Introduction
Retailers have tried to compete with the best merchandise but the competition is becoming difficult because in every category of the products there are problems to be encountered. Retailers are using the web- based sourcing and the procurement systems so that they can be able to maintain their image as a place where the consumers want to shop. There is the cutting down of the costs that could be spent by the retailer in ensuring that the consumers value their products and thus such the retailer is able to raise the sales. There is the improvement of compliance in which the retailer spends less time in meetings with the suppliers and in the reviewing of the multiple versions of the documents.
The retailers want to do away with the face to face negotiations which wastes a lot of time in discussing the problems that they face and the best ways to improve the losses that awaits them. there also the reduction of the costs that can be incurred in the gathering and analyzing of the information on the electronic documents to be used by the trading partners and the reduction of time spent by the retailers ion finalizing their contracts with the suppliers. The merchandise planning is done so that sales and profits can be maximized by the retailer. This planning is seen as a systematic approach where by the retailer ensures that the right people, the right processes and the right computerized support are taken so that sales are more and thus the investment is also raised. (Peter, 1983 )
The first Gap store was opened in the year 1968 by Fisher D, in san Francisco and it is still the headquarter. It is one of the world’s largest retailers with more than 3000 stores and gets revenue of about $16 billion. There has been a significant growth since 1969 and now it operates four of the recognized brands that is the world- Gap, Banana Republic, Old Navy and the Piperlime. It was created to make it easier for the consumers to get the goods they require like a pair of jeans.
Their focus is on the assortment for going to work, out and the weekend apparel. If systems that help in the identification and the support of winners are provided then it will be easy to move the resources from the losers to the winners so that production is raised and in the process more sales are made leading to success of the business. To manage the stock is a problem but there is always the need to maintain the cash flow and the profitability of the business.
The losses in sales and profits are mainly caused by the poor merchandise planning and thus a retailer has to ensure that planning is followed so that the losses are avoided. Profit losses can result from the inadequate merchandise planning and the lost sales result from lack of merchandise and also due to the forced margins reductions as a result of excessive merchandise. So to reduce these losses then there is need of having a well managed merchandise system in terms of good location, having a motivated staff and the powerful displays. The effective merchandise planning delivers the margin increases directly to the bottom line and also allows the retailer to build a broader range of the higher margin sales. (David, 1987)
The Gap’s customer’s demographic make up is a problem because they have been inconsistent in their ability to stay true to what they want and thus the retailers are facing a problem in providing for the goods that are acceptable to the consumers.
They are not able to know the changes they have to make. Having an effective planning then there are benefits like: increased sales where by the consumers make high purchases from the retailers premises; there is also the reduced out of stock merchandise where by the planning ensures there is the right merchandise at the right tome and place; there is reduced unplanned markdowns where there is the right price been charged at the right time and place; there is the productivity and the rewarding resulting from the retailer where by there will be much selling made on the consumer due to the fact that the staff will be confident and they will have the familiarity of the merchandise depth and placement; consumers will increase purchases as the retailer will have an attractive, well positioned displays that will enable the retailer to encourage multiple sales transactions because they will have the merchandise arranged in a more methodical manner and thus leading to greater average value transaction by the reduction of the consumer confusion.; there will be also improved inventory control where by there will be simplification of the maintenance of a physical inventory control an thus reducing the rate of the profit leakage through losses maintenance should be remembered by the retailer so that the original presentation of the goods does not deteriorate and thus the retailer will have to face these losses. Retailer has to keep in mind the following actions so that the business can be of benefit to him or her. (David, 1987)
Developing a plan
There should be strategic plan that is used to set the critical success factors for the merchandise that is in terms of sales, the margin and the inventory levels. This plan allows the retailers to take into account the effects that results from new brands, stores and the closures and after this plan has been set then what follows is the margin plan which is a weekly version of the strategic plan where by there appears the levels of sales, the margins and the markdowns.
