Range Planning for the Season

Range Planning
Before the onset of a season – winter or summer an essential component of buying is preparing a range plan.. Whereas the overall budgetary planning as well as the buying strategy would already have been defined at the senior management level . The range plan would be a combination of the elements of buying strategy and budgetary plans.
Range Plan Structure
The first step in the process of making a range plan should be the structure wherein the following components would needed to be addressed

a) Range Profile
b) Range Width
c) Average Selling Price
d) Margin Mix
e) Sales Value ( in terms of value and quantity

Range Profile
The range profile should be based on the following
GBB price assortment. The good better and best principle . Depending on the profile of the retailer outlet , the GBB split would vary. For instance in the case of an up market retailer like Lifestyle , the GBB split would probably be in the ratio of 10:20:70 whereas in the case of Haryali Kisaan Bazaar the ration would be 60:30:10. It is important to remember that the GBB split is a price assortment.
Product Assortment ; This would be based on the consumer preferences of the retailer target consumer. Decisions that need to be taken by the buyer would be styles in the case of lifestyle, tastes in the case of food and features and needs in the case of home products
Customer Appeal : While developing the range plan, the buyer would also need to address customer appeal of the products in terms of socio economic , age, gender etc.



Will take up the other elements in following days

Trade Fairs

Visiting trade fairs on a regular basis should be a an essential part of functioning for anyone involved in buying and sourcing. Trade fairs enable a buyer to have access to a very large pool of manufacturer's and suppliers. They also give one an opportunity to do benchmarking exercises in terms of price, quality, designs, specs etc of the products that one carries or propose to carry in outlets. I am giving below a link to a site that gives information on all trade fairs around the world. Can be very useful to plan visits.

http://www.biztradeshows.com/

Product Presentation - III

PACKAGING
In continuation of my earlier 2 posts on product presentation, packaging and its importance, I would like to add the following
Development of Packaging
Whereas, there would be a high proportion of merchandise which would come pre packaged, sizeable no of products would either need to be repackaged or require fresh packaging. In such cases, the buyer, once he decides on the product, will need to organise the design and development of the packaging. The importance of packaging cannot be overemphasised. At this stage the supplier too becomes involved as the packaging needs to be done by him.
The first stage in developing the packaging is to decide the kind of packaging that is required which could vary from
- cardboard boxes
- blister packs
- shrink wrap onto card
- polythene bag and header card
-sealed bags etc etc
The next stage is to decide on the matter that is to come on the packaging. Whereas the description etc of the product is a given, it is important that legal compliances such as
- MRP ( Maximum Retail Price inclusive of taxes)
- Qty/Wt
- Name and address of Manufacturer
- Customer Care No
- Epiry Date
and any other information which is a statutory requirement is clearly printed on the packaging.
It is important to note that the packaging of the product should be based on the method of presentation of the product that is decided by the buyer.

REMEMBER , A POORLY PACKAGED AND POORLY DISPLAYED PRODUCT WILL NEVER ACHIEVE IT'S TRUE SALES POTENTIAL.

The Buying Function - OTB

'OPEN TO BUY' - some very important and relevant points that all buyers and planners need to keep in mind.

For any retail organization , buying is an extremely critical function in merchandising. This process begins with the preparation of the buying plan called the ‘ OPEN TO BUY’ or OTB.

The importance of OTB cannot be overemphasized. Proper OTB planning prevents over-buying, eliminates confusion and consequently enables maximizing profits.

