Section III: Merchandise Assortment Planning

1. Category Management Process

Category management is the process of organizing retail products into specific categories rather
than managing individual brands. This helps retailers streamline purchasing, pricing, and promotions
for an entire category, making it easier to manage stock and meet customer needs. Retailers group
similar products together based on customer preferences and market demand.

• Example: A supermarket classifies products into categories like dairy, snacks, beverages,
and household essentials. Instead of managing each brand of biscuits separately, they
manage all biscuit brands under the snack category. This allows them to compare sales,
negotiate better deals, and plan promotions effectively.

2. The Buying Organization

The buying organization refers to the structure within a retail company that handles product
selection, purchasing, and inventory management. Buyers analyze market trends, negotiate with
suppliers, and ensure the right mix of products is available. The size of a buying team depends on the
business scale—large retailers have separate teams for different product categories, while small
businesses may have one buyer handling all purchases.

• Example: In a fashion retail chain, a merchandise planner decides how many shirts, pants,
and jackets to stock based on past sales, customer preferences, and seasonal trends. If
summer is approaching, they will stock more lightweight cotton clothes instead of woolen
wear.

3. Assortment Planning Process

Assortment planning is a strategy that determines the number of product variations a store should
carry to meet customer demand while managing inventory efficiently. It involves selecting the right
mix of styles, colors, sizes, and price ranges to maximize sales and profitability. Retailers must
balance variety with inventory costs to avoid overstocking or stockouts.

• Example: A shoe store may decide to keep 10 styles of sneakers, 5 styles of formal shoes,
and 3 styles of boots based on what customers prefer. By analyzing past sales, they avoid
overstocking unpopular designs and ensure they meet customer needs.

4. Trade-off Between Variety, Assortment, and Product Availability

Retailers must balance the variety of products they offer, the depth of assortment within each
category, and the availability of those products. Too many options can confuse customers and
increase storage costs, while too few choices can drive customers away. This trade-off is crucial in
inventory management.

• Example: A mobile store cannot stock every smartphone model from every brand. Instead,
it focuses on popular brands like Apple, Samsung, and OnePlus, offering only a few models
from smaller brands to ensure variety without excessive stock.
5. Assortment Plan

An assortment plan defines the selection of products a retailer will carry, considering customer
preferences, store size, and sales trends. It includes decisions on how many variations of each
product type to offer. A well-planned assortment ensures high customer satisfaction while
minimizing inventory costs.

• Example: A clothing store may decide to stock 5 different colors of T-shirts in 3 sizes each
rather than keeping all 10 available colors, focusing on the most in-demand shades.

6. Product Mix Trends

Product mix trends include different merchandising strategies:

• Shotgun Merchandising: Offering a wide variety of products to attract different customer

o Example: A department store selling clothes, electronics, groceries, and home

• Rifle Merchandising: Focusing on a specific niche or product category.

o Example: A store that sells only gaming accessories like keyboards, consoles, and
headsets.

7. Purchasing Systems

Purchasing systems determine how a company procures goods from suppliers.

• Centralized Purchasing: A single team buys products for all store locations.

o Example: Big Bazaar buys products in bulk for all its stores across India.

• Decentralized Purchasing: Individual stores order their own inventory based on local
demand.

o Example: A local chain of bakeries where each outlet orders ingredients based on its
specific customer preferences.

8. Merchandise Purchasing

Merchandise purchasing refers to acquiring goods for resale based on demand forecasts, supplier
terms, and market trends. It involves deciding the right quantity, timing, and supplier to maintain
optimal stock levels.

• Example: A grocery store orders fresh milk and bread daily because they sell quickly, but it
only orders dry fruits once a week due to slower sales.
9. Merchandise Pricing

Retailers set product prices based on factors like production costs, competitor pricing, customer
demand, and perceived value.

• Example:

o Competitive Pricing: Amazon lowers prices to match Flipkart.

o Psychological Pricing: A T-shirt is priced at ₹499 instead of ₹500 to appear more

10. Retail Promotion Mix

The retail promotion mix includes advertising, discounts, in-store promotions, and loyalty
programs to attract and retain customers.

• Example:

o A clothing store announces a "Buy 1 Get 1 Free" sale to increase sales.

o Amazon runs a Diwali Sale with discounts on electronics.

Section IV: Store Management

Store management involves overseeing store operations, inventory, employees, and customer
service to ensure efficiency and profitability.

• Example: A store manager at Reliance Trends ensures that shelves are stocked, employees
assist customers, and billing runs smoothly.

2. Role of Store Managers

Store managers handle employee supervision, customer service, and sales performance. They
ensure store profitability and operational efficiency.

• Example: A McDonald's store manager ensures the kitchen runs smoothly, staff follows
hygiene rules, and customers receive quick service.

3. Retail Personnel Management Process

This involves hiring, training, and managing retail staff to improve customer service and sales.

• Example: A clothing store trains sales staff to suggest matching accessories to increase
sales.
4. Legal and Ethical Issues in Managing Store Personnel

Retailers must follow labor laws, ensure fair wages, and prevent discrimination.

• Example: A company cannot fire an employee unfairly or pay women less than men for the
same job.

5. Cost Controls

Cost control involves reducing expenses like rent, salaries, and inventory costs.

• Example: A store uses LED lighting to save electricity costs.

6. Reducing Inventory Shrinkage

Shrinkage refers to inventory losses due to theft, damage, or supplier fraud.

• Example: A supermarket installs cameras to prevent employee theft.

7. Detecting and Preventing Shoplifting

Retailers use security measures to prevent theft.

• Example: Stores like Zara use security tags on clothes to prevent shoplifting.

8. Store Layout, Design, and Visual Merchandising

Store layout influences customer buying behavior.

• Example:

o Grocery stores place chocolates near the billing counter for impulse buying.

o Apple stores use bright lighting and open spaces to highlight products.

9. Customer Service

Providing good customer service ensures customer satisfaction and loyalty.

• Example: Amazon's easy return policy encourages more people to shop online.

10. Retail Selling

Sales techniques like upselling and cross-selling increase revenue.

• Example: A mobile shop suggests a screen guard and cover when a customer buys a phone.

11. Contemporary Issues in Retailing

Retailers face challenges like e-commerce competition and sustainability.

• Example: Many physical stores lose customers to online platforms like Amazon.

12. Ethical and Legal Issues in Retailing

Retailers must follow fair pricing, labor laws, and truthful advertising.

• Example: A store cannot falsely advertise a "50% discount" if they increased the price first.
13. Careers in Retailing

Retail careers include store managers, merchandisers, and retail analysts.

• Example: Someone interested in fashion can work as a merchandiser for H&M.