RETAIL THERAPY How to: create a merchandise plan
Retail consultant, Clare Rayner takes us through the ins and outs of creating a successful merchandise plan
Merchandise planning is the method by which buying and merchandising teams can translate the range direction or range strategy into a financial and unit plan that can be used to inform suppliers, distribution and finance what the future impacts will be in terms of seasonal order quantities, supply chain flows and cash flow.
I
t is an iterative process that evolves from the initial top level budgetary figures and
targets to a detailed line-level plan from which initial order quantities and supplier commitments can be placed. In addition, merchandise
gaps or over-buys on the range and ties the final range presented back to the original range direction, meaning that the opportunity to realise full margin sales is maximised. Alongside full price and core
products, merchandise planning can also include promotional activity planning, to keep track of margin spent on promotions. It can provide an effective decision support tool from which buyers and merchandisers can make tough product selection decisions based on facts, analysis and a framework. Having a robust planning
process, that involves not only commercial teams but also suppliers, operations and finance, ensures a far smoother new season
“A plan is only effective when used to drive the business forward.”
planning, a term that is often used interchangeably with range planning, enables buyers to work with their commercial colleagues to develop an outline structure for the forthcoming range in terms of SKU count, category and sub category mix, and price architecture. This “framework” ensures that the range selected meets all of the strategic objectives for the range, providing consumers with the requisite choice and delivering the commercial targets. When reviewing potential products for inclusion on the range a well thought-out range framework, which forms the basis of the future line-level plan, ensures that there are no gaps and similarly that there are no over-buys. Merchandising planning
improves the overall efficiency of the buying and range selection process. It ensures all parties are kept informed and that the retail business has a good view as to what the forthcoming season commitments are in terms of cash and supply chain capacity. It avoids costly mistakes of having
launch. Ultimately having a quality process will aid profitability as there will be fewer lost sales, greater full margin sell-through And the total cost of the management of the range, from source to shelf, will be reduced. When devising a merchandise
plan it is important to consider not only the data requirements, the analysis and the structure but how it will be used as a decision support tool and how it will be used to communicate with the wider stakeholders and those involved in the end to end supply chain. A plan is only effective when used to drive the business forward. Retailers need to ensure that
the historic data, used to shape the future ranges, is accurate and that the process still involves the insights of the buyers who will have a view as to the future trends which will need to be considered. Using historical data alone is risky, especially where some categories may be increasing and others decreasing. A successful merchandise
plan is structured to support the 32 | Department Store News |
DepartmentRetailer.co.uk
business process, to work with and not against the range development and review cycles. It will be useful to all those who require it e.g. data will be in cost terms for finance and in unit / volume terms for suppliers and cubic capacity terms for distribution. Over the years I’ve seen
businesses invest millions in merchandise planning tools that are unused. That’s because they simply did not support the process, they hindered it. Whilst some process change may be necessary, or even enabled by a planning tool, it’s paramount that the essence of good buying, and the intuition of those closest to the customer, is not stifled by onerous data entry, analytics or planning processes. There are different approaches
to planning – top down typically is used for longer range planning, estimating. This approach would, for example, consider a top line budgetary figure for an entire category and then apportion that between sub-categories based on an estimated sales mix. Bottom up on the other hand is more typically used for mid and shorter term planning, when there are more accurate values available at the detail level so line-level estimates can be calculated and summed up
to review a sub-category or category position. Each approach has its pros and
cons, usually both approaches are required with top-down being done well in advance of the seasonal launch and bottom-up being done once specific line- level detail is known and when store level distribution and average weekly rates of sales can be estimated by line. Range planning affects
customers positively – assuming that the original range directions were developed with the customer in mind. The range presented will be comprehensive, offering choice, and will incorporate price points that the customers are comfortable with. Critically if also used to plan the supply chain it will help to ensure on-shelf availability of items. Range or merchandise planning
is at the core of successful retailing – it incorporates all aspects of delivering a congruent offer to the customer in the most commercially beneficial way. I’d wholly recommend any retailer, regardless of size, develop range planning as a core aspect of their buying and merchandising processes.
For more information visit
www.retailchampion.co.uk
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36