What exactly is OTB ? OTB refers to merchandise budgeted to be purchased during a particular season for which stocks have not as yet been ordered. OTB is a planning tool for any retailer.
An efficient OTB plan has the following elements

1. Forward Sales Planning : Sales plan for the full season or the year with monthly phasing needs to be prepared. This enables one to react to variations in sales plan, reschedule deliveries and cancel and alter purchase orders for the future deliveries as the case may be.
2. Forward Cover : This is based on the planned stock turns. For instance if the planned stock turns for the store is 6 times a year, then the ideal stock holding at any point of time should be equivalent to 2 months stock cover.
3. Opening Stock ; The value of the opening stock is a flow calculation. In OTB planning, the first entry is an estimate. From the 2nd month onwards , the closing stock of the previous month is the opening stock of the current month.
4. Stock Required : This is based on the forward cover planned. If the forward cover is 2 months and the current month is Month 1, then the stock required would be the sum of the forecasted sales on Month 2 and 3.
5. Intake Requirement : Difference between required stock and opening stocks.
6. On Order : Stocks already ordered and due for delivery during the period.
7. Open to Receive : Figure arrived by deducting the stock on order , if any, from the intake requirement. This figure indicates the OTB quantity.
8. Closing Stock : Arrived by taking the opening stock, subtract sales and add the on-order and open-to-receive quantities.

Advantages of an Open to Buy Plan
- Enables calculation of working capital requirement in advance
- Ensures right inventory level to support planned sales and to attain the best Gross Margin return on Inventory (GMROI)
- Enables fresh flow of merchandise at the desired times
- An efficient OTB provides the organization more opportunity for profit.

Role of Buyers and Planners

ROLE OF A BUYER AND PLANNER IN RETAIL
The Buyers Role

In any retail organisation, Buyers and Planners play an extremely important role. It is therefore important to understand the accountability and responsibility of these two positions.
The buyer’s main responsibility is purchase of merchandise. This is done through a process of range planning for a specific season wherein he would consider the following
- Sales planned based on historic data and opportunities existing to increase sales
- Selection of merchandise based on a planned price architecture to reflect the good, better and best selection of merchandise for the season
- Planning for gross and absolute margins for the category which would drill down to the SKU level.
Buyers select the range, type and quantity of merchandise based on
- customer demand ( price, quality etc)
- trends
- budget
- store/company policy
Buyers need to understand customer needs to enable providing a commercially viable range of merchandise at competitive prices to maximize profits for the organization. Buyers need to source new and review existing merchandise to ensure products are competitive and current. Keeping abreast of market trends and reacting to demands are key elements of the role.

FOR A BUYER TO BE SUCCESFUL, HE MUST KNOW HIS CUSTOMER , HIS NEEDS, HIS LIFESTYLE AND HIS DESIRES. THE CUSTOMER SHOULD BE THE CENTRAL FOCUS ON ALL BUYING DECISIONS

Activities of the buyer would typically involve the following
- analyzing consumer buying patterns and predicting future trends;
- regularly reviewing performance indicators with sales;
- managing plans for stock levels, reacting to change in demand and logistics;
- meeting suppliers and negotiating terms of contract;
- maintaining relationships with existing suppliers and sourcing new suppliers for future products;
- participating in promotional activities;
- writing reports and sales forecasts, and analyzing sales figures;
The Planner’s role
The Planner takes over after the buying decisions are made and through the planning system takes the following action
- Creates an input plan for each DC
- Through the planning system loads the range plan via store clusters into individual store weekly estimates to season end.
- phases the input plan depending on supplier lead times
- checks and controls replenishments, checks reforecasting and reorders or cancels accordingly
- Monitors slow moving merchandise and recommends action to be taken in terms of markdowns or special clearance activity to clear stocks
- Ensures final clearance to liquidation of merchandise
- Accountability of store and DC stocks
- Management of Gross to Net Margins by minimising stock levels, primary and secondary freight and markdowns
- Ensures Ideal Stocks are maintained at outlets

Competencies of a Planner
- Interest in the relevant section.
- Numeric skills paramount.
- Data analysis
- Excel knowledge.
- Good at planning
- Good team worker.
- Good PC skills.
- Working to deadlines.
- Time management.
- Good communication skills – liaison with stores.

I would welcome any suggestions additions to the roles that I have defined .

