35 Fashion Retailing and Merchandising

R. Sunitha

epgp books

 

 

Learning objectives

 

  • To impart knowledge on importance of fashion retailing To understand about types of retailing
  • Retailing is the business in which the organization directly sells its products and services to the ultimate consumer for his or her personal use.
  • Retail sales is driven by the willingness of the consumers to buy goods and services.
  • Retailing is a set of business activities that adds value to the products and services sold to consumers for their personal or family use.
  • Retailing consists of those activities involved in selling directly to ultimate consumer.
  • It is the selling to final consumer products to house holds.
  • According to Philip Kotler Retailing includes all the activities involved in selling goods or services directly to final consumers for personal non business use.
  1. Functions of Retailing

The functions of retailing  include :

  1. Sorting : The items are arranged in order by the retailers so that the customers are able to locate and pick up their needed goods easily.
  2. Storage: The retailer holds stocks of goods and thereby meets the day-to-day needs of the consumer.
  3. Channels of communication: The retailer spreads by word-of-mouth communication, valuable information to the customers about the product. The shortest channel is the manufacturer to consumer.
  4. Transportation: Even small grocery stores are undertaking the work of door delivery orders in case of durable goods.

Essential Characteristics of Retailing

Direct interaction with customers:

  • The retailer acts as the final link between the organization and its customer
  • The retailer knows his customer better than anyone.
  • He even suggests the customer what to purchase and allows him credit facilities to encourage frequent buying behavior in the customer.
  1. Small purchases: The customer purchases goods in small lots from the retail stores. So there are frequent visits of the customers to the retail store.
  2. Instrument of marketing communication: Through communication the information about the product is disseminated to the needy customers.

Types of retailers

 

Basically retailing is categorized into store retailing and nonstore retailing. In the store retailing, the essence of a store in a particular location is taken into consideration, to sell the products.

 

They can be performed in different formats like speciality store, department store, supermarkets, convenience stores, discount store, off price retailers and super stores.

 

In the non store retailing, the products are sold through the use of electronic media or direct selling medium like telemarketing, automatic vending, direct selling or online retailing.

 

But the Store based retailing is a tangible based retailing channel. Customers buy products by seeing their practical explosure in stores.

 

3.1. On the Basis of Merchandise offered,

 

The store retailing is divided as follows.

 

3.1.1. Departmental Stores:

 

A departmental store is a large scale retail institution.

It offers wide range of consumer goods under one roof.

 

These stores provide a wide range of products and options to the consumers thereby fulfilling their needs.

 

Several product lines are available with various price products in different product categories namely clothing, home furnishing, household goods, appliances, trade market, Jewellery, Toiletries, cosmetics, footwear, sports wear, toys, books and CDs.

 

Departmental stores are the largest form of organized retailing today, located mainly in metro cities, in proximity to urban outskirts.

 

They lend an ideal shopping experience with an amalgamation of product, service and entertainment, all under a common roof.

 

4.1.2. Convenience stores:

  • These are relatively small stores located near the residential area.
  • They offer limited line of convenient products such as candy, ice-cream, soft drinks, lottery tickets, tobacco products, newspapers and magazines, along with a selection of processed food and some groceries.
  • These stores enable the customers to make quick purchase and offer them few services.
  • They stock a limited range of high-turnover convenience products and are usually open for extended periods during the day.
  • The prices here seem to be slightly higher due to the convenience premium.

4.1.3. Super Market:

  • These are retail organizations provide low cost high volume self-service operation to meet consumer requirements.
  • Most of the super market charge lower price
  • They are the large self-service outlets, catering to varied shopper needs.
  • These are located in or near residential high streets.
  • A supermarket, also called a grocery store, is a self-service store offering a wide variety of food and household merchandise, organized into department.
  • It is larger in size and has a wider selection than a traditional grocery store and it is smaller than a hypermarket or superstore.
  • It is a large self service trade market, low cost, low margin, high volume designed to cater total needs for food, laundry, household and other maintenance products. Goods are sold under one roof.
  • Apparels for women, men, and children are also sold along with household goods such as furniture, lamps, linen and table ware.
  • A supermarket is an advanced form of the small grocery stores and caters to the household needs of the consumer.
  • The various food products are all displayed at the respective departments to catch the attention of the customers and for them to pick any merchandise depending on their choice and need.

