Merchandising noun or verb
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MERCHANDISING NOUN OR VERB?. MERCHANDISNG. Introduction : How Does Merchandise Get In Your Store? What Questions Should I Ask Myself When Ordering?. OBJECTIVE. Be able to define merchandising. MERCHANDISING. Merchandising is being able to: get the right merchandise

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Merchandising noun or verb

MERCHANDISINGNOUN OR VERB?


Merchandisng

MERCHANDISNG

Introduction:

How Does Merchandise Get In Your Store?

What Questions Should I Ask Myself When Ordering?


Objective

OBJECTIVE

  • Be able to define merchandising


Merchandising

MERCHANDISING

  • Merchandising is being able to:

    • get the right merchandise

      (color, size, style,quality,etc.)

    • at the right time

    • at the right price

    • at the right place

    • in the right amount


Merchandisng1

MERCHANDISNG

  • Where does it come from?

  • Who ordered the merch-andise?

  • Does it sell?

  • Is it good quality stuff?


Merchandisng2

MERCHANDISNG

  • How many should we stock?

  • What sizes should we have?

  • What does the competition have?


Merchandisng3

MERCHANDISNG

  • Is it a fad or a trend?

  • What kind of price are people willing to pay?

  • Etc. etc. etc.


The jeans activity

THE JEANS ACTIVITY

  • With two partners, spend $10,000 to stock a jean store.

    • Have 5 brands

    • Cost is $20 each

    • Identify sizes to be carried

    • Identify the # of jeans to be stocked in each size


The jeans activity1

THE JEANS ACTIVITY

  • With a partner, spend $10,000 on stocking a jean store. (Cont.)

    • Calculate the total dollars spent per style/brand

    • Present your plan to the class & turn in to me


Objective1

OBJECTIVE

  • Be able to outline the buying process used by most marketing businesses


The buying process overview

The Buying Process(OVERVIEW)

  • Prepare a merchandise plan (Monthly plan of buys for year)

  • Choose the assortment

    (color, type, size, variety, etc.)

  • Find the best supplier

    (quality vs. price)

  • Negotiate the order


Objective2

OBJECTIVE

  • Be able to describe the factors that effect a business’ merchandise assortment


Merchandise assortment considerations

Merchandise Assortment Considerations

  • Image

  • Brand Policy

  • Pricing Policy

  • Merch. Plan

  • Customers

  • “Experts”


How do buyers know what to buy

How do Buyers Know What to Buy?

  • Marketing Research

  • Customer Contact

  • Want Slips


Objective3

OBJECTIVE

  • Be able to define & complete a purchase order


Purchase orders

Purchase Orders

  • A business form used to tell a vendor that you want to buy merchandise


Purchase orders1

Purchase Orders

  • P.O. TERMS:

    • To

    • Date

    • Shipping Date

    • Via

    • FOB

      • (Shipping Point vs. Destination)

    • Terms


Purchase orders2

Purchase Orders

  • P.O. TERMS:

    • Order #

    • Items #

    • Description

    • Quantity

    • Unit Cost

    • Total Cost

    • Total Order


Objective4

OBJECTIVE

  • Be able to calculate Purchase order terms


Why do vendors offer terms

Why do vendors offer terms?

  • For Paying Cash

  • For Paying Early

  • For Buying in Volume

  • For Buying Regularly

  • For Buying Out of Season


Sample terms

Sample Terms

2/10 NET 30

  • The 2 is the amount of discount available

  • The 10 is the number of days available to get the discount

  • The 30 is the total number of days available to pay the bill


Sample terms1

Sample Terms

2/10 NET 30

  • EOM

  • ROG

  • Advance Dating


Sample problems

Sample Problems

Assume a $1,000 purchase dated on 4/1/01 w/ the following terms Due Date

Discount = ________

1.) 5/10 Net 30 _____

2.) 5/10 Net 30 EOM _____

3.) 5/10 Net 30 6/1/01 _____


Sample problems1

Sample Problems

Assume a $1,000 purchase dated on 4/1/01 w/ the following terms Due Date

Discount = ________

1.) 5/10 Net 30 5/ 1/01

2.) 5/10 Net 30 EOM 5/30/01

3.) 5/10 Net 30 6/1/01 6/30/01


Activity

ACTIVITY


Objective5

OBJECTIVE

  • Be able to complete an invoice


Invoice terms

INVOICE TERMS

  • Pieces

  • Weight

  • Invoice #

  • Backordered (B/O)

