Page 152 - DMGT550_RETAIL_MANAGEMENT

Unit 9: Merchandise Management

Visual merchandisers work very closely with the buying departments in most chains. Information Notes
concerning delivery dates, promotions and product quantities may affect decisions about what
to feature in store windows and key display areas. The “visual people” will also handle any
special in-store signage that will accompany the product.

Notes Visual merchandising is everything a customer observes. It includes the exterior
and interior elements of a store, which creates a positive image and seeks the attention of
the customer and in the ultimate leads to a sale.

9.3 The Assortment Planning

In Assortment Planning we use store grades as a way to reduce the number of decisions we have
to make. If we had to plan every store individually we would end up repeating similar assortments
many times. Planning at the store grade level allows us to be most effective as a result of our
efforts.
What measures should we use to create the grades? Retailers commonly use sales value as the
basis for store grading. This allows them to group together similarly performing stores, on the
basis that they should have similar ranges assorted to them. As they become more sophisticated
many retailers begin to incorporate space into the equation. This often results in a two tier grade
system with space sub grades within each sales grade. Superficially, this would appear to be a
reasonable approach, and it generally does provide more efficient planning that not using
grading at all. However, it places its emphasis on the wrong element - sales.

When we are making decisions about assortments we are primarily deciding which items will
go to which stores in which periods. The first question that we need to ask ourselves is how
many items we should be sending to each store or store grade. The factor that limits the number
of items is not primarily sales velocity (derived from sales value), but space available for
display. Space is a limiting factor in bricks & mortar stores in the same way as production
capacity is in manufacturing. If we are going to send similar ranges to groups of stores it makes
far more sense to group these by space available for display than by sales value. Of course, this
assumes that you have accurate records on space at the product level you wish to grade by, and
that you have systems in place to keep these records accurate and up to date. But what about
sales? Well, we can allow the replenishment systems to pick up on rates of sale and to refill
accordingly. We are not ignoring sales, we are merely saying that there are more relevant
measures that we can use for grouping stores for assortment planning.
Of course there may be instances where you have more space in a store than is warranted by the
sales performance. This is not a desirable outcome, but is one which does exist from time to
time. Where this is the case, you may consider reducing the density of assortment. If this
widespread you may want to consider subgrading by ales within space.
Once we have decided which measures to use for grading, we also need to decide at what level
we wish to grade. There are 4 factors that will influence our decisions here:

1. The availability of data for the selected measure
2. The availability of a system that will calculate the grades at the selected level
3. The availability of a range & assortment planning system that can use the grades at the
selected level
4. The ability of our transactional systems to execute plans based on the selected level

LOVELY PROFESSIONAL UNIVERSITY 147