INSTITUTE - USB

DEPARTMENT - BBA
Bachelor of Business Administration
Retail Management
21BAT-374

Merchandising DISCOVER . LEARN .

EMPOWER 1
 Introduction to Retail
Management
CO1 To describe the concepts, functions, types and importance of Retail
Industry in India.

CO2 To interpret and analyze the requirements of Store Design and Visual
Merchandising in Retail Stores.

CO3 To classify the factors influencing the Retail consumer, consumer behavior
and decision making process

CO4 To evaluate Merchandise Management through retail operation and pricing

http://p2plogistics.co.uk/

CO5 To formulate Customer Relationship strategies by Personalization, Special

Treatment Benefits, Communication Benefits, Rewards and Loyalty
Programs

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Merchandis
e
Manageme
nt
Retail customer is
customer who is
going to buy in
small quantity
and the product
usage would be
by him or by his
family or friends. https://www.google.com/search?q=merchandise+management
&source=lnms&tbm=isch&sa=X&ved=2ahUKEwj004mfvZHmAhXl
4zgGHcrrDFEQ_AUoAXoECBAQAw&biw=1536&bih=706#imgrc=T
YIOBreAvr5LuM:
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Meaning or concept of
Merchandising
Merchandising
• Merchandising is the promotion of goods and/or services that are
available for retail sales.
• Merchandising includes the determination of quantities, setting
prices for goods and services, creating display designs, developing
marketing strategies, and establishing discounts or coupons. More
broadly, merchandising may refer to retail sales itself, that is the
provision of goods to end-user consumers.

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Benefits of Merchandising

Effective merchandising yields:

• Higher sales
• Faster inventory turnover
• Buyers who spend more time in the store
• More satisfied customers
• Increased customer loyalty
Stores that present products that customers are frequently looking for
in a pleasing display, or tucked away neatly, will find those same
customers returning for more on a regular basis.
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The Changing Face of Merchandising

• All around the world, but most notably in the United States, the
reality of merchandising is getting an update. The roles and rules of
merchandising are experiencing an evolution. Chief merchants,
formerly concerned mainly with selection and presentation of
products, now have broader accountability and a heavier hand in
customer experience, as well as the development of design and talent
related to display and marketing design.
• Because consumer savvy is broadening and technology is playing such
a massive role in merchandising, companies need to stay ahead of
consumers’ expectations. Innovation and experimentation have a
central role in retailers' merchandising strategies.
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 Merchandise Management
• Merchandise management is the process through which each retailer decides what items to carry,
how much to have on hand to meet the needs of customers, where they should be displayed in the
store to maximize sales, and how they should be priced to sell the best and maximize profits.
• The goal of every retailer isn't just to make sure that what they carry meets the needs of their
customers. Retailers also need to have the ability to organize and manage their inventory.
Retailers need to be able to track their inventories from the time they're ordered from a
manufacturer to the time a consumer buys an item. They must ensure that all merchandise is
handled and stored correctly, that it's organized in the store so that consumers can easily find
what they want, and that it's easy to determine when it is time to re-order.

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 Factors affecting Merchandizing
Retail merchandising consists of the planning, buying and selling of goods and products that
retailers will then sell to their customers. It's a critical part of successfully managing both in-store
and eCommerce operations, yet it's also one of the most challenging and least understood
aspects. Each part of the merchandising equation – planning, buying and selling – needs to be
carefully executed, or the retailer may end up losing profit margins and not utilizing product
properly.
• The size of the retail organization
• The type of store
• The merchandise to be carried and
• The organization structure

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Functions of Merchandising
Manager
• Lead the merchandising team.
• Ensure the merchandising process is smooth and timely.
• Coordinate and communicate with suppliers.
• Participate in budgeting, setting and meeting sales goals.
• Train the employees in the team

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Merchandise Planning
• It's every retail executive's dreaded scenario. Your marketing or promotion has worked. You have
drawn in your target customer either to your store or e-commerce channel with the right item, at
hopefully the right price, and they are ready to buy. Sounds great, right? You're about to make a
sale as soon as the customer clicks to add the item to their cart or physically select the item in the
store. But the story unravels when the dreaded "out of stock" message appears or the customer is
greeted by an empty shelf in the store.
• Establish a Cross-Channel Merchandise Planning Process
• Establish a Cross-Channel Merchandise Planning Organization.
• Define Exit Strategies for All Merchandise.
• Assign Logical Store Clusters.
• Acquire the Proper Tools