4.1.4.  Hyper Market:

  • A hypermarket is a superstore which combines a supermarket and a department store.
  • It carries wide range of products under one roof including groceries lines and general merchandise.
  • It’s markets are huge retail stores that offer various products such as clothes, jewelry, stationery, electronic goods at cheaper price as they focus on high volume.

4.1.5. Specialty stores:

  • As the name itself suggests specialty stores would specialize in a particular product.
  • A specialty store specializes in one area.
  • It is characterized by narrow product lines.
  • A specialty store is a store, usually retail, that offers specific and specialized types of items. They offer a narrow product line that concentrates on specialised products such as jeweler, fabrics, furniture etc.
  • Customer service and satisfaction are given, due importance.
  • For example, a store that exclusively sells hand bags or leather goods would be considered specialized.
  • It is a small retail outlet that focuses on selling a particular product range and associated items.
  • Most of the speciality stores specialize in selling at premium prices.
  • Thus by providing narrow merchandise these stores satisfy a particular group of customers.
  • These are more suitable for fashion retailing.

There are four types of speciality stores namely, single line merchandise which carries one category of merchandise, single brand merchandise which carries only private label, limited line merchandise which is deals with related categories of merchandise and multiple line merchandise that offers many catalogues.

 

4.1.5 a. Single line stores

  • These stores carry deep inventories of one particular classification.
  • It has wide selection range and may have goods like accessories such as shoes socks, ties etc.
  • These stores are small and independent which also grow into regional and national store.

4.1.5b. Single brand or private label retailers

  • The stores carry only merchandise sold under stores name or private label.
  • These store names are established as important brands. As they are vertical operations they can be flexible and maximize a trend quickly.

4.1.5c. Limited Line stores

 

Cater to narrow group of customers. They carry apparels and accessories for women or men or children.

 

4.1.5 d. Multiple line stores

  • Carry a wide range of goods for men, women and child’s wears. They may also have cosmetics.
  • They have many departments and so they are designated as speciality stores.

4.1.6. Discount stores

  • Discount stores offer a huge range of products to the consumers but at a discounted rate.
  • These stores offer a quality of product which may be inferior to departmental stores.
  • It is a standard type of merchandise sold at lower prices with lower margin but higher volumes which offered limited service.

4.1.6.a. Off Price retailers

 

Merchandise bought at less than regular wholesale prices and sold at less than retail prices are called off Price retailing.

 

Often this includes the left over goods, overruns, irregular products and previous seasons products obtained at reduced prices from manufacturers and other retailers.

 

Factory out let stores which are owned and operated by manufacturers and deals with irregulars discounted goods.

 

Closed out retailers who deal with broad consistent assortments

 

4.1.7. Mop and Pop stores

 

Mop and Pop stores are small stores run by individuals in the nearby locality to cater to the daily needs of the consumers.

  • These are local stores that provides limited range of daily use article.
  • They provide them with more personalized service.
  • They merchandise toys, medicines and grocery items.

4.1.8. Shopping malls

  • Malls are building or group of buildings that contain stores that is many retail stores operating at one place form a mall.
  • It consists of several retail outlets each selling their own merchandise but at common platform.
  • The consumers can easily walk between the stores.
  • It can be in enclosed or open air format.

4.1.9. Mass merchandise

 

These are retailers who have built their businesses by providing commodity merchandise.

The retail consultants include discounters, off price retailers factory outlets.

Many of these stores are doing excellent job in presenting fashion merchandise in addition to the basics at low prices.

  1. Discouonters offer low prices by buying large quantities lower priced merchandise. Some discounters are now having super centers large megastores that include apparel, general merchandise, groceries and services.
  2. Outlet stores They sell overruns and out-of-season merchandise in their own outlet store. This seems to be profitable for the retailers to run their clearance stores for out of season or slow moving merchandise.
  3. Off-price retailers.Some retailers specialize in selling merchandise at low prices by offering special buys, closeouts, overruns, last seasons goods, off colours, and manufacturers returns.
  4. Warehouse stores
  • These stores sell limited stock in bulk at a discounted rate.
  • In a ware house setting a small membership fee is charged and the consumer get deep discounts on general merchandise.
  • These do not bother much about the interiors of the store and the product display may not be proper.
  1. Promotional stores
  • They are the stores that offer special buys from the manufacturers.
  • Frequent sales is an effort to get customer into the store.
  • The store retailing can also be divided depending on the size as large and small stores.

