Retail Reductions- reductions in price of merchandise;
shortages of merchandise including clerical errors,
pilfering, shoplifting
• Planned Purchases- retail dollar purchase needed to
achieve sales and inventory projection for each month
Determining Planned Sales
Use previous year data for a specific month
to help determine this figure then project or use
sales goal (% of increase or decrease) to calculate
EXAMPLE FROM FALCONS’ NEST
August 2013 Gross Sales: $3400
Sales Goal: 5% Increase
August 2014 Planned Sales = ($3400x.05 ) + $3400
$3570
Factors Impacting Planned
Sales
• Target Market Growth or Decline
• Economic Conditions
• Federal/State/Local Regulations
• Competition
The planned sales figure is critical in the
merchandising plan, as all other budget
figures are based off of this number!
Determining Retail Stock BOM
• Beginning of Month Inventory ( will be the same as End of
Month Inventory for the previous month)
Ensure there is enough stock to generate sales!
Check previous year data to find out how much stock was
needed in relation to previous year sales- express as a ratio
of
EXAMPLE FROM FALCONS’ NEST:
August 2013 Gross Sales = $3200
BOM Stock for Aug 2013 = $6400
BOM = 2:1 (6400/3200) = 2
Use this ratio an apply to 2014 planned sales
Aug 2014 Planned Sales $3750 X2= $7500 BOM Retail Stock
Determining Planned Reductions
• Reductions in merchandise; theft; pilfering; clerical
error- all impact amount of $ available for planned
purchases
• Calculate as percentage of Planned Sales
• Businesses typically determine from previous year
data and often set goals each year to reduce this
number
EXAMPLE FROM FALCONS’ NEST:
• August 2013 Planned Reductions was 10% of
Planned Sales which equals $35; Falcons’ Nest wants
to reduce planned reduction by 3% from last year:
$35 X.03 = $1.05
• August 2014 Planned Reduction = $35 - $1.05 =
$33.95
Merchandising Factors
Effective merchandising means having the right
product at the right place at the right time!
• Overall Budget (Merchandising Plan)
• Product Categories
• Product Assortment
• Pricing and Markdown Strategy
• Receiving and Ticketing
• Shortage Control
Comparing Merchandise
Strategies
Class Activity
Compare the merchandising strategies (Pricing;
Inventory; Product Assortment) of two stores who
offer the same products for sale.
Create a chart to compare and contrast
these strategies.
Use Word to complete the assignment and e-mail to
mbelote@lcps.org
50 Point Class Assignment