MARGIN

SALES &
FORECASTING

OPEN TO BUY

Merchandising
INVENTORY
Process
MANAGEMENT
PERFORMANCE
ANALYSIS

STOCK
ALLOCATION

DISTRIBUTION
LOCATIONS

People

FINANCE

SUPPLY CHAIN

Influences

MANAGEMENT
REPORTING

POS

Systems

SUPPLIERS
MARKETING

MERCHANDISING

Key Drivers
Right
Product

Right
Location

Merchandise
Planning

Right
Quantity

Right
People

Right
Time

Right
Processes

Right Location
Physical Location
Size
Occupancy Costs
Demographics
Classification
Grade
Sales per m

Right Time
Speed to Market
Seasonality
Seasonal Trends

Right Processes

Sales and Forecasting

Inventory Management
Stock Allocation
Supply Chain
Margin Management
Performance Analysis
Open to Buy
Industry Benchmarks
KPIs

Right People
Level of Experience
Level of Expertise
Succession Planning
Incentive Programs
Training and Development Programs

Right Quantity
Size Matrix
Colour Assortment
Fabric Assortment
No. of Styles
Quantity per Style
Sleeve Lengths
Pant Lengths
Category Mix

Right Product

Target Market
Suppliers
International Trends
Value Equation

Price
Fashion
Quality

Common Problems Experienced

Late to Market
High Stock Holdings
Wrong Product on Racks
Timing of Markdowns
Inadequate Stock Allocation Methodology
Range Planning not identifying Key Trends
Inadequate Margin Management
Lack of detailed Management Reporting
No Lifecycle Management Strategy
No Pre-Season Strategic Plan

Merchandise Planning Cycle

START

Step 1

Review Past Season

Company Performance vs. Plan
Category/Dept/Store
Sell Thru by Product Type
Missed Opportunities

Step 2

Initial Budget Proposal for New

Season by Store at Company
level taking into account
Current Trends
New Stores
Refurbishments
Relocations and
Closures
Indicative Market Financial Trends
(CPI, Industry Growth)
Gross Margin Target

Step 3

Commence Merchandising Planning

Process at Department Level for
Sales
Stock (WOS and S/T )
Markdowns
Spend (Open to Buy)
Gross Margin
Average Retail Pricing

Step 4

Grade Stores by Turn Over

Take Department Product (Sales/Stock)
Plans down to Category level
by month
by week
by Graded Store
by Climate Grid
by Store Demographic

Step 5

Review Planned Sales % Contribution

by department, or
by category, or
by Store
vs. Previous Like Season

Step 6

Quantify Product Mix

Number of Styles
Quantity per Style
Sleeve Lengths
Pant Lengths
Top to Bottom Ratios
Colour Plan
Fabric Plan
GP Plan
Price Point Plan
Size Matrix

Step 7

Sign-Off Product and Financial Plans

Step 8

Supply Chain Optimisation

Supplier Selection (Fashion/
Quality/Price)
Logistics Planning (Speed to Market)

Step 9

Stock Allocation Process

by Style
by Store (incl new/Refurb)
by performance vs. plan
Delivery to Store

Step 10

Sales/Stock Performance Review

by Store
by week
by month

FAQ Relating to Merchandise Planning Cycle

Step 1

Do you review previous season?

At what level of your assortment do you analyze?
What is the format you use in this process, i.e. SWOT analysis?
Do you have a standard document?
What do you do with the information?
How quickly do you react to the analysis?
Who drives this process?
Do you have follow up meetings?
To whom is the analysis presented?
How long after the season is the analysis done?
Are there checks and balances in place to ensure results are taken into
next like season buy.

FAQ Relating to Merchandise Planning Cycle

Step 2

Who does initial sales forecast?

What factors are considered in preparing this forecast?
Who provides input into the process?
Are Operations involved in the process?
Who is accountable for the budget?
How is the budget presented?

Step 3

Do you plan by week/month/season?

How do you determine benchmarks for:
WOS
Stock Turn
Markdowns
OTB
Gross Margin
Ave. Retail Price

FAQ Relating to Merchandise Planning Cycle

Step 4

Step 5

How are stores graded/ranked?

What factors are considered when grading stores?
Who provides input into this process?

How much emphasis is placed on % sales contribution?

At what level is this broken down to?

Step 6

Who determines the assortment plan?

How do they go about developing their plan?
Who drives the plan?
Who owns the plan?

FAQ Relating to Merchandise Planning Cycle

Step 7

Who signs off plans?

Who is accountable and takes ownership of plans?

Step 8

What are criteria for selecting suppliers?

Who sets criteria?
Are suppliers given regular feedback on performance?
What happens if there are quality issues?
What happens if there are late deliveries?
What happens if a supplier cannot meet cost price?

FAQ Relating to Merchandise Planning Cycle

Step 9
What criteria are applied to determine quantification to each store?
How often are criteria reviewed?
How do you determine what a new store should receive as opening
stock?
Who controls the allocation process?

Step 10
Is there a process to review performance?
What happens to information generated in these reviews?