MERCHANDISE

PLANNING
Fashion Buying – Chapter 6
Lecture # 6
 THE IMPORTANCE OF PLANNING
• This chapter examines the way in which the flow of fashion merchandise is planned
and managed from the supplier to the distribution centre (DC).

• Fashion garments have an extremely varied and changeable sales pattern which
varies as a result of fashion fads and weather conditions.

• Retail fashion merchandise planning is mainly concerned with the numerical control
and management of the range from initial conception to delivery to the shop.

• Modern retail merchandising is a highly complex activity, requiring highly developed

numeric and analytical skills.
 PLANNING AND PROFITABILITY
• The most important goals in successful merchandising is to assist the process of
achieving the planned level of buying profitability. ‘Buying profit’ can be defined as
the difference between the cost price paid for the garment and the retail selling
price in the shop.
• The mark-up or profit made between the two prices can be explained by the
following margin and selling price equation:
 THE PROBLEMS OF PLANNING IN
DETAIL
• Planning at individual garment level is called ‘line-level planning’. Some retailers call
it style-, rather than line-level planning.

• Most retailers tend to group like garments within similar merchandise groups or
categories for the purposes of planning. For example, all styles of skirts would be
added together to create an overall ‘skirt category’.

• Both sets of information do not allow us to track and examine performance at skirt
sub-category level.

• It is vital for the buying and merchandising team to be aware of possible changes of
demand at sub-category level.
 FASHION RETAIL PLANNING LEVELS

In general fashion retailers plan at the five levels shown in Table 6.1. Fashion retailers plan
their categories and departments differently to suit their business, although similar definitions
are widely accepted.
 THE IMPORTANCE OF THE
MERCHANDISER IN PLANNING
Starting the planning process for a season
• The merchandiser and buyer generally start the sales planning process in
conjunction with the Buying Director or Buying Manager at a preliminary
seasonal planning meeting well in advance of the season.

• At this meeting, it is normal for the entire team to examine the historic
performance of the previous equivalent season, in order to identify key
trends that impacted on final profitability.

• ‘Season’s post-mortem’ is a useful document for planning the future fashion

direction of a fashion business and is helpful during the planning of a new
season.
 KEY POINTS TO CONSIDER
• Always have a clear agenda, with clear aims and objectives – never have a meeting for
its own sake

• Always have the right number of people at a meeting – usually any more than six–eight
people makes it difficult to get through the agenda

• Always have a meeting with a clear leader or chair person – some people in the fashion
industry like the sound of their own voice, which can exclude others

• Always start meetings on time and have a clear time limit – it is simply bad business
manners to waste other people’s time

• Always have written minutes with action points at meetings – without these as an aide
memoire, even the best staff often forget what they were supposed to do.
 THE IMPORTANCE OF HISTORIC
SALES PATTERNS
• Post mortem is written into a report format, in order to ensure that the ‘lessons
learned’ are clearly locked into corporate memory.

• Post mortem is written into a report format, in order to ensure that the ‘lessons
learned’ are clearly locked into corporate memory.

• Merchandise planning using ‘retrospectoscopy’ (basing decisions only upon past

known events), often leads to a dull repeat of old formulas.

• After the ‘post mortem’ review, the buying and merchandising team will try and fix
some of the key sales ratios upon which the future planning process will be based.
• When proposed sales target figures come downward from a higher level in
the organisation, this is referred to as ‘top-down planning’.

• ‘bottom-up’ approach is when buyer and merchandiser build the next

season’s merchandise plan.

• It is common for most fashion retailers to undertake the merchandise

planning process using a combination of both top-down and bottom-up
planning, trying to arrive at compromise that satisfies the planning objectives
of both the buying and merchandising team, as well as those of senior
management.
 CREATING THE INITIAL SEASONAL
SALES PLAN
• Once all the teams have been individually consulted, an overall initial sales
plan (Table 6.2) will start to emerge.

