Apparel Store Operation Project

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                   Victoria Seitz, California State University San Bernardino
                   Nabil Razzouk, California State University San Bernardino


    The paper reports on an experiential approach to teaching retailing and merchandising
    through the operation of a student run store. The experiential approach allowed
    students to adopt principles and concepts taught in lecture to a real world setting. The
    experiential approach allows students to prepare for the real world while providing an
    excellent environment for outcomes assessment of learning.


     Much discussion in Schools and Colleges of Business has focused on accountability and, in
particular, outcome assessment. Students want to learn the skills that prepare them for a job after
graduation. The growing interest in these issues has heightened the interest in experiential
learning as a predominant force in establishing accountability and providing a positive
environment for assessing students outcomes. The experiential approach has been shown to
increase student learning as well as excitement about course material by getting the learner more
involved (Wedell and Wynd, 1994). Hence, the purpose of this paper is to report on an
experiential approach used in teaching retailing and merchandising classes that allowed students
to gain real world experience while providing an environment for outcomes assessment.
     In retailing and merchandising related courses, experiential learning techniques have been
limited or nonexistent. In an introductory merchandising course Seitz (1993) developed and
implemented a Shadow Day Program, where students were exposed to various aspects of retail
merchandising in action through the cooperation of selected national retail companies.
Otherwise, in most retail courses, the primary pedagological course of action include lecture,
field trips and perhaps some experience with computer simulation programs. Given that many
business students, particularly marketing majors, start their careers in retail, it is important for
them to know what the real world of retailing and merchandising is all about. Through the
Retailing and Merchandising Laboratory, “The Store,” students gained hands on experience in all
aspects of the field that allowed them the opportunity to determine if it was a possible career path
for them.


     . The syllabus outlined the necessary texts for the course, one, which presented retail and
merchandising concepts, and the other a workbook for handling merchandising accounting. The
course objectives were as follows: 1) to gain working knowledge of the terminology pertinent to
the field of merchandising; 2) to gain a working knowledge of the merchandising planning
process, merchandise budgeting, pricing, unit planning and inventory control systems; 3) to
understanding the role of the buyer and their buying activities; and 4) to apply this knowledge in
the operation and profitability of a retail store.

     The course was set up to incorporate both lecture and homework assignments as well as
operation of “The Store.” During the first class meeting students were given an overview of the
class as well as the Store Operation Project. During the second class meeting, store management
was selected and departments formed. Departments included Merchandising, Accounting,
Visual Merchandising, Human Resources, Receiving, Shrinkage, and Advertising and
Promotions. The format for divisions and departments, as well as profit and shrinkage goals
were aligned with a national retail chain.
     The Store Manager was responsible for the Merchandising Division, which included
merchandising, advertising and promotions, and visual merchandising. The Operations Manager
was responsible for the Sales Support Division that included receiving, human resources,
accounting and shrinkage. Students in each department selected a manager for their department
and became aware of their responsibilities. The Store Manager, in addition to overseeing these
departments, was also responsible for working with the Store Operations Manager and their
division, as well as overseeing and directing the final project report. Evaluation of the students’
efforts was conducted through homework assignments, the successful operation of the laboratory
and departmental peer and manager evaluations


     The objective of the Retail Store Operation Project was to apply the concepts in
merchandising to the operation and profitability of a store. The profitability of the store was
primarily measured by gross margin, gross profit (loss) and shrinkage attained at the conclusion
of the laboratory’s operation for that quarter. Gross margin, gross profit and shrinkage goals
were determined based on guidelines set by national retail chains. The goals were as follows:
gross margin 35 percent or better; gross profit of 10 percent or better, and an inventory shrinkage
of two percent or less.
     The first quarter that the laboratory was in operation, students were responsible for
developing a mission statement as well as policies for “The Store.” The Human Resources
department was responsible for coming up with an employee manual, setting the hours of
operation based on students’ availability and training.
        Each Friday, the Accounting Department took a physical inventory to compare with that
week’s daily sales logs to determine if there were any problems that could be rectified
immediately. Furthermore, the Accounting Department compared the Z tape to the daily sales
logs to make sure that every sale was accounted for.
     The Receiving and Shrinkage departments worked together to minimize internal and
external loss. When items were received they were checked in by the Receiving department and
shared with Shrinkage. If items were not in the box as noted by the invoice the vendor was
contacted. This procedure was also used when the goods came in damaged. Shrinkage, also
concerned with external loss, set up procedures for when customers came into the store.
     The Merchandising Department was responsible for procuring merchandise for the
laboratory. The primary categories included soft lines such as clothing for men and women,
refreshments such as colas, water, and packaged snacks, and school supplies. For large ticket
items such as clothing and gifts, merchandisers purchased on a consignment basis and the items
sold were paid for at the end of the quarter. For merchandise that came from other sources
outside the University bookstore, merchandisers were responsible for marking up the
merchandise to secure a good gross margin but at a price that the target market expected to pay.
Throughout the quarter, merchandisers would modify the price based on sales.
        The Advertising and Promotions department was responsible for advertising the
laboratory throughout the campus and sent out press releases to seek coverage from the local
university and city newspapers. In addition to advertising, this department planned special
events such as booksignings, raffles, contests, and designer appearances. The objective of the
promotions was to increase store traffic and sales.
     The Visual-merchandising department was responsible for setting up the ambiance of the
store and presenting the merchandise in the best possible manner. Displays were changed
weekly in the store as well as in remote areas such as the Student Union. It was determined that
merchandise should be displayed in the laboratory due to problems with external theft at remote
display sites.
     During the final weeks of the quarter, the Merchandising and Accounting departments
worked together to set up the closing physical inventory so that inventory valuation could be
conducted. After the last day of being opened, all student employees participated in taking
physical inventory. The numbers were calculated and compared to inventory received and sales
to determine shrinkage.


