Chapter 9 Merchandise Buying and Handling

							          Chapter 9
Merchandise Buying and Handling




          Eric Sanders
           Ryan Snell
       Merchandise Management
•   Analysis: Correctly identify customers needs and
    wants
•   Planning: Merchandise must be purchased 6-12
    months in advance
•   Acquisition: Merchandise must be bought from
    distributors or manufacturers
•   Handling: Assure the merchandise is where it
    needs to be, and in proper shape to be sold
•   Control: Over large inventory investments to
    ensure adequate returns on merchandise
Planning Dollar Inventory Investment

•   Basic Stock Method: Basic stock level plus
    variable amount based on expected sales
    for period
•   Percentage Variation Method: Assumes the
    percentage variation in monthly stock from
    average stock should be half as great as the
    percentage variation in monthly sales from
    average sales
Planning Dollar Inventory Investment
                cont…
•   Weeks Supply Method: Inventory level
    should be set equal to a predetermined
    number of weeks supply, which corresponds
    to desired rate of stock turnover
•   Stock to Sales Method: Inventory planned
    for the beginning of the month is a ratio of
    stock to sales obtained from a trade
    association or retailers historical records
            Inventory Planning
       Choosing the right merchandise mix
•   Variety: Number of lines (menswear,
    women’s wear, sporting goods, etc…)
•   Breadth: Number of brands found in a
    particular merchandise line
•   Depth: Number of stock-keeping units
    within each brand of the merchandise line
           Constraining Factors
• Dollar merchandise constraints: only so much
  money to spend on inventory
• Space constraints: important to fit everything in
  store while maintaining a nice shopping
  environment
• Turnover Constraints: Must keep merchandise in
  stock, but not have merchandise left over
• Market Constraint: Must fit into the type of retailer
  you wish to be: specialty store vs. variety store
 JCPenney Makes Shifts in Structure.
► Firststep was to bring in outside help…Vanessa
  Castagna
► She implemented change by centralizing all buying
  functions… this allows store management to focus
  on delivering a excellent shopping experience.
► Centralized buying process isn’t all that new, but if
  a retailer wants to stay competitive it must adapt
  or they will be gone.
► The new buying process is but one piece of their
  overall strategy…example women’s magazines.
         Implementing Change
► New   home office merchandise action
  teams…responsible for assortment, planning, &
  selling.
► Focus on reducing inventory levels, and will be
  supported by new software based on sales history
  data.
► The new game of retailing involves reaching the
  customer through nontraditional ways… Internet,
  catalogs and other marketing methods.
► FairMarket Inc. is an Auction network that features
  merchandise overstock from JCPenney’s.
              Key Benefits
► Reduces inventory.
► Higher turnover…more adaptable to trends.
► Better customer service for better shopping
  experience.
► Fashionable merchandise.
Thank You
Any Questions?