FM206 Midterm

retailing

consists of the business activities involved in the selling of goods and services to the ultimate consumers

online retailing

one of the key forces that’s dramatically impacting traditional shopping

wholesaler

organization that purchases merchandise from a manufacturer in large quantities and resells the goods in smaller amounts to retailers

buying/merchandising

the business activity that involves selecting and purchasing products to satisfy the wants and needs of consumers

• forecasting the wants and need of consumers

• planning merchandise assortments to satisfy consumer wants and needs

• selecting vendors from whom to purchase merchandise

• negotiating contracts w/ vendors

• pricing merchandise

• keeping sales and inventory records

• reordering merchandise

buying involves:

seamless

retailers need to ensure that the brand experiences is____ and constant at all touch points

bounce rate

the porting of users who click away while waiting for a page to load

showrooming

consumers visit brick-and-mortar retail stores before they go online to compare prices and make a purchase

reverse showrooming

consumers research products/services online before purchasing them in-store

social commerce

e-commerce merging w/ social media

omnichannel retailing

a concept that’s more focused on consumers being able to interact w/ the retailers from whatever touchpoints are appropriate to them wherever they’re in the purchasing process

Metaverse and social media

retailers are using marketing from the ______________to draw ppl into brick and mortar

transparency and the adoption of technology

____________are the greatest developments to emerge from the supply chain crisis

mini-fulfillment centers

stores are becoming________

store cluster

differentiate demographics and psychographics in store distribution

purchase order

details all merchandise that is on order

convenience products

customer is not willing to spend time, money, and effort in locating, evaluating, and purchasing

collection merchandise

merchandises many classifications together in one group

fashion merchandise

will have a high demand over a short period of time

classification

a specific category of merchandise

specification buying

changes made to a garment that differentiate it from the competition

broad and shallow

10 different style of jeans, one in each size

quantity discounts

price reduction at cost for making a large buy

markup

the cost of goods to calculate retail price

key item

a style to be bought as a big volume producer

trend

the movement or direction of fashion

narrow and deep assortment

1 style of sweater in 10 colors and sizes

private brands

create exclusive product for specialty stores

basic merchandise

has stable consumer demand

subclassification

a smaller more specific category of merchandise

MSRP

manufacturer suggested retail price

pure play retailer

a retailer who only operates online

omni-retailer

a retailer who operates online and brick and mortar

tops to bottom ratio

how many tops are bought to how many bottoms

penetration to total

the part divided into the total

sales volume

a key measurement of the buyer’s performance

soft lines

apparel, accessory products for home

hard lines

sporting goods, appliances, furniture, toys, lawn and garden products

discounters and mass merchants

emphasis on one-stop shopping to meet the needs of a family; appeal to consumers who value savings over service

department stores

sell variety of merchandise for the individual and the home

specialty stores

sell specific product catefories

outlet stores

focus on selling slow movers, out of date merch, factory overruns

• right product

• right price

• right time

• right place

• right quantity

the five r’s of merchandising

ultimate consumer

the individual or group that will consumer the product

assistant buyer

buyers in training

planner

monitors stock levels by store and tracks key items by sales

category manager

in-store expert in visual merchandising, pricing, and managing sales of a specific group of products

merchandising analysts

responsible for identifying sales trends, maintaining desirede inventory levels and assortments

superstore

refers to stores that are bugger than what would normally be found selling a particular category of merchandise

supercenters

mega-supermarkets and general merchandise stores that stock everythin from food to small appliances under one roof

warehouse clubs

huge warehouse that sell just about everything in large quantities

specialized superstores/category killers

offer one to three categories of merchandise in a tremendously large assortment at discount prices

chain store

two or more stores under single ownership

bib-box retailers

a store that occupies an enormous amount of physical space andoffers a variety of products to its custoemrs

centralized buyin

occurs when all buying activities are performed from the store’s central headquartersc

