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RMG 400 Lecture Notes - Markdown

Retail Management
Course Code
RMG 400
Bharat Sud

of 2
Planned Purchases = Sales + Reductions + EOM BOM
Being overbought usually causes all of the following: Markdown increased, maintained
markups will increase, Profits will decrease
EOM Stock is the same as BOM for next month
What does assortment planning involve:
Determining specific quantities and characteristics of each products: Brands, Sizes,
Colors, Materials
What are the goals of effective assortment planning:
Balanced assortment of merchandise
Meet the needs of as many customers as possible (Understanding customer critical)
Factors affecting assortment:
Types of Merchandise:
Fashion (High demand, short time span)
Basic / Seasonal (Easier buying based on past records)
Convenience / Specialty (Expected to be in stock, Large assortment not needed as
brand is not important)
Store Policies:
Quality and Price Range (Usually price & quality related, Buying to support image)
Brands (National vs Private Label, National is better as its known more)
Product Breadth:
Customer wants and needs
Place in Product life cycle
Competitions Assortment
Capital Available
Top Sellers
Cannibalization sales of one company may reduce sales of another
Product Depth:
Size (low sustainability)
oClothes, Window treatments
oAppliances, food servings
Material (clothes, luggage, sports equipment)
Others (storage)
Types of Assortment Plans:
Broad & Shallow (wide brands, few colors)[
Narrow & Deep (Few brands, wide colors)