MERCHANDISE

MANAGEMENT
“TO HAVE THE RIGHT GOODS, AT THE RIGHT TIME, IN THE RIGHT
QUANTITIES, AND AT THE RIGHT PLACE”
(DONELLAN, 2018)
 MERCHANDISE MANAGEMENT
 One of the most important and central functions of any
successful retail business. Retailers that are leaders in their field
often achieve that because they are perceived by their
c ustomers as having a better merchandise offering than their
c ompetitors do.
 The antic ipation of c ustomer requirements is key to the ultimate
success of a retailer, no matter how big or small they may be.
 MERCHANDISE MANAGEMENT
• The term merchandise management refers to the process that is
involved in planning and controlling the budget allocated to a
specific division in such a way that the correct choice and amount
of merc handise is purc hased, so that the needs of the target
market are met and the store makes a profit.

• It involves
the planning, development and presentation of a
merc handise mix that matc hes the target markets requirements.

• The buyer needs to be able to sense what customers will want, but
also have the ability to analyse sales data and make adjustments
where necessary to price and stock levels.
 LEVELS OF MERCHANDISE
MANAGEMENT
The management of merchandise can be observed at various levels
within a retail business:

1. Strategic – where long-term decisions are made, including how

the merchandise mix contributes towards the positioning of the
store (incorporated in the strategy).
2. Operational – where strategy becomes part of the processes and
operations that are operationalized by merchandise
management teams.
3. Merchandise management processes – where the customer
comes into contact with the merchandise either in the physical
or online stores.
 ANALYSIS

 Analysing the target market so that customers are identified

and understood. Only by meeting the needs of the customers
can the right merchandise be purchased and sold.

 The analysis of historical trends is also important. By studying

information on what has happened in the past, it helps to plan
for the future. This is all crucial as sales objectives have to be
met.

 Buyers need to be able to use their allocated budget in

the most effic ient and profitable manner.
 PLANNING
 Buyers almost always purchase merchandise well in
advance of the season that it is intended for.
 Because of this they have to be able to plan ahead.
 A number of factors have to be taken into account:
 Trends
 Target market’s propensity to purc hase
 Economic factors such as interest and exchange rates and
inflation
 ACQUISITION, HANDLING AND
CONTROL
 Acquisition – Retailers have to purchase the merchandise that
they are going to sell to their target market. This often involves
a lot of research, travel and negotiation with potential
vendors.
 Handling – Organising the logistics of getting merchandise to
where it is required, in the right condition.
 Control – Answering for how well merchandise budget is
invested and whether there is an adequate return on that
investment.
 Merchandise Buyer Planner Assistant Buyer Allocation
Manager Analyst
• Responsible • Expected to • Works hand • Assists the • Analyzes
for reach goals in hand with buyer. sales trends
merchandise related to the buyer. • Provides • Makes
choices. sales and • Responsible operational distribution
• O versees profitability. for planning support. decisions
strategy. • Responsible and control • Generates • Liaises with
• Manages for of the reports. distribution
buyers purchasing product • Replenishes centres and
• Ensures that merchandise. range. merchandise. buyers
all strategies • Manages the • Requires
meet financial budget analytical and
objectives allocated to strategic
him/her decision
making skills
 MERCHANDISE PHILOSOPHY
 The merchandise team is guided by the retailers merchandise
philosophy when deciding what products to stock.
 Describes the selected target market and their needs and
desires.
 Outlines how they hope to satisfy the target market in terms of
positioning, image, pricing and any other pertinent factors.
 RETAIL POSITIONING
• Successful positioning helps retailers to communicate the
nature of their offering with prospective customers and place
them in contrast to their competitors.
• Positioning has to do with perception – how we ‘see’ things.
• Positioning can include (although not limited to); price,
merchandise assortment; conveience and service quality.
• The assumption is that customers will be more loyal to
retailers that they ‘perceive’ as filling their needs in the best
possible way.
MERCHANDISE PHILOSOPHY

Up to date with the latest fashion trends. Target

customers are young women who want high fashion at a
low price. Cut out the middle man to reduce costs.

Aims for the 14-25 year age group. Offers up to date and
fashionable clothing that is young and fun. Everything
offered at everyday low prices.

Underpinned by quality at affordable prices.Strive to meet

customers needs and form lifelong relationships.
 PLANNING OF PRODUCT RANGE

 Variety - refers to the number of different type of product lines

offered to the c ustomer.

 A product line is a group of products that have similar

func tions, c an be substituted for eac h other and/or
complement each other.
 Variety is expressed in terms of breadth.
 PLANNING OF PRODUCT RANGE
 Assortment – This term refers to the number of choices
offered within a specific type of product. Expressed in terms
of depth. These choices could vary in terms of price points,
colours, sizes or brands.
 Assortment is expressed in terms of depth.
 A shallow assortment would mean that the store has a
limited number of items to c hoose from whereas a deep
assortment means that there would be a large number of
items to select from.
VARIETY AND ASSORTMENT

Breadth / Width

D ishwashing Clothes
Bath Soaps
Detergents washing
D Finish dishwashing Breeze N atural Bio Classic Triple
Therapy Bath Soap Action Washing
e powder 1 kg
Almond Oil 125 GR Powder 1.5 KG
p
t D ove Regular Cream
Sunlight dishwashing Skip Concentrated
h liquid 750 ml
Bar W hite Bath Soap
Liquid 750 ml
100gr

A jax A xion G old Johnson's Baby O mo Automatic

Lemon Dishwashing Bedtime Bath Soap Flexible Washing
Liquid 1.5 L 300ml Powder 2 KG
 STOCK KEEPING UNIT

 Also known as a SKU, a stock- keeping unit is a single item of

merc handise whic h c arries its own bar-c ode and is described
down to the last detail.
 For example Mr Pric e MAXED leggings, full-length, lycra, navy-
blue, size M.
 C an be described in terms of c olour, size, brand, flavour and any
other factors whic h might make a specific product different to
another within its range.
 TYPES OF MERCHANDISE

• When buying merc handise, retailers must c arefully

consider other factors in terms of merchandise
management.
• They must study how customers think about products and
how they will shop for them.
• This will assist retailers to decide what they should be
stocking, and how much they should stock.