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Markdown Lowdown

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					           Markdown Lowdown



Erin Hulce and Miklos Eros
                   Retailer’s Finances

 The Merchandise Budget


 Retail Accounting Statements


 Inventory Valuation
   Managing a Retailer’s Finances



 Merchandising: Planning and control of
 the buying and selling of goods and
 services to help the retailer realize its
 objectives
                   Merchandise Budget

1. Anticipated Sales
2. Stock on hand
3. Reductions
4. Additional Purchases
5. Gross Margin
          Planned Retail Reductions

 Not all merchandise is sold at actual
  markup price
 Allowances for reductions should be
  made
 Major item in budget subject to
  constant change
 Sale-priced items increased from 8% of
  U.S. retail sales in 1971 to 78% of sales
  today
   “Retailers who recognize that
reductions are part of the cost of
         doing business and plan
                appropriately will
          achieve higher profits”
                                   ProfitLogic

 Helps retailers gauge when, where, and how
  to markdown prices
 Identify products and determine best way to
  price to generate highest gross margin dollars
 Used during entire lifecycle of merchandise
 Retailers able to improve inventory and able
  to mark fewer items down
 Top priority is getting highest return on
  inventory investments
      Some of ProfitLogic’s Customers

 Gap, Inc.               Nordstrom
 Ann Taylor              Marshall Fields
 American Eagle          Sears
 The Children’s Place
                          Shopko Stores
 Bloomingdale’s
                          Toys R Us
 Charming Shoppes
 JCPenny
 Marshall Fields
 Target
                                  The GAP

 International specialty retailer
 Clothing, accessories, personal care
  items
 Stores in U.S., United Kingdom,
  Canada, France, Japan, and Germany
 1,300 U.S. stores
 Fiscal 2002 sales $14.5 billion
 www.gap.com
                                 The Gap

All stores received same sizes and styles
 without much regard to local needs
Some sizes were always sold out and
 other sizes were always having to be
 marked down
                                    The Gap

Gap began using ProfitLogic after seeing
 benefits Old Navy gained
     o Financial benefits
     o Quick return on investment
     o Seem-less integration

Using system to send unique
 assortments of sizes to particular stores
Determine optimum timing and amount
 for markdowns
“We are not deploying technology for
 technology’s sake. Everything we do
 has the customer in mind and we are
 constantly looking for better ways to
 improve the customer shopping
 experience.”

                   - Calvin Hollinger
                         VP Information Technology
                         Gap, Inc.
                                        References

Dunne, P.M. & Lusch, R.F. (2005). Retailing (5th ed.).
  Mason, OH: South-Western.
Schlosser, J. (2004, January 12). Markdown Lowdown,
  149, 40.
DMReview.com Web Editorial Staff. (2003, June 20).
  Industry Implementations. Retrieved April 27, 2005
  from:
  www.dmreview.com/article_sub.cfm?articleId=6925
www.profitlogic.com
www.gap.com

				
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posted:9/26/2011
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