  • Unit Cost

  • Shipping Cost

  • Tax


Activity1

ACTIVITY


Objective6

OBJECTIVE

  • Be able to define & complete the following forms:

    • Bill of Lading

    • Waybill

    • Freight Bill

    • Delivery Receipt

    • Packing Slip


Physical distribution forms

Physical Distribution Forms

  • Bill of Lading

    • Also called a shipping order.

    • Used to request that a transport company come pick up & deliver merchandise.

    • Serves as a contract

    • Consignor vs. Consignee


Physical distribution forms1

Physical Distribution Forms

  • Waybill

    • Used to keep track of merchandise as it moves through the “Channel of Distribution” (ex. Fed Ex Ad)


Physical distribution forms2

Physical Distribution Forms

  • Freight Bill

    • An invoice (bill) for the shipping charge

    • Tells who should be paying for the shipping charge


Physical distribution forms3

Physical Distribution Forms

  • Delivery Receipt

    • Form used to verify that merchandise has arrived

    • Signed by the buyer


Physical distribution forms4

Physical Distribution Forms

  • Packing Slip

    • Used to compare merchandise delivered w/ what was supposed to be in the carton

    • Condition, number of items, correctness of order


Activity2

ACTIVITY


Merchandising noun or verb

MERCHANDISNG

.

Retail Pricing


Objective7

OBJECTIVE

  • Be able to Define “Retail Pricing”

    • Assigning a Dollar Value to Goods & Services


The importance of proper pricing

The Importance of Proper Pricing

  • Attracts Customers

  • Determines Sales

  • Determines Profit

  • Keeps Up With the Competition


Objective8

OBJECTIVE

  • Be able to Define the Terms Associated with Retail Pricing:

    Retail Price: The amount that customers pay for a product or service


Merchandising noun or verb

OBJECTIVE

  • Be able to Define the Terms Associated with Retail Pricing:

  • Cost: The amount that a business pays to purchase products to resell


Merchandising noun or verb

OBJECTIVE

  • Be able to Define the Terms Associated with Retail Pricing:

  • Markup: The additional amount that a business adds to cost to cover its expenses AND make a profit


Merchandising noun or verb

OBJECTIVE

  • Be able to Define the Terms Associated with Retail Pricing:

  • Markdown: A Reduction in

  • the amount of Retail Price


Formula

FORMULA

RP$ = C$ + M$


Merchandising noun or verb

FORMULA

RP% = C% + M%


Merchandising noun or verb

FORMULA(Variations)

C$ = RP$ - M$

M$ = RP$ - C$

C% = RP% - M%

M% = RP% - C%


Merchandising noun or verb

ILLUSTRATION


But what do business people generally know

But What do Business People Generally Know?

  • Retail Price = 100 %

  • Cost of Goods (C$)

  • Markup % (M%)

  • The Formulas


Problem you ve got apples oranges

PROBLEM: You’ve Got Apples & Oranges


Set up

Set - Up

RP$ =

RP% = 100%

C$ =

C% =

M$ =

M% =


Merchandising noun or verb

EXAMPLEWhat can you Calculate?