‘Sales growth is often

referred to as Like-for-
Like (LFL) growth’
 SALES PLANNING AND THE
FASHION BUSINESS
• It is almost impossible to devise the perfect sales plan that will never need changing
at some point in the future.
• As the season progresses, it becomes more problematic to make major changes, as
it becomes harder to make buying changes once orders, production and delivery
have commenced.
• Some shorter lead-time fashion retailers are more able to make adjustments further
into the season, by delaying fabric buying and garment styling decisions until the last
minute.
• More classic and longer lead-time businesses find it more difficult to make such
changes.
• In general, it is the younger fashion retailers that work on the shorter lead-times, while
the older more conventional businesses assume that the demands of their customers
are less likely to change.
DO THE SALES PLANS EVER CHANGE?
 PLANNING SALES PHASING
• As shown in Table 6.3, there are
many factors that impact upon
a fashion business. The majority
of factors are outside of the
control of an individual business
 THE SIGNIFICANCE OF A GOOD
PHASING PLAN

• Table 6.4 shows typical sales phasing over a twelve-month period, showing
the likely percentage participation of the main garment types.
 THREE KEY FACTS AND RATIOS
EMERGE FROM SALES PHASINGS'

1. Seasonal sales variation

2. Departments with seasonal sales peaks

3. Fundamental sales ratios

 STOCK TURN AND STOCK INTAKE
PLANNING
• The concept of merchandising efficiency in retailing known as ‘Stock Turn’.

Stock turn is simply a way of measuring how many times a business changes the
stock that it has on offer to the customer during the course of a trading year

• To measure annual stock turn there is a simple formula that can be applied
by the merchandiser:
STOCK TURN CALCULATION
Knock-on Effects Of Failing
to Achieve the Planned
Stock Turn
 CONTROLLING FASHION STOCK – THE
WEEKLY SALES, STOCK AND INTAKE PLAN
 MERCHANDISE PLANNING AND
THE WSSI
The WSSI’s role in underpinning forward intake planning is pivotal. The
merchandiser, working with the buyer, ensures that the right lines are delivered
at the right point in the season.
Things that need to be carefully considered are:
• Is the line the right weight of fabric for the time of year?
• Does the line form part of a coordinated package that needs to be delivered
together?
• Is the line required as part of planned promotional activity – e.g. in an
advert?
• Is there too much or too little stock of other similar lines in that category?
 THE DELIVERY SCHEDULE AND ITS
RELATIONSHIP TO THE WSSI
• Buyers and merchandisers need to keep an overall and detailed control of
planned intake.

• The WSSI acts as an overall control mechanism to ensure that the flow of
stock and money in the business is happening efficiently.

• But more importantly, so is the detailed line-by-line delivery schedule, listing

the week and day when the suppliers have been requested to deliver the
garments to the DC or warehouse.
 MARKING PRICES UP AND DOWN
USING THE WSSI
• One of the key merchandising activities controlled by using the WSSI is the
aspect of line level price alteration that regularly occurs within all fashion
businesses.
• Ideally at the start of the season, the buyer and merchandiser aim to create
a price structure that relates to the type of customers to whom they are
selling.
• The prices must also be competitive in terms of ensuring that they are also in
line with the major competition.
• The overall effect of a mark-down is to reduce the value of the stock held.
This in turn means that there is theoretically more buying required to get the
stock level back to the planned level.
 THE TERMINAL STOCK MONITOR
OR REPORT
• This separate report is used to control the level of old season’s stock that will be left
at the end of a season.

• It is simply impossible for any fashion business to sell out completely of the previous
season’s stock, and even after the very best trading seasons, there will be
fragmented lines and ranges left around the business.

• The best fashion businesses plan a level of terminal stock that will be acceptable to
be left with at the end of a season.

• As the end of the season approaches, it becomes an increasingly important

document.
THE WSSI – THE ANSWER TO
PLANNING?
 SOME FINAL THOUGHTS ON THE
WSSI

• WSSI acts as a decision-

making tool to help the
business decide what action
to take on an ongoing
regular basis. The key
decisions that need to be
considered each week are
shown in Table 6.1.