ABC's of Merchandise Planning

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ABC's of Merchandise Planning

By Jim Malone - 10/08/2012
Merchandise planning is key to a successful retail profit cycle. In order to see great success, a retailer must follow not only a plan, but also a process.
One must begin with a financial plan at a classification level – influenced by the business activity from both last year and current. Once this level of guidance has been established, move onto building assortment plans that match the customer’s purchasing habits. This process becomes the merchandise plan, being utilized as the retailer shifts into the selling season. Key elements such as price points, size and delivery date must also be managed.

A large number of retailers believe planning is now complete and expect the results to fall into place for success – but do not stop just yet.
Adopt a process for deploying and managing the plan. This can be summarized into three key steps: the delivery period; order file management; and receiving and placing on the sales floor.

Delivery Period
One must remember to set an expectation date for when goods will be needed. This date will either be communicated to the retailer by a vendor, or vice versa. Once a delivery date is confirmed, place the product into your “on order” file. Don’t forget, vendors must know the importance of adhering to your delivery needs.

Order File Management
Now, begin the management of expected orders – do not sit back and look at the order file. The file must be worked with the same level of effort that was spent planning for the merchandise. The file needs to be set up by month, and then by week within the month.
The expected weeks shipping knowledge can be received from the vendor, first at order time and again when a call is made to monitor the shipment.
As a merchant, it is important to make calls to your vendor on a planned basis:
  • One week after the order is placed contact the vendor or sales rep directly to provide contact information and confirmation of order and delivery date.
  • 30 days prior to shipment confirm the delivery date is on target.
  • One week prior to shipment confirm the merchandise will be shipped as expected from the vendor.
  • At the expected delivery time follow up with the vendor. If merchandise is not received, find out why and when it is to be shipped.
  • One week after the expected delivery date, if the merchandise has still not shipped, ask the vendor for a 20% discount on the product.
Receiving and Placement
The product is for a specific time, so it is important for the entire team to be connected in the plan. Communicate the expectations of this product to the sales staff. Remember the product was bought with enthusiasm and expectation that must be carried to the customer, and which only the sales staff can convey. Customers will only buy current and exciting merchandise.

Jim Malone is a senior consultant with Retail Smart Guys, a company providing assistance to retailers to examine opportunities for maximum profit. For more information visit