There is need to plan for the range of product where the retailers needs to break down the goals of the merchandise plan into specific lines and the system should be capable of extending the results so that the effect of changes in cost price can be viewed. The creation of the buying plan will assist in the category and the individual item sales and the purchase planning that helps the retailer to be able to identify the costs that are incurred in a period of one month. This plan allows the retailer to make the allowances for the purchase of the items that are required by the consumer. After the working on of the requirements of the purchase then the retailer can use the information to assist in the basic cash flow planning process.
Product positioning
This involves how the merchandise is done in the store. Therefore it is important when designing a store to have a clear analysis of the sales that had been made in the course of the year and also the gross margin dollars that have been contributed by each group. A retailer should ensure that the plan that is made should have an allowance n space so that there can be maximization of the productivity of the sales floor. So as to increase the performance of any merchandise group then there is need to move that group to a prime location.
Thus in calculation of the cover numbers then there is need to consider the previous sales in the line of any product promotional activity, the seasonal activity, the planned stock turn targets, and the supplier lead times so that one will be able to know the costs that can be incurred at that particular time and also the store costs. There should be the ideal fixture that is invisible so that the consumer will be able to see the merchandise and thus the consumer will be able to make more purchase. So the fixture displays the merchandise in a manner that will simplify and enhance the customer purchasing decision.
Number crunching-There is the measurement of the retailer’s performance that is done using indicators like the gross margin return on the investment which is calculated using the gross profit margin percentage and the weeks cover indicators. This gross margin return on the investment provides the simple terms in which one is able to access the number of times per year in which the retailer gets every dollar invest in the merchandise at cost that is returned as profit. Thus the overall merchandise planning helps the retailer to maximize the sales and ends up in freeing the working capital that is tied into the excess inventory and thus more sales will be made because this capital will be used to produce more. (Andrew, 1989)
In order to implement these actions then the business owner should change the business environment where by you make sure first you know the number of the existing customers so that you will be able to know how to work with the customers to raise the purchases so as to raise sales and profits in return. Also the retailer should ensure the planning is done by professionals so that if the retailer follows such plan the success will be achieved.
This is because a plan is very important for a success of any business and thus if it is not done with a lot of consideration then it means that those who will use it will not succeed. the retailer should set a plan in which it will attract the attention of the consumers and the retailer should consider the following: there should be a commission set for the retail investor issues this will enable the investor know how to carry out the activities that are beneficial to the consumer ; should raise the level of education to the investors this will assist them to know what is expected of them in the process of raising their sales; and lastly the retailer should ensure that a record is keep showing the sales that are made per year this will assist them in knowing the changes that are required so as to make more sales.( Andrew, 1989)
Through this implementation measures then the retailer will raise the sales and the profits because the consumers will raise their purchasing power meaning that the retailer will make more sales. An employer should keep in mind the action plans so that he or she can run the company effectively through ensuring a good relation with the employees and thus more production is made.
If an employer has no knowledge of merchandise planning then the failures will be more than the successes so any company should have in mind the planning sequence before undertaking any step of production. So in order to improve in performance then the employer should make a look on the merchandise plan and make the changes that are required so as to raise the sales and the profit and this can be done through keeping records of how the company sales its products and also have the knowledge of how to attract the consumers through providing quality products and the observation of time of delivery of the products to the consumers and this will end up making a great change to the sales and thus high profit will be experienced due to the fact that the consumers will be willing and ready to make use of that product.
Conclusion
Retailers and any person taking the step of starting a business should keep in mind the action plan, the product positioning and the number crunching. This is because these are the steps for a business to succeed and not to collapse as more sales will be made meaning high profit and thus the owner will be willing to carry out the business because he or she has knowledge on how to succeed.
Reference
Andrew, P (1989). Strategic planning to make the retailer aware of the performance of business. Business publishers, pp 76.
David, B (1987). How to succeed in a retailer business. Readers’ publishers, pp 56.
Peter, D (1983). The merchandising plan as a way for success in business. London: BBC, 40.