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This chapter provides a description of the merchandise budget plan, and is an extension of what has been concluded in the chapter merchandise assortment planning. Sales forecasting together with inventory management helps in developing a merchandise budget plan for the fashion merchandise category. Sales forecasts for fashion merchandise are given on a monthly basis according to the previous sales patterns. The merchandise planner should purchase more merchandise in the months in which the sales forecasts are higher than the average.
The purchasing systems used to purchase staple merchandise are quite different from the purchasing systems of fashion merchandise. The purchasing systems of staple merchandise help determine the amount of stock to be purchased for each specific stock-keeping unit.
While assigning the merchandise to the stores, merchandise planners should chiefly consider the sales potential of the stores. They should also think of the impression of the stores that customers would take home if faced with inferior assortments. After assigning the merchandise to the stores, the retailer must analyze the performance of the merchandise through various aspects like performance of vendors, classifications and SKUs. Three procedures that we discussed to evaluate the merchandise performance are: ABC analysis, Sell through analysis and Multi-attribute method. ABC analysis is used to rank merchandise categories and establish an inventory management philosophy. Sell through analysis helps analyze the performance of various SKUs. Multi-attribute method helps evaluate the performance of vendors.