RP$ =

RP% = 100%

C$ = $6.00

C% =

M$ =

M% = 40%


Merchandising noun or verb

EXAMPLE

RP$ =

RP% = 100%

C$ = $6.00

C% = 60%

M$ =

M% = 40%


Merchandising noun or verb

EXAMPLE

RP$ = C$ / C%

X = $6.00 / 60%


Merchandising noun or verb

EXAMPLE

RP$ = $10.00

RP% = 100%

C$ = $6.00

C% = 60%

M$ =

M% = 40%

RP$ = $6.00 / 60%


Merchandising noun or verb

EXAMPLE

RP$ = $10.00

RP% = 100%

C$ = $6.00

C% = 60%

M$ =

M% = 40%

M$ = RP$ - C$


Merchandising noun or verb

EXAMPLE

RP$ = $10.00

RP% = 100%

C$ = $6.00

C% = 60%

M$ = $4.00

M% = 40%

M$ = RP$ - C$


Do sample problems s 7 9 10

DO SAMPLE PROBLEMS#S 7, 9, 10


Objective9

OBJECTIVE

Be Able to Calculate Markdowns


Markdowns

MARKDOWNS

MD$ = RP$ x MD%

MD$ = $10.00 x 40%

MD$ = $4.00

New RP$ = Old RP$ - MD$

RP$ = $6.00


Do sample problem 12

DO SAMPLE PROBLEM# 12


Objective10

OBJECTIVE

  • Be Able to Calculate a Store’s Markup Policy


Markup policy

Markup Policy

Consider a store that has business expenses of $125,000 (Heat, Electric, Salaries, etc.) and spends $200,000 on merchandise. The owner wants to take home a modest $50,000 income.

  • How much merchandise must he/she sell this year? Per month?

  • What must be the store’s markup policy?


Set up what do you know

Set - Up: What Do You Know?

RP$ =

RP% = 100%

C$ = $200,000

C% =

M$ =

M% =

Cost of Goods:

$200,000

Overhead:

$125,000

Desired Profit:

$50,000


Set up what do you know1

Set - Up: What Do You Know?

RP$ =

RP% = 100%

C$ = $200,000

C% =

M$ = $125,000 +

$50,000

M% =

Cost of Goods:

$200,000

Overhead:

$125,000

Desired Profit:

$50,000

Cost of Goods:

$200,000

Overhead:

$125,000

Desired Profit:

$50,000


Set up what do you know2

Set - Up: What Do You Know?

RP$ =

RP% = 100%

C$ = $200,000

C% =

M$ = $175,000

M% =

Cost of Goods:

$200,000

Overhead:

$125,000

Desired Profit:

$50,000


What is the business sales goal

What is the Business’ Sales Goal?

RP$ =

RP% = 100%

C$ = $200,000

C% =

M$ = $175,000

M% =

Cost of Goods:

$200,000

Overhead:

$125,000

Desired Profit:

$50,000


What is the business sales goal for the year

What is the Business’ Sales Goal for the Year?

RP$ = $375,000

RP% = 100%

C$ = $200,000

C% =

M$ = $175,000

M% =

Cost of Goods:

$200,000

Overhead:

$125,000

Desired Profit:

$50,000


What is the business sales goal for the month

What is the Business’ Sales Goal for the Month?

RP$ = $375,000

RP% = 100%

C$ = $200,000

C% =

M$ = $175,000

M% =

Cost of Goods:

$200,000

Overhead:

$125,000

Desired Profit:

$50,000


What is the business sales goal for the month1

What is the Business’ Sales Goal for the Month?

RP$ = $375,000

RP% = 100%

C$ = $200,000

C% =

M$ = $175,000

M% =

$375,000 / 12 =

$31,250


What is the business markup policy

What is the Business’ Markup Policy?

RP$ = $375,000

RP% = 100%

C$ = $200,000

C% =

M$ = $175,000

M% =

Cost of Goods:

$200,000

Overhead:

$125,000

Desired Profit:

$50,000


Objective11

OBJECTIVE

M% = M$ / RP$

M% = $175,000 /

$375,000

M% = 46.67%


What is the business markup policy1

What is the Business’ Markup Policy?

RP$ = $375,000

RP% = 100%

C$ = $200,000

C% =

M$ = $175,000

M% = 46.67%

Cost of Goods:

$200,000

Overhead:

$125,000

Desired Profit:

$50,000


Markup policy1

MARKUP POLICY

EVERY ITEM BOUGHT FOR THE STORE MUST BE MARKED UP 46.67% IF THE STORE IS TO PAY FOR ITS MERCHANDISE, ALL OF ITS EXPENSES, & MAKE THE DESIRED PROFIT!!!


