1. Retail Merchandising 1

2. Objectives
 To demonstrate the importance of a sound merchandising
philosophy
 To outline the considerations in devising merchandise
plans: forecasts, innovativeness, assortment, brands,
timing, and allocation
 To discuss category management
• To study various buying organization formats and the
processes they use

3. Retail Merchandising
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Definition & the Concept of Retail
Merchandising
Role & Responsibilities of a Merchandiser
Fashion Merchandising
Merchandise Characteristics
Merchandise Management- Merchandise Mix &
Merchandise Budget
Basics of Merchandise Accounting

4. RM - DEFINITION
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Retail selling effort that is the principal task of in-store sales personnel through the
use of promotions designed by a manufacturer, such as unique displays, giveaways,
or discount and premium offers. In this case, merchandising is the act of managing
and arranging the merchandise on display in a store so as to promote its sale.

5. Role & Responsibility of Merchandiser
 Planning
 Directing
 Co-ordinating
 Controlling

6. Merchandising
Versus Store
Management Career
Tracks

7. Functions of Merchandisers at Shopper’s stop
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Inventory-turn Management
Achieving Sales & Margins
Plans Merchandise
Availability Management, as per range plan
Merchandising strategy & planning
Processing of purchase orders
Analysis of Data & Sales Budgeting
Profitability Targets & Expense Control
Vendor/Supplier relations for both, in-house products as well as for
brands.

8. ARRANGING -MERCHANDISE

10. Merchandising arrangement
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MERCHANDISING ARR
ANGMENT………
Why making effective use of your space is so important.
How to position your departments and products.
How to improve store lighting.
The importance of atmosphere and cleanliness in your store.
How to create great displays and signage.
W
HAT W W
E ILL ACHIEVE AS A BUSINESS……….
The consistently best Display standards against Competition in India
A great environment that will attract & satisfy Customers
Showcase to best advantage our product offer
Dramatically enhance Customer Service

11. Managing the Merchandise
 Developing a sales forecast
 Determining the merchandise requirements
 Merchandise control
 Assortment planning

12. Developing Sales forecast
 Reviewing Past sales
 Analyzing the changes in Economic Conditions
 Analyzing the changes in the sales potential
 Analyzing the changes in the marketing strategies
of the retail organization and the competition
 Creating the sales forecast

13. Forecasts
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These are projections of expected retail sales for
given periods
 Components:
 Overall
company projections
 Product category projections
 Item-by-item projections
 Store-by-store projections (if a chain)

14. Determining the merchandise requirements
 Merchandise Mix
 Retail communication Mix

15. Basics of Merchandise Accounting

16. Merchandising Accounting
 Cash Flow
 The Balance sheet
 Financial Ratios
 Income statements
 Gross- Margin-Return on Investment

17. Cash Flow
 Cash In
 Cash Out
 Negative Cash flow = Cash In < Cash Out
 Positive Cash flow = Cash out > Cash In

18. Cash Flow Curve

19. The Balance Sheet
 The Balance Sheet is a statement of an
organization's Assets, Liabilities and Owners’
Equity at a Particular Point in time.
Assets
Liabilities
Owner's Equity

20. Assets
 Assets – Owned by an organization
a. Short term (or) Current Assets
b. Long term

21. Liability
 Liability: Debts owed by an organization
Payment on Short term
Ex: Payment to supplier
Payment on Long term
Ex: Mortgage on Land &
Building
Investment on Extension,
Expansion &
renovation
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22. Owner’s Equity
 Owner’s Equity : Difference between asset and
Liability.
Relationship:
Assets = Liabilities + Owner’s Equity
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23. Income statement

24. Income statement
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Profit performance for a specific period of time
Income statement is otherwise called Statement of earnings or Profit
& loss statement
Income statement:
Revenue – Expenses = Net Income
Profit = Expenses < Revenue = positive Net Income
Loss = Expenses > Revenue = Negative Net Income
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25. Income statement
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Income statement can be computed for an entire organization
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contd…
Individual Store
A Group of Store
Department
Profit and loss is based on the revenue & expenses directly associated
with each unit of business.

26. Income statement
contd…
 Components : 5 major components
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Revenue
Cost of goods sold
Gross margin
Expenses
Net Profit
 Relationship among the components
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Net revenue
–
Cost of goods sold - Expenses
Gross margin
Net Profit

27. Income statement
contd…
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Relationship among the components
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Net revenue
–
Cost of goods sold - Expenses
Gross margin
Net Profit
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Net revenue : composed of sales, Leasing or renting property or
interest on accounts
 Net sales = Gross sales – Customer return
 Gross sales are used to determine the customer return rates
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Customer return rate = Customer returns x100
Gross sales

28. Income statement
contd…
 High customer return rate is often indicates of issue related
a. Customer service
b. Quality
c. Fit of merchandise
 High sales attest to the ability of an organization buyer to
select assortments of goods that are appealing to the store’s
target customers.

29. Income statement
contd…
 Cost of goods sold (or) Cost of Merchandise sold (or)
cost of sales
 Cost of goods sold = Billed cost of Merchandise +
work room costs +shipping cost – cash Discount Returns to vendors

30. Income statement
contd…
 Shipping cost : Delivery cost for transporting goods
from supplier
 Workroom costs: activities that prepare
merchandise for sale ( steaming & pressing apparel)
 Return to vendors : defective or slow selling goods
returned to suppliers for credit
 Cash discounts : Invoice concessions from suppliers
for prompt payment

31. Income statement
contd…
 Expenses: Payroll, rent, Utilities, advertising and
interest on debt.
 Direct Expense: attributable to a specific unit
( store rent )
 Indirect Expense: is not attributable to a specific
unit. ( news paper advertisement )

32. Income statement
contd…
 Gross margin : Difference between sales and cost of goods sold.
 Net Income : Gross Margin – Expenses
 Income can be increased by Increasing sales
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Increasing Gross Margin
Decreasing cost of goods sold
Any combination of above
 Component Percentage :
Cost of goods sold = cost of goods X 100
Net sales
Gross Margin = Gross Margin X 100
Net Sales
Expenses = Expenses X 100
Net Sales

33. GMROI
Particulars
Category A
Category B
Sales
300000
250000
Cost of Goods Sold
180000
100000
Gross Margin
120000
150000
Gross Margin %
40%
60%

34. GMROI
 Gross Margin Return on Investment
 Integrates
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two performance
Gross Margin
Turn Over
 To create a single measure of performance
GMROI = Gross Margin X Net sales
Net Sales
Average Inventory
GMROI = Gross Margin / average Inventory
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35. Key terms
Assets
Balance sheet
Cash discount
Cash Flow
Component Percentage
Cost of goods sold
Current ratio
Expenses
Factor
GMROI
Gross sales
Income statement
Liability
Net Income
Net Loss
Net Sales
Return to Vendor
Owner’s Equity
Time Series Comparison
Workroom cost