Product Presentation -II

PACKAGING
The method of product presentation is as important as the product presentation and packaging forms a critical part of this presentation.
Given this importance, it is essential that buyers are involved in the development and management of a products packaging. This involves 3 key stages
1. Identifying the purpose of the packaging
2. packaging policy if any of the company
3. the development process.
1. Purpose of Packaging
In a retail environment, packaging serves several purposes . These can be outlined  as

• protection of the product - both in the store as well as in transit
• communicate the brand and product specifications and benefits
• enhance the product
• attract the customer

For packaging to be effective and purposeful, the above criteria should be met
2. Packaging Policy
Packaging policy is normally a reflection of the buying strategy of a company. The approach to packaging could reflect the strategy of convenience, ease of purchase and speed. This is what one would find in a chain of convenience stores that would sell packaged products that are easy for the customer to pick up. Alternately , packaging could also reflect the strategy of service, premium products and quality.. It is important to remember that 'The packaging needs of each product should be identified at the development stage so that the cost of packaging can be taken into account and the style developed in time for the product launch'

Will take up Development of Packaging in my next post.

Product Presention - I

SHOW YOUR PRODUCTS TO CUSTOMERS
Buyers spend lots of energy in buying and developing the merchandise before it finally hits the stores. Sometimes, however , it is forgotten that one very critical aspect is the way the product is presented to customers in the store and overlook issues such as packaging and in-store display. The importance of the saying ‘ JO DIKTA HAI WOH BIKTA HAI’ cannot be overestimated. Proper display and presentation can make all the difference between achieving or not achieving sales targets. Remember the following
1. Visual Merchandising : Be involved in the planning of the in-store presentation of your merchandise. Adequately plan the MDQ’s ( Minimum Display Quantities).
2. Communicating Ideal presentation standards :
Effectively communicate to the store staff on how the merchandise should be displayed and the ideal presentation standards. This could be by way of talking to sales staff directly, sending mail before the merchandise arrives at the stores or making a detailed manual at the beginning of each season.
Remember to Look for ways in which the job of the sales staff can be made easier by improving packing and display methods of the product.

Ethical Behaviour

Does the acceptance of gifts from a supplier to a buyer constitute unethical behaviour. The questions  that arise
                  What gifts can be accepted ?
                  Should acceptance be associated with the value ?
                  Should promotional material like pens, diaries etc with the suppliers logo and name be acceptable as gifts ?
                  Is it OK to accept a suppliers product on the pretext of trial ?

These are questions that all buyers should ask themselves and answer.

WHATEVER THE COMPANY POLICY, REMEMBER THAT AS A BUYER , YOUR REPUTATION GOES WITH YOU FROM JOB TO JOB. WHEN YOU ARE OFFERED A GIFT, ALWAYS ASK YOURSELF WHAT MOTIVATES THE SUPPLIER TO MAKE THE OFFER AND WHAT MOTIVATES YOU TO ACCEPT.

Let me have your views on this
                   

Buying - An overview

One of most important and key functions of a retail organization is BUYING. This function has the potential to make or break a company. It is therefore absolutely vital that buyers understand their role within the organization as well as the contribution that this activity has on the overall business.

Some key factors that buyers must remember

1. The corporate strategy of an organization defines the broad framework on which the buying function needs to operate and contribute to the profitability of the company. It can never operate in isolation from the rest of the business.
2. Buying is far more effective if it is focused on achievement of the business objectives and on the customers who buy the products.
3. Knowledge of the market ensures that buyers have detailed information on which to base their decisions of buying. INFORMED DECISIONS ARE BETTER DECISIONS.
4. An hour talking to customers can greatly influence the way a buyer perceives the market and assesses the needs of his customers.
5. KNOW YOUR COMPETITOR. Customers never see your products in isolation. Neither should the buyer
6. Your customer should be the CENTRAL FOCUS of all your buying decisions.
7. A customer focused product range may not attract all your target customers but will attract a majority of your target group as compared to an unfocused range of products. This will guarantee you much higher sales.
8. Always keep in mind the twin company objectives of turnover and profitability.

Does anyone have any more points to add ?? Pl contribute