     Homework Assignments: In addition to running the retailing and merchandising laboratory
and in-class lectures, students were assigned homework problems to assist them in compiling
information about the operation of the store. The six homework assignments were mathematical
and accounting in nature and worth 75 points each for a total of 450 points. The homework was
done on an individual basis so students could learn first hand how to solve retail and
merchandising problems.
     Retail Store Operation Report: This report involved the whole class and each department
of the retailing and merchandising laboratory. The report provided information on the store’s
operation for the quarter and included average markups, sales per square foot, turnover, vendors
carried, markup, markdowns, advertising and promotions, inventory valuation and shrinkage, the
receiving report, gross profit, visual merchandising, daily, weekly, and total sales, income
statement, cash flow report as well as recommendations for the future. The report was the
primary evaluation vehicle for the class and accounted for 1000 points or approximately 2/3rds
of the grade. The weight of the points revolved around shrinkage, gross margin and gross profit
figures. In addition, completion of the report and all requested materials were part of the
evaluation. In addition, students completed confidential peer evaluations for members in their
departments and their division manager. This evaluation influence individual grade assignments
for the report. The Operations Manager and Store Manager were responsible for completing
peer evaluations for each student employee that was also used in determining individuals’


    At the end of each quarter, surveys were completed by students, and at the completion of
one year they were compiled and analyzed. The total number of students that responded equaled
42. The majority (85.8%) of respondents were between the ages of 22 to 34 and were primarily
female (52.4%) and had prior retail experience (52.4%). Regarding those that had retail
experience, most had over one year (21.4%) and approximately 17 percent had five or more
year’s experience.
     Regarding the coupling of the Retailing and Merchandising Laboratory and lectures, the
majority (92.9%) of students stated that the lab strengthened the in-class lectures and that
lectures strengthened working in the lab (81%). Concepts learned in lecture were primarily
markup and pricing (23.8%), paperwork and inventory valuation (9.5%) and operating a store
(14.3%). The most significant concepts learned practicing retailing and merchandising in the
laboratory were teamwork (16.7%), accounting (19%), visual merchandising and customer
service (14.3%) and how to operate a store (19%). Approximately 98 percent of the students
noted that the merchandising laboratory was a benefit primarily because of the opportunity for
practical training (81%).
    What students liked most about the Retailing and Merchandising Laboratory was the
opportunity for practical training (54.8%) and the learning environment (28.6%). What they
enjoyed least from the experience were the homework assignments and completion of the Retail
Store Operation Report (11.9%) as well as the amount of time required to make sure the lab ran
smoothly (9.5%). However, as a side-note for this question, approximately 17 percent of the
students noted that they enjoyed everything about the class. Some of the recommendations
suggested by students included more instruction (9.5%), and rotating students to different
departments throughout the quarter so that they could learn all aspects of running a store (9.5%).
     In addition to the open-ended questions in the survey a modified Likert scale, ranging from
“a lot better” to “a lot worse” was incorporated to measure the benefit of the experiential
approach compared to traditionally taught courses. Regarding the amount of learning,
approximately 64 percent noted that learning through the experiential approach was a lot better
or somewhat better. Regarding excitement for the material approximately 62 percent noted that
through the experiential approach excitement for the course was a lot better or somewhat better.
Regarding preparation for the real world the experiential approach proved to be a better
pedagogy among 78 percent of the students than traditionally taught courses. As well,
instruction was noted as better through the experiential approach by approximately 71 percent of
the respondents. Finally, interest in the subject matter was better than traditionally taught
courses among 69 percent of the respondents.


Seitz, Victoria A. (1993), “Shadow Days: An Experiential Approach for Introductory Classes.”
    Marketing Education Review, 3 (1, spring), 37-43.
Wedell, Allen J. and William A. Wynd (1994), “The Personal Selling Course: An Experiential
    Approach.” Relationship Marketing in a Time of Change: Proceedings of the 1994
    Conference of the Western Marketing Educators’ Association (Gary L. Karns and Debra A.
    Haley, Eds.), 80-83.

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