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Analyzing Merchandize Planning
• Retailer must decide a procedure to analyze the merchandise performance with regard to addition
or deletion of vendors and departments as an ongoing process. These decisions become necessary
because in case of fashion merchandise, consumers’ preferences, tastes, liking and disliking
change rapidly.
• Therefore, it becomes necessary for a merchandise buyer to add/delete merchandise, search for
new vendors or add/delete/club some categories. Further, poor performance of merchandise, in
terms of quality and after use dissatisfaction, force a merchandise buyer to change the vendor in
question to avoid further complaints and reduced profits.
• Three methods are commonly employed to analyze the performance of merchandise.
1. ABC Analysis
2. Sell Through Analysis
3. Multi-Attribute Method

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ABC Analysis
• The ABC analysis sometimes known as Always Better Control is an inventory classification process
where total inventory is classified into three categories:
A – Outstandingly important;
B – Of average importance and
C – Relatively unimportant as a basis for a control scheme.
• Each firm whether small or big has to maintain several types of inventories. Some are small in size
but are costly ones, some large in size but have less cost. It is never advisable to keep the same
degree of control on all the items. The firm should pay maximum attention to those items which are
costly and less attention to those which are cheaper. Therefore, firm should be selective in its
approach to control investment in various types of inventories. This logical approach is known as
ABC analysis and tends to measure the importance of each item of inventories in terms of its value.
• Strategy to be followed:
• In case of ‘A’ items keen attention is paid to work out the requirement, safety stocks, order
scheduling, and prompt receipt and inspection. ‘A’ and “B’ items should be frequently reviewed and
close watch is kept on their consumption pattern, stock balance and refill orders. For inexpensive
‘C’ items control is comparatively stress free.

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Sell Through Analysis

• This method describes the comparison between the actual and forecasted sales volume to
determine whether early markdowns should be applied or fresh order for additional merchandise
should be given to satisfy current demand. There is no universal rule to indicate when a markdown
should be introduced or additional stock of merchandise be ordered. It simply depends on the
experience with the merchandise, a buyer has in the past year.
• The variation between actual and forecasted sales guides the retailer about possible changes with
regard to addition/deletion of SKUs, vendors and departments. Further, the significance of sell
through analysis is employed in evaluating the performance of fashion merchandise and new
arrivals. After carefully analyzing the performance of the various items in ladies jeans category, retailer can plan for
whether to buy fresh stock of merchandise (in case of good customers’ response) or go for markdowns (in case the items
have no good response from customers).

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Multi-Attribute Method

• This method is used to analyze the- various alternatives available with regard to vendors and
select one that best satisfies store needs. This method is based on the concept that customers
look a retailer or a product as a collection of features and attributes.
• The model is framed to forecast customers’ evaluation/judgement of a product or retailer based
on:
(i) Products performance on customers’ parameter, and
(ii) The significance of those parameters to the customer.
• Retailers/buyers use this method to evaluate the performance of merchandise and vendors.

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ASSESSMENT PATTERN
Theory

Components Continuous Internal Assessment (CAE) Semester End Examination (SEE)

Marks 40 60

Total Marks 100

Sr. No. Type of Assessment Weightage of actual conduct

1 Assignment 10 per assignment

2 Exam 20 per MST

3 Quiz/Test 4 each quiz

4 Surprise Test 12 each test

5 Attendance and class performance 2

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APPLICATIONS
• Concept of Retail Management

• Concept and importance of retail layouts and retail design

• Importance and scope of retailing

• Understanding of various formats of retail management

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 References
1. Levy and Weitz, Retailing Management, 6th Edition Tata McGraw Hill
2. Bajaj, Tuli, Srivastava “Retail Management” 2nd Edition Oxford University Press
3. Gibson “Retail Management “4th Edition Jaico Publication House
4. Dunne Patrick M, Lusch Robert F, Griffith David A, Retailing, (5th Ed.), Thomson
South Western.
5. https://www.creativedisplaysnow.com/types-retail-store-layouts/#what-is-retail-
layout
6.https://www.indeed.com/career-advice/finding-a-job/what-is-visual-
merchandising

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THANK YOU