RMG 200 Chapter Notes -Froot Loops, Club Monaco, Apple Jacks

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Published on 18 Sep 2012
School
Ryerson University
Department
Retail Management
Course
RMG 200
Professor
Store Level Forecasting
To predict store level demand, forecasting systems need to be able to measure simultaneously the impacts of any
factors on unit sales, which includes:
Price
The amount of unit sales of an item obviously depends on the price at which it is offered
Promotion
The degree and type of promotion are also critical in determining the unit sales of an item
Store
Location can be large variations in demand depending on store location
Product
Placement
The amount of shelf space afforded an item, as well as its location on the shelf, can have a large
impact on sales
Seasonality
Some categories eg. apparel are highly seasonal in nature
Other Factors
- Product life cycle knowledge of whether product demand is growing, stable, or in decline
is important
- Product availability the degree to which the merchandise is, or is not, on the shelves ready
for sale impact sales
- Competitor price and promotional activity these also affect a retailer’s sales
- Business cycles sales may be higher at the beginning of the month due to payroll cycles;
also, sales are higher on weekends than weekdays
- Weather late or early arrival of hot or cold weather can have a significant impact on sales
of seasonal items
- Unusual events a new highways, unexpected store, natural disasters
- Cannibalization decreasing price of Apple Jacks would increase sales but perhaps
deteriment of sales of Froot Loops
- Complementary products putting dogs on sales will also cause an increase in sales of hot
dog buns
SETTING OBJECTIVES FOR THE MERCHANDISE PLAN
- Defining target market
- Establishing performance goals
- Deciding, on the basis of general trends in the marketplace, which merchandise classifications deserve more or
less emphasis
- Merchandise plan: a plan used by buyers to determine how much money to spend in each month on a
particular fashion merchandise category, given the firm’s sales forecast, inventory turnover, and profit goals
THE ASSORTMENT PLANNING PROCESS
- A list of SKUs that a retailer will offer in a merchandise category
- Reflects the variety (breadth) and assortment (depth) that can be the retailer plans to offer in a merchandise
category
Category Variety and Assortment
- Variety (aka breadth): the number of different merchandise categories within a store or department
- Assortment (aka depth): the number of SKUs within a merchandise category
- Assortment planning involves decisions concerning the amount of merchandise choice that is available to the
customer
Examples:
Broad and Shallow
Assortment Planning
- Stocks a broad assortment of styles to satisfy
the style conscious consumer but does not
carry depth in any particular item
- Customer is more selective about style, size,
and colour, and will change with the newest
trends
Club Monaco
Narrow and Deep
Assortment Planning
- Mass merchandisers
- Only a few choices in particular category, but
is stocked in considerable depth
Walmart, Zellers
Square Assortment
Planning
- Traditional department stores
- Limited depth within the categories to avoid
having an overstock situation that could
Bay, Sears
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Document Summary

To predict store level demand, forecasting systems need to be able to measure simultaneously the impacts of any factors on unit sales, which includes: The amount of unit sales of an item obviously depends on the price at which it is offered. The degree and type of promotion are also critical in determining the unit sales of an item. Location can be large variations in demand depending on store location. The amount of shelf space afforded an item, as well as its location on the shelf, can have a large impact on sales. Some categories eg. apparel are highly seasonal in nature. Product life cycle knowledge of whether product demand is growing, stable, or in decline is important. Product availability the degree to which the merchandise is, or is not, on the shelves ready for sale impact sales. Competitor price and promotional activity these also affect a retailer"s sales.

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