4.10.Small Stores

  • This store is managed by one person usually the owner who does multiple roles such as manager, buyer, sales person, stock person and book keeper.
  • As sales grow, the owner hires employees who perform wide range of activities.
  • High personalized service is offered to the customers like planning the wardrobe. Through personal contact the needs of the customers are also known.

4.11. Large Stores

 

As sales increases the owner hires more employees and increases space. Managers are hired and retailing functions are divided among the people who specialize in their respective jobs.

 

4.12.Store in a Store Retailing

  1. It is the In-store designer boutique
  • Popular designers require a permanent location for their merchandise.
  • The retailer purchases the product and also provides space.
  • The designer or brand vendor says how merchandise is done visually.
  • In store boutique helps the designers of bands to present their entire collection such that it strengthens their image.

They also sell their own accessories along with clothes.

  1. Leased Departments

For providing additional services for their customer, many stores lease certain departments to an out side organization.

 

These leased departments are retail stores which are owned and operated by an outside firm rather than by the store itself.

  1. Multiple-Unit store

The success of these stores depends on its ability to buy I large quantities and distribute the merchandise and operating costs through out the organization.

 

4.2. Types based on Ownership

 

4.2.1. Sole proprietorship

  • When the stores are owned by a single person it is called sole proprietorship.
  • Most of these stores are owned-managed.
  • There is a flexibility in these stores as they are not bound by corporate rules and they can also respond quickly to the needs of the customers.
  • The owner-manager should have broad range of capacities for operating the businesses.
  • These stores hire financial services and advertising agencies.

4.2.2.  Partnership

  • This is a business owned by two or more persons under a contractual agreement.
  • Each owner can take up or divide the responsibilities.
  • As store hires employees the job becomes more specialized.
  • On growth of the business it can be converted into corporations.

4.2.3.   Corporation

 

All the fashion chains are corporations.

 

The stock holders finance the corporation and elect the board of directors. Each acquired retailer becomes a separate division within the corporation. Each division is semi-independent with its own central merchandising and management.

 

All the divisions share the communication, information, and distribution systems, private label development, catalog production and e-commerce development which helps to reduce the cost.

 

  1. Retail Merchandising 5.1. Merchandising

It is termed as planning, buying and selling of a merchandise.

 

It is an integral part of retailing and is very challenging function.

 

5.2.    Merchandise management

It is termed as the analysis, planning, acquisition handling and control of merchandise of retail operation.

 

5.2.1.    Analysis

 

Analysis is required as the retailer should understand the needs and wants of his target audience.

 

5.2.2.  Planning

 

It is necessary to plan since the merchandise to be sold in future is to be bought in advance.

 

5.2.3.   Acquisition

Merchandise to be sold in retail store, needs to be procured from others.

 

5.3.   Process of Merchandise management includes

 

The developing of strategies to ensure that the right product is bought at the right price, and is available at the right place, at right time, right amount for satisfying the target customers.

 

5.4. Factors affecting merchandising functions

  • Size of the retail organization
  • Organization structure
  • Merchandising to be carried
  • Type of store
  • Size of the retail organization

  5.5.  Merchandising Organization

The merchandising responsibilities are divided between two chains namely the store line and buying line.

 

5.5.1.    Store line

The responsibilities of a store line is to coordinate the movement of goods and people within the store, to train sales associates, to provide customers services, to control expenses, to maintain the building and to maintain security.

 

Store line executives should work together with merchandise managers, buyers, and sales associates to produce positive sales results.

 

The store managers are responsible for merchandising sales, employees and the general success of the store.

 

5.5.2.    Buying Line

 

The merchandise managers and buyers of the buying line must do all the planning and other activities necessary to bring the right merchandise into the store at the right time to satisfy the stores customers.