Merchandising noun or verb

MERCHANDISNG

.

Stock Turnover


Objective12

OBJECTIVE

Be able to define stock turnover and its importance


Stock turnover

Stock Turnover

The number of times the average inventory of a product is sold and reordered in a given period of time


The importance of stock turnover

The Importance of Stock Turnover

  • Stock Turnover is the most often quoted business ratio

  • &

  • is an indication of a business’ profitability.


The importance of stock turnover1

The Importance of Stock Turnover

  • The Retail Price of each product sold represents the company’s cost of goods, total expenses, & desired net profit.


The importance of stock turnover2

The Importance of Stock Turnover

  • If you multiply the number of items sold by the $ value of profit it represents, you can calculate how much profit a company has earned


The importance of stock turnover3

The Importance of Stock Turnover

  • Therefore, the faster you sell your product, the more profit your company can make. Plus, every additional product sold results in more profit for the business


The importance of stock turnover4

The Importance of Stock Turnover

  • Obviously, however, if you are selling out your merchandise to fast, the expense of ordering & shipping merchandise will eat into your net profit, so you can’t order to little merchandise


The importance of stock turnover5

The Importance of Stock Turnover

  • Calculating a business’ stock turnover ratio, therefore, is an art as well as a science


Stock turnover st ratio

Stock Turnover (ST) Ratio

S T = Sales / Average

Inventory


Stock turnover st ratio1

Stock Turnover (ST) Ratio

Sales:

The total amount

of merchandise

sold during a

specific period of time


Stock turnover st ratio2

Stock Turnover (ST) Ratio

Average Inventory:

The approximate amount of merchandise in the store at any given point in time


Average inventory

Average Inventory

Average Inventory =

BOM Inv. + Inv.2 +

Inv.3 + Inv. 4 + . . .

Divided By

# of Inventories

Taken


Stock turnover st ratio story time

Stock Turnover (ST) Ratio “Story Time”

A small business has sales of $400,000 in a year. They took inventory 12 times. The average inventory was $50,000. What was their stock turnover ration?


Stock turnover st ratio3

Stock Turnover (ST) Ratio

S T = Sales / Average

Inventory

X = $400K / $50K

X = __?__


Stock turnover st ratio4

Stock Turnover (ST) Ratio

S T = Sales / Average

Inventory

X = $400K / $50K

X = __8__


Stock turnover st ratio story time1

Stock Turnover (ST) Ratio “Story Time”

A small business has sales of $400,000 in a year. They want a stock turnover of 10 because a 10 ST ratio will make them the profit they want and need. What should their average inventory be?


Stock turnover st ratio5

Stock Turnover (ST) Ratio

S T = Sales / Average

Inventory

10 = $400K /__?__

X = __?__


Stock turnover st ratio6

Stock Turnover (ST) Ratio

S T = Sales / Average

Inventory

10 = $400K /__?__

X = __$40,000__


The importance of stock turnover6

The Importance of Stock Turnover

  • Stock Turnover is an important indication of a business’ profitability.


Objective13

OBJECTIVE

Be able to describe methods to increase a product’s stock turnover ratio


The importance of stock turnover7

The Importance of Stock Turnover

  • Increasing Stock Turnover:

  • Increases profits

  • Uses your capital efficiently

  • Decreases your expenses

  • Results in fewer markdowns


Increasing stock turnover

Increasing Stock Turnover

  • Better Buying: Get merchandise that people want

  • Better Pricing: Charge what people are willing to spend


Increasing stock turnover1

Increasing Stock Turnover

  • Better Stock Control: Get rid of the “slackers”

  • Proper Stock Care: Make it look good


Increasing stock turnover2

Increasing Stock Turnover

  • Better Promotion: Sell the product better


Sample quiz

Sample Quiz

Complete the sample quiz on pricing, markup goals, and stock turnover


Objective14

OBJECTIVE

Be able to define terms and describe procedures for the proper stocking of merchandise


