Lecture Management of retail buying – Chapter 4: Merchandise assortments

In this chapter, you will learn about: The different types of brand identification, their potential benefits & challenges, the importance of private-label merchandise in today’s marketplace, theories about the optimum breadth & depth of assortments,...

Ch. 4: Merchandise Assortments • The different types of brand identification, their  potential benefits & challenges • The importance of private­label merchandise in  today’s marketplace • Theories about the optimum breadth & depth of  assortments • How demand and selection factors, seasons & (in  apparel) size, fashion, & fit all work to influence  assortment & buying patterns • Setting policies about assortments for buyers to work  from Copyright © 2006 by John Wiley & Sons, Inc All rights rese Private­Label Brands PROS                                  CONS • • • • • • • • More variety for consumers Specialty and ethnic item  availability Cost advantages Increased customer loyalty Better profit margin for  retailers Positive store image for  “specially selected” items Increased shelf space for  some manufacturers Good alternative to pricey  “name brands” for smaller  retailers • • • • • Store image issues may  backfire with consumers:  second­rate, “off­brand”  items Less financial support from  competitive manufacturers Greater difficulty ensuring  quality, product consistency Strained relationships with  manufacturers’ other  retailers Lower profit margins for  manufacturers Copyright © 2006 by John Wiley & Sons, Inc All rights rese Assortment Planning: Terms to Know • Breadth and depth (“wide and shallow,” “deep and  narrow”) • Model stock • Balanced assortment • Pulling power • Net marginal productivity • Dominant (or “competent”) assortment • Demand rigidity • Classification Classificationcontrols Productlifecycle Copyright â 2006 by John Wiley & Sons, Inc All rights rese Demand Rigidity Factors • The product’s primary or intended use • Secondary considerations – “Wants” that, if  necessary, may be substituted • Purchase habits typical of this type of product  – Is it a convenience or a necessity? • Price lines – Both high­end and bargain  prices are considerations here • Urgency – How soon is it needed? This  determines how selective the shopper can be Copyright © 2006 by John Wiley & Sons, Inc All rights rese Setting Assortment Policy • The nature of merchandise carried in the  store • Characteristics of the trading area • Community needs and special attributes that  might meet them • Comparisons to competitors • A price line that fits the target customers • Availability of capital • Realistic view of merchant’s capabilities Copyright © 2006 by John Wiley & Sons, Inc All rights rese ... Secondary considerations – “Wants” that, if  necessary, may be substituted • Purchase habits typical of this type of product  – Is it a convenience or a necessity? • Price lines – Both high­end and bargain ... Better profit margin for  retailers Positive store image for  “specially selected” items Increased shelf space for  some manufacturers Good alternative to pricey  “name brands” for smaller  retailers... Urgency – How soon is it needed? This  determines how selective the shopper can be Copyright © 2006 by John Wiley & Sons, Inc All rights rese Setting Assortment Policy • The nature of merchandise carried in the