What is Merchandise Planning?
Merchandise planning process refers to selecting, managing, and displaying products in a manner that they bring maximum turnover on a brand name. This is all done by meeting consumer needs and desires.
The activity seeks to meet consumer demand by making the right merchandise available to customers at the right time, place, price and quantity.
One of the biggest expenses retailers face is buying merchandise. All the costs of shipping, transporting, delivering, and storing add to a significant amount. Make the wrong purchasing decision, and you may end up doubling your merchandise purchasing costs for a month. Therefore, merchandising planning is important to ensure that expenses do not mount up, and a retailer is able to meet a customer’s needs the right way.
The Process of Merchandising – How to Plan Merchandise?
Therefore, different industries have different merchandising needs and their merchandising planning processes for planning and acquiring merchandise will be different too.
Nevertheless, there are a few fundamental aspects to product merchandise and retail merchandising planning that ever industry indulges in. Here is an introduction to those steps.
Analyse and compare previous sales to forecast demand
The first ideal step would be to take out all the sales-related data for the last month or last quarter. That data would help a retailer determine what should be purchased and how much.
Deciding on merchandising needs
After a retailer has forecasted demands and has a rough idea of what they need to buy and how much for this quarter, they should do everything to provide those products at the right time, place and price to the customer.
This will happen once they decide all the quantities to buy for their retail stores. Once done, they shall decide the budget for all the purchasing. This will help retailers determine all the merchandising financial needs.
Assortment planning usually means planning how much product should be bought to ensure that every customer’s demand is met. Here, the details of the inventory, colour, size, material brand, size etc. are important. This helps the retailer determine the number and type of each product to be bought for ensuring that demand is met.
Components of Merchandise Planning:
- Product: Product is the most important type of merchandise planning tool. The retailer should buy the right amount of product to fulfil the needs of his customer and not create an unwanted inventory for himself.
- Price: Price is another sensitive factor, especially for a price-sensitive country like India. The retailer should have an idea about the target customers and their range. If the products are outside the price range, the store will not see many sales. The retailer has to price plan well in order to ensure regular sales, stock clearance and adequate profits.
- Range: Another important factor to consider in product merchandising planning is the range of products offered. A store should always offer ample options to its customers, so they do not have to go anywhere. There should be a range of design, colours, textures, price, range, etc.
- Assortment: Grouping products so that customers can easily find them is also important. Placing products of similar significance and category is helpful. Merchandise is always presented category wise and department wise for customer’s convenience.
- Space: Every retailer shop should have adequate space for all the products bought. All products should be visible to the customers for buying. All the space available in a retail store should be utilised by hanging fixtures, putting lights, hangers, mannequins, etc.
Why you Need to Plan Merchandise?
Merchandise planning remains an important aspect of having a retail store. Here are a few reasons why –
- It can help a retailer stock their warehouse in an efficient manner. This will lead to an increase in inventory-turnover ratio
- It decreases inventory carrying costs. As right merchandise planning will lead to less labour, fewer costs, less loss as most of the inventory will be sold, etc.
- Brings value addition to the company as the customer rarely ever leaves empty-handed
- Revenues increase as there are fewer markdowns and more sales
Cost of Merchandising Planning
Retail Merchandising planning is sure, not easy. There are many methodical steps to it, and a retailer has to plan things right, otherwise, they may end up with a lot of inventory left in the warehouse. With the right merchandise planner or a retail merchandising company hired by any retailer, merchandising planning will be worth the effort and cost.
Once you have set the ball rolling the right way, the amount of savings, increase in turnover will eventually make you break even with the cost of merchandise planning.
PPMS is the right product and merchandising planner company if a retailer is looking for increasing profits and planning things the right way. Through proper planning not only will product fly off from shelves easier, but the customer will also leave more satisfied.
Merchandising Planning is not a new concept. While many beginners in the business may not realise the need for such an important task, veterans will definitely abstain from dispensing it. Product merchandising planning has been roughly taken up by every important trader in history to ensure that their business is efficient and profitable.
Contact PPMS and rely on their services to hop onto the bandwagon of retail efficiency and profitability.