Stocking terms

Face

Salvage

Floats

Rotation

Code Dated

Mass Stacking

Signage

Broken Down

Blocking

Back Stock

End-cap

Vertical vs Horizontal

“Damaged”

Stocking Terms


Stocking terms1

Stocking Terms

  • Face - Bringing merchandise

    forward

  • Salvage - Material used in stock-

    ing that can be used again

  • Floats - Carts used to haul

    merchadise around the

    store


Stocking terms2

Stocking Terms

  • Rotation - “F I F O” Bringing old

    merchandise to the front

  • Code Dated - Expiration dates

  • Mass Stacking - Using one

    product to form large

    display

  • Signage - Informational signs


Stocking terms3

Stocking Terms

  • Broken Down - to collapse

    boxes for ease of storage

  • Blocking - Creating space on a

    shelf for products

  • Back Stock - Merchandise that

    doesn’t fit on a shelf and

    must go back to storage


Stocking terms4

Stocking Terms

  • End-cap - A display built at the

    end of an aisle

  • Vertical vs. Horizontal - How

    products are placed on

    shelves

  • “Damaged” - Merchandise that

    can be fixed and sold


Stocking procedures

Customer Service

Safety

Efficiency

Appearance

Increased Sales

Stocking Procedures


Stocking procedures1

Customer Service:

Customers come first. Help whenever possible

Wear your uniform

Take customers to product vs. pointing in general direction

Stocking Procedures


Stocking procedures2

Safety:

Keep aisles clear

Don’t overstock shelves or floats

Be able to see when pushing floats

Remove out of date merchandise

Lift properly!!!!

Stocking Procedures


Stocking procedures3

Efficiency:

Stock using two hands

Use teamwork

Use your product knowledge!!!

Properly stocked merchandise uses less space allowing more profitable products to be stocked and sold

Stocking Procedures


Stocking procedures4

Appearance:

Shelves should always look full and orderly

Keep shelves neat & clean

Repair damaged fixtures and products

Keep yourself looking neat & clean

Stocking Procedures


Stocking procedures5

Increased Sales:

Signage is critical. It is the salesperson!!!

Rotate products on the endcaps

Place your most profitable merchandise at eye level

Being neat, clean, & orderly helps to sell also!!!

Stocking Procedures


On the job safety

On the Job safety


Film stocker interactive program

Film:“Stocker Interactive Program”


Objective15

OBJECTIVE

Be able to define terms and describe procedures for the proper inventory of merchandise


Inventory control terms

Unit Control

Dollar Control

Basic Stock List

Model Stock Plan

Inventory Control Terms


Inventory control systems

Book Inventory

(Perpetual)

Physical Inventory

Inventory Control Systems


Inventory control

Book Inventory

A paper record

Subtract Sales

Add purchases

Doesn’t allow for Shrinkage

Information is collected by POS systems or paper records

Inventory Control


Inventory control1

Physical Inventory

Simply counting

the products

Tedious & costly

Accurate

Inventory Control


Objective16

OBJECTIVE

Be able to calculate the amount of profit earned per square foot of selling space allocated


Profit calculation terms

Gross Profit

Net Profit

Item

Stock Turn

Month

Year

Per Sq. Foot

Floor Plan

Square Feet of Selling Space

Profit Calculation Terms


Profit calculation terms1

Profit Calculation Terms

  • Store Owners are faced w/ a limited amount of space

  • He/She wants as much profit as possible (Mgrs. Job may depend on it!) from that space

  • Products take up space!!!


Profit calculation terms2

Profit Calculation Terms

  • Products that make profit stay

  • Products that do not make profit leave

  • Most profitable products get the best space


Profit calculation formula

Profit Per Square Foot of = Selling Space

Total

__Net Profit__

Square Ft. of Selling Space

Profit Calculation Formula


Profit calculation formula1

SAMPLE PROBLEMS

Profit Calculation Formula


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