Page 151 - DMGT550_RETAIL_MANAGEMENT

Retail Management

Notes 1. Customer profile analysis
(a) Who are our best customers, and what are their buying behaviors and attitudes?
(b) Who do we want our customers to be?
(c) Who are our secondary customers, and what should we be buying for them?
Winning specialty store concepts focus on one “individual” and build their merchandise
mix to please this specific shopper. Learn right away that you can’t be everything to
everybody.
2. Department analysis: To effectively forecast sales and purchase the right product, you
need a further breakdown of your store’s major departments. For example, a typical
family shoe store may have the following departments: men’s footwear, women’s footwear,
children’s footwear and accessories. The men’s department may be made up of the following
subcategories or “classes”: dress shoes, sport shoes, boots and slippers.
To plan at the “class” level, you need sales and inventory data at the “class” level.

3. Key Department Trend: The professional buyer is always looking for trends in his market.
For example, what is happening in men’s footwear? Maybe Western boots are growing in
popularity, brown dress shoes have been declining for the last two seasons and black
sport shoes are hot with the youth market. Do you always run out of large sizes in slippers
weeks before Xmas?
Trend information is available from a number of sources, including trade publications,
merchandise suppliers, the competition, other stores in the U.S. and Europe, and your own
experience.
4. Major Vendor Analysis: “Information is power.” Even a minor analysis of the performance
of your major vendors can identify significant buying issues.

Example: In the case of the family shoe store illustration, a closer look reveals that our
number one supplier last season did not do us any favours. Although they shipped 98% of what
we booked, further analysis indicates late deliveries coupled with styling and fitting problems.
This resulted in a poor in-season sell through, creating the need for heavy markdowns. Due to
poor supplier performance, we ended up with a gross margin of 10% below the store average.
As you can see, this type of vendor analysis is essential in planning your merchandise strategy.
1. Advertising Review: Increased traffic flow often results in higher sales. To this end,
advertising and promotions are used to improve traffic levels. The buying and advertising
departments must work closely together to ensure the company’s investments in this area
result in strong performance.
A promotional calendar outlining event dates, media buys and budgets should be
developed and taken into consideration when the merchandise planning process takes
place. Buyers may have to coordinate product deliveries with promotions, or vice versa.
A successful promotion last year may be hard to equal this season, or, by contrast, a poor
promotion may require a higher forecast for this season.
2. Visual Presentation Analysis: People usually respond best to visual stimuli, so product
presentation is a major driver of sales. For this reason, another segment of the buyer’s
seasonal written report describes their thoughts about visual merchandising for the
products. This includes the following:
(a) Are any special fixtures required?
(b) Where should the product be displayed?
(c) What type of signage is necessary?

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