Merchandise

Assortment Planning
What should a well planned assortment contain?
Selection of a particular merchandise classification
Whether or not to offer the classification at all
Other important factors are
1. Quality of the merchandise offered for sale quality
would reflect image of the store.
2. Price range quality and price range would interact
with each other. There is no specific correlation and a
general correlation exists.
3. Choice of national brands or private brands
4. Good taste buyers must decide what is aesthetically
pleasing to all customers.
5. Proper timing buyers need to decide not only what
to offer but when to offer, the right time.
6. Product life cycle maintaining regular stock
assortment is important to most types of goods.
Research and development
Introduction into market
Product growth
Product maturation
Product saturation
Product decline
Product abandonment
7. Variety of product lines A product line is defined as a
broad category of products having reasonably similar
characteristics and similar end uses. The variety of
product lines may be limited as in the specialty store or
may be numerous as in department stores.
8. Assortment strategies breadth and depth of
assortment.
Assortment Depth = limited number of categories
(Narrow) + a number of popular styles (deep)
Assortment Breadth = A number of categories (Broad) +
Limited number of styles (Shallow)
Balanced Assortment = A number of categories (Broad)
+ A number popular styles (Deep)
Factors Affecting Unit (Assortment) planning decisions
Type of Retail Institution > Competition > Goods >
Trading Area > Capital
Past sales > Customer complaints > Returned goods >
Sales Lost > Sales Made
Consumer wants > Increased Impulse Buying > Greater
assortment of goods > More affluent society
Types of goods offered> Specialty goods> shopping >
Convenience > Seasonal > Fashion
Elimination of merchandise lines > Storage space
required > Financial investment > more items added
limit to what can be carried.
Unit or Assortment plans are developed in one of two
ways. The first method is use of basic stock list and the
second one is use of model stock plan.
Planning a basic stock list
1. Homogeneous and Heterogeneous Staples staple
goods of same type, size, color etc are called
homogeneous. If staple goods are alike or not identical,
then they are called heterogeneous.
2. Seasonal and non seasonal staples those staples
that are in demand regularly not affected seasonal
variations are called non seasonal staples. Some
staples may be in demand in particular seasons are
called seasonal staples.
Periodic fill ins of staple stocks
Information required before placing reorder
1. The normal sales rate
2. The delivery period
3. Reorder period
4. The reserve
5. Stock on hand
6. Merchandise on order
Formulas for periodic fill in of staple stocks
Maximum staple goods to be on order and on hand
Maximum = (reorder period RP +delivery period DP)
Rate of sales, S + Reserve, R
M = (RP + DP)S + R
Unit Open To Buy = Maximum (on hand orders + out
standing orders)
Reserve = 2.3 * Sq Rt of (Lead time)sales
Reserve = 1.6 * Sq Rt of (Leadtime) sales
Planning the model stock a model stock may be
defined as the desired assortment of stock broken down
according to predictable factors such as classification,
price, material, color, and size based on consumer
demand. The model stock plan is used to plan ideal
assortment.
Thus it will include an assortment of staple goods,
fashion goods, and seasonal goods.
An assortment of fashion goods fashion stock in
apparels and furnishings is the most difficult of all
classes merchandise to plan because of many choices
of styles, colors, materials, vendors and manufacturers
and many new items available. Since fashion goods
have short life cycles risks are also high for buyers. Five
characteristics of fashion merchandise will help buyer in
determining the fashion assortment. 1. classification 2.
price 3. size 4. material and 5. color