 

The General Merchandise Managers are incharge of several divisions which may be related like for women’s wear, accessories or they may be totally unrelated.

 

The responsibility of the Divisional Merchandise Managers is segmented into single divisions such as womens sports wear or furnishings, directed by divisional merchandise managers. In the womens area divisional might be in charge of junior dresses or junior sportswear.

 

5.5.3.   Buyers

 

Each division is composed of departments.

 

These departments are based on life-style, styling categories price ranges ot vendors.

 

Womens dresses may be divided into social occasion and career.

 

When it is categorized according to the price, the departments may be divided into designer, bridge, contemporary moderate and budget.

 

In a large chain buying responsibilities may be subdivided like for example Acessories are subdivided into handbags, hosiery, hats, jewelry and so on.

 

5.5.4.    Fashion Merchandising Direction

 

This is established to maintain the cohesive fashion merchandising in line with a distinctive store image.

The owner acts as fashion director and buyer.

 

5.5.5.  Buying Preparations

 

5.5.5.1. Merchandise plan

 

Management determines a fashion merchandising policy a long range stands for fashion buying, selling, and related activities.

 

The merchandise Plan components are Receipt plans, sales plan, mark-up plans, mark-down plans, inventory shortages, end-of-month stock levels, weeks of supply, gross margin, promotional plans and stock turn.

 

Planning sales goals The retailers goal is to exceed its merchandise plan. The aspects which are taken into consideration are economic conditions, market and trend anslyses, shifts in population, local retail competition, variations in consumer demand, seasonal consumer demand, weather, holidays, physical expansion, marketing activities needed for support.

 

The planning should be made on units to be purchased, stock to meet the consumer demand, buying plan that the buyer expects to purchase from vendors, and assort planning where the target group of customers are satisfied.

 

Open to buy is calculated by deducting the planned stock from actual stock.

 

5.5.5.2. Buying

 

There are certain roles for the buyers. They are,

  • Experience Research
  • Bottom- line versus creative aspects of buying Buyer –planner System
  • Buyer as editor
  • Buyers role in marketing – Advertising, Visual merchandising and special events.

Experience

 

The buyers knowledge of merchandise stems from both education and experience.

The ability to evaluate the merchandise and judge the suitability, depends on examining the types of merchandise for quality, style and price.

 

Research

 

This becomes second nature to the buyer.

Research on the following aspects must be done by the buyer.

 

Demographics and psychographics, effect of economic conditions on demand for certain types and prices of merchandise, global influences on styling and sourcing, market and fashion trends, influence of media and competitors merchandise offerings.

 

Bottom- line versus creative aspects of buying

  • The buying process is part of analytical and part creative.
  • The mechanics involve knowledge of sales histories and the development of a merchandising plan.
  • Their increased responsibilities to the bottom-line leave many buyers no choice.

Buyer –planner System

  • The retailers separate buying functions into a buyer-planner system.
  • Here the buyers are able to focus on shopping the market and merchandise selection and finance control where the planners concentrate on distribution.

Buyer as editor

  • Buyers influence consumer buying to a large degree by their selection of merchandise which narrows the choice for the consumer.
  • They have to show collection to represent them properly.

 

Buyers role in marketing – Advertising, Visual merchandising and special events.

The buyer makes plans for advertising, visual merchandising and special events.

 

5.6.  Merchandising Evaluation

  • Based on the merchandise sold on evaluation the retail executives are able to plan for the future before beginning a new cycle of buying and selling.
  • The awards, bonus and performance appraisals are also directly related to the achievement of financial goals.
  • These evaluations can be ongoing and periodic processes.

 

Analyses and Comparisons

 

The buyer may compile a vendor analysis showing the initial markup, markdowns, and profit percentages gained on products from an individual resource.

Comparisons are made with the previous year’s data for the same period. When compared, with the merchandise plan, the results show how well the store met its objectives established at the beginning of the period and objectives.

 

Conclusion

 

So in this module we have seen about store retailing and retail merchandising. I hope this would be useful for the viewers. I conclude this module saying that the customer service has become very important these days. The customers satisfaction has become the prior importance. So retailers should serve the public effectively and efficiently for ensuring the growth and development of the firm.

you can view video on Fashion Retailing and Merchandising

 

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