Retailing Management Study Set 4

Business

Quiz 12 :

Managing the Merchandise Planning Process

Quiz 12 :

Managing the Merchandise Planning Process

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A buyer at a sporting goods store in Denver receives a shipment of 400 ski parkas on October 1 and expects to sell out by January 31. On November 1, the buyer still has 350 parkas left. What issues should the buyer consider in evaluating the selling season's progress
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It is always good to have a feedback section or an evaluation of selected merchandise management after its implementation. The comparison is done between the actual sales/demand with forecasted sales/demand here in this evaluation.
To evaluate the selling season's progress, certain issues/factors have to be considered. The first factor that needs to take into consideration is the change in actual and forecasted sales/demand. This is evaluated using sell-through analysis. It evaluates the advertising features, markdown availability of the vendor. Secondly, it is required to consider the SKU's effectiveness. ABC analysis will help to understand the issues related to SKUs. Here, the sales, gross margin, GMROI, and turnover of inventories are taken into consideration. They also should consider the 80-20 rule here, the 80 percentage of his sales comes from that 20 percent of minimal inventory. So this helps the retailer to keep the inventory at a preferred level.  The third factor to be considered is issues faced by the vendor/retailer.  Here, the issues that they encounter are weighted with scores.
The issues to be considered while evaluating the performance of the product are as follows. Firstly, the reputation of the vendor is considered. If the vendor gives more score for reputation then it is necessary to take steps that will not shake the reputation. Secondly, merchandise quality. It evaluates whether the service quality has more impact on loyalty than satisfaction. Third, are markup opportunities that the retailer is having. Fourth, country of origin. It is also a valid issue that affects sales. Fifth, the fashion and appeal of the product. Sometimes, the reason why the product is not sold out is due to the out of fashion. Sixth, the history of sales. The past history and the reason for such a trend are necessary to take into consideration. This helps the retailer to correct the bad influence of low sales. Finally, promotion. The attractiveness and effectiveness of the promotional activity should be considered to understand if this is the reason for low sales.

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Calculate the GMROI and inventory turnover given annual sales of $20,000, average inventory (at cost) of $4,000 and a gross margin of 45 percent.
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GMROI stands for gross margin return on investment, helps to analyze the company's ability to turn the inventory into cash. This is positive when it is above the inventory cost level. It is calculated by dividing gross profit by average inventory cost. Inventory turnover shows how often the product was sold and replaced during a period of time. It is calculated by dividing the cost of goods sold by average inventory.
Calculation of GMROI and IT is as below.
Given:
GMROI is calculated by dividing gross profit by average inventory cost.
Inventory turnover is calculated by dividing the cost of goods sold by average inventory.
Here, CGS is not given in the question, so it is necessary to calculate CGS.
Thus,
Then, Inventory turnover for the question is as below.

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Assume you are the grocery buyer for canned fruits and vegetables at a five-store supermarket chain. Del Monte has told you and your boss that it would be responsible for making all inventory decisions for those merchandise categories. It would determine how much to order and when shipments should be made. It promises a 10 percent increase in gross margin dollars in the coming year. Would you take Del Monte up on its offer Justify your answer.
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Every retailer strives to increase the sales of the various categories of products it offers to the customers. The retailers undertake several activities and runs loyalty programs to increase the sales of the products offered for customer buying.
It is assumed that an individual is a buyer of canned fruits and vegetables in a supermarket chain. One of the manufacturers and suppliers of this product category Company DMM informed the individual and his boss that he would be responsible for making all inventory decisions for this category of products and also assures an increase of 10% in gross margin dollars in the coming year.
Over this, the individual would agree to take this offer from Company DMM because if the manufacturer of the product is itself planning to increase the sales of its products in the supermarket and guarantees an increase in the gross profits, then nothing can be better than this. There is no reason for the superstore to deny this offer because every retailer wants to increase the sales of the products sold by it and if there is a guarantee in certain product category, then the individual and the boss of the supermarket should take this offer and thereby increase the sales of that category of product.

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How and why would you expect variety and assortment to differ between a traditional bricks-and-mortar store and its Internet counterpart
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A buyer at Old Navy has received a number of customer complaints that he has been out of stock on some sizes of men's t-shirts. The buyer subsequently decides to increase this category's product availability from 80 percent to 90 percent. What will be the impact on backup stock and inventory turnover Would your answer be the same if the product category were men's fleece sweatshirts
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Variety, assortment, and product availability are the cornerstones of the merchandise planning process. Provide examples of retailers that have done an outstanding job of positioning their stores basis of one or more of these issues.
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As the athletic shoe buyer for Sports Authority, how would you go about forecasting sales for a new Nike running shoe
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Simply speaking, increasing inventory turnover is an important goal for a retail manager. What are the consequences of turnover that's too slow Too fast
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The fine jewelry department in a department store has the same GMROI as the small appliances department, even though characteristics of the merchandise are quite different. Explain this situation.
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A buyer is trying to decide from which vendor to buy a certain item. Using the information in the table below, determine from which vendor the buyer should buy. Reference Table: img
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Using the 80-20 principle, how can a retailer make certain it has enough inventory of fast-selling merchandise and a minimal amount of slow-selling merchandise
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