entralized merchandising plan

A central office representing a group of stores has complete responsibility for the selection and purchase of merchandise for all the stores

warehouse requisition plan

used only by stores carrying basic merchandise; each store manager is allowed to requisition the assortment they wish for the store from the regional distribution centers pre-selected by headquarters

product specialists

buyers at chain store become:

owner

in a small, independent store, the owner is responsible for all buying duties

• steady flow of merchandise is provided

• sales forecasts are more reliable

• a specialist is making the buyin decisions

• expense are reduced

• purchasing power is conolidated at headquarters

advantages of centralized buying

• adjusting merch selection for local conditions may be difficult

• can lead to lack of cooperation b/w buyers and store managers

• maintaining enthusiastic and knowledgeable sales associats is a challenge

drawbacks of centralized buying

control

 This department would be responsible for safeguarding the firm’s assets and is usually divided into accounting, credit, and financial control.

operation

This department would typically be responsible for the stockroom, maintenance, delivery, receiving, and customer services.

promotion

responsibilities of this department would usually include advertising, visual merchandising, public relations, special events, and fashion coordination

• gross margin

• profit

measuring the success of strategic decisions

gross margin

sales minus cost of goods sold

profit

money that remains after operating expenses have been subtracted from the gross margin

• increase sales

• decrease cost of goods

• decrease operating expenses

measuring the success of strategic decisions

net sales - COGS

gross margin calculations

gross margin - operating expenses

profit/loss calculations

departmentalization

organizing different store activities into departments or divisions

functional departmentalization

activities of a similar nature are grouped tgt into a major area of responsibility and headed by an individual who reports to the owner or CEO

product line departmentalization

group merchandise by categories

geographic departmentalization

breaks the organization down bby regions of the country

organizational chart

a chart of internal structure that indicates all the employees and their relationship to another

profit

the amount of money that remains after operating expenses have been subtracted from gross margin

net sales

the real volume of sales that have occurred

cost of goods sold

the actual cost of the merchadise that was sold during the period

merchandise mix

the types or mix of products that are available for customers to purchase; must be frequently monitored

product line

a group of products that are closely related bc they function in a simialr manner

breadth

the number of product lines or brands carried within a product classification

broad breadth

allows the retailer to appeal to a larger market

narrow breadth

usually allows the store to offer fewer brands in a larger number of styles, colors, sizes, and materials

depth

the number of choices offered to customers within each brand or product classification

target market

the type of products that you purchase must be matched to the wants and needs of this

assortment planning

involves determining the specific quantities and characteristics of each produc in relation to brands, colors, sizes, and materials

• organizational structure & size

• store policies

• types of merchandise

• variety of merchandise

• target customer

• financials

factors affecting scope of buying

impulse products

irresistable urge to purchase

specialty products

usually accepted in well-known brands

national brands

dominates sales bc of national advertising support; represent quality to many custoemrs

private brands

usually more profitable to retailers bc they have more control over merchandising decisions

generics

unbranded items in plain packages that receive secondary shelf locations and obtain little or no advertising support

• the compatibility of the new product with existing merch

• potential profitability

• placement of existing products within the PLM

• the appropriateness of the new products for your customers

• the ability of the competition to offer the same or similar products

before adding new products, consider:

product life cycle

illesutrates the expected behabior of a product over its lifetime

cannibalization

when potential slaes of existing products are lost to new or similar items

• decide what classification of products a store will carry

• determine the brands and price for each subclassification

• idnetify the general characteristics of an item that customers may consider when buying and make purchases according to that

• decide on the proportion of one classification to another

• calculcate the specific number of unit to purchase

steps in assortment planning

market

a group of people with the ability, desire, and willingness to buy

market segmentation

• demographic data

• geographic data

• behavioristic data

• psychographic data

• past sales

• internal forces

• external forces

• target market

• competition

• trends

factors that affect an assortment plan

positioning

identifying a group of consumers and developing retail activies to promote