Merchandise Strategy: Case Study Team Project
Jones, R. P., & Levy, M. (2011). Merchandise Strategy: Process for Success. In M. Levy & B. Weitz, A. (Eds.), Retailing Management (8 ed.). New York, NY: McGraw-Hill Irwin.
Merchandise Strategy: Process for Success
Tom had just started his new job as Vice President of Merchandise. He knew that the categories he was now responsible for had been declining in performance for several years and he had been hired to turn those categories around. Tom recognized immediately that to accomplish this turnaround he and his new team would need to develop a sound merchandise strategy. Tom called in his merchandising team of which consisted of buyers, assistant buyers, and planners for each product category. He laid out a process to have each member of the team gather valuable information to be used by the team in the creation of their product category merchandise strategy. The team would gather information on customers, pricing and product and evaluate the information to identify growth areas. But first Tom required each product category team to develop a mission statement reflecting how the team would approach their business going forward.
Tom requested each category team upon completion of their merchandise strategy, to prepare a brief presentation which expresses and supports their merchandise strategy as well as their recommendations regarding areas for future growth. The presentations would be reviewed by Tom, the General Merchandise Manager and the President. Each merchandise strategy presentation would include details regarding the following material as they relate to the teams product category and should be arranged in following order:
Mission Statement
Determined in collaboration with all team members, the mission statement is designed to be the guiding principles of the merchant team and would include the following:
§ Need: Why does the company need this product category?
§ Integration with corporate: How this category furthers the corporate mission?
§ Objective: What are the short and long term goals for this category?
§ Strategy: What will your merchandise team do to achieve all the above?
Customer Profile
Provided by the planners, the customer profile identifies the target consumer to drive merchandise decisions for the product category and would include the following:
§ Customer Demographics (e.g., age, sex, race, income)
§ Customer spending and shopping habits (e.g., regular price v. sale price; weekend v. weekday)
§ Customer product fashion dimension (e.g., fashion v. Basic)
§ Customer quality dimension (e.g., low quality v. high quality
§ Customer value dimension (e.g., low importance v. high importance)
§ Key volume price point triggers by product category (e.g., polo shirt $19.99)
Product Guidelines
Provided by the buyers the product guidelines define characteristics that best suit the target consumer for the product category and would be based on the following information:
§ Style: Look, feel, color, shape, fashion direction (forward or laggard)
§ Sourcing: Domestic, international, branded, private label, co-brand, designer
§ Quality: Standards, material use, workmanship
§ Price: Opening price points, mid-range price points and high-end price points
§ Assortment: Breadth versus depth of product assortment in the category
Pricing Strategy
Provided by the assistant buyers, the pricing strategy defines the price range of key product lines in the category in relation to the competition and helps define product sourcing and product hierarchy decisions. Pricing strategy should also reduce intra-company competition. Pricing strategy addresses internal and external competition and includes:
§ Assortment: Product pricing by category to address internal competition.
§ Competition: Product pricing by category to address external competition.
Recommended Growth Strategy
Opportunities for future growth are determined by the team and should be fully supported by the information the product category team compiled. The growth strategy includes:
· Category and sub-category development
· New or expanded assortments
· Reduced or eliminated products, categories or sub-categories
Student Instructions
Each team should begin by selecting a retailer. The team should profile the retailer, its place in the industry and its position on merchandise assortments and its positioning against its competition. Information at the corporate level that can be gathered which relates to the merchandise strategy (e.g., mission statement) should be included in the presentation. Bearing in mind the retailer selected, each team should select a product category or sub-category to be the focus of the merchandise strategy. For example:
· Retailer: Macy’s
· Product Category: Men’s sportswear
· Product Sub-Category: Men’s woven sport shirts
This selection scheme can be developed for any type of retailer. The goal is to select a category that is big enough but not so large as to require multiple strategies. (For example; Menswear would require multiple strategies). It may be best to review your selection with your instructor. Within each team, members should each be assigned a specific role of buyer, assistant or planner. Each team member has a specific role to play and information to gather. Throughout the merchandise strategy process you may need to use public industry data to fill in for information you will not be able to gather from the retailer directly. This may include store trips and on-line searches.
It is recommended that an initial meeting be held by the team to develop the mission statement. The mission statement sets the direction of the team in the process of gathering the appropriate information and analyzing the product, customer, pricing and areas of growth.
When all the information is gathered each team should again meet to develop the recommended growth strategy based on the mission statement and the data assembled from all team members. Next, each team should develop a brief Power Point style presentation detailing their findings regarding; Mission Statement, Customer Profile, Product Guidelines, Pricing Strategy, and Recommended Growth Strategy. Each presentation should be structured in this order and address at a minimum, each of the points outlined for each topic. Team member can use the notes section for each slide to detail the information they gathered, how it was obtained and how they came to their conclusions. If information is obtained from published materials, proper citation should be given.
Tom had just started his new job as Vice President of Merchandise. He knew that the categories he was now responsible for had been declining in performance for several years and he had been hired to turn those categories around. Tom recognized immediately that to accomplish this turnaround he and his new team would need to develop a sound merchandise strategy. Tom called in his merchandising team of which consisted of buyers, assistant buyers, and planners for each product category. He laid out a process to have each member of the team gather valuable information to be used by the team in the creation of their product category merchandise strategy. The team would gather information on customers, pricing and product and evaluate the information to identify growth areas. But first Tom required each product category team to develop a mission statement reflecting how the team would approach their business going forward.
Tom requested each category team upon completion of their merchandise strategy, to prepare a brief presentation which expresses and supports their merchandise strategy as well as their recommendations regarding areas for future growth. The presentations would be reviewed by Tom, the General Merchandise Manager and the President. Each merchandise strategy presentation would include details regarding the following material as they relate to the teams product category and should be arranged in following order:
Mission Statement
Determined in collaboration with all team members, the mission statement is designed to be the guiding principles of the merchant team and would include the following:
§ Need: Why does the company need this product category?
§ Integration with corporate: How this category furthers the corporate mission?
§ Objective: What are the short and long term goals for this category?
§ Strategy: What will your merchandise team do to achieve all the above?
Customer Profile
Provided by the planners, the customer profile identifies the target consumer to drive merchandise decisions for the product category and would include the following:
§ Customer Demographics (e.g., age, sex, race, income)
§ Customer spending and shopping habits (e.g., regular price v. sale price; weekend v. weekday)
§ Customer product fashion dimension (e.g., fashion v. Basic)
§ Customer quality dimension (e.g., low quality v. high quality
§ Customer value dimension (e.g., low importance v. high importance)
§ Key volume price point triggers by product category (e.g., polo shirt $19.99)
Product Guidelines
Provided by the buyers the product guidelines define characteristics that best suit the target consumer for the product category and would be based on the following information:
§ Style: Look, feel, color, shape, fashion direction (forward or laggard)
§ Sourcing: Domestic, international, branded, private label, co-brand, designer
§ Quality: Standards, material use, workmanship
§ Price: Opening price points, mid-range price points and high-end price points
§ Assortment: Breadth versus depth of product assortment in the category
Pricing Strategy
Provided by the assistant buyers, the pricing strategy defines the price range of key product lines in the category in relation to the competition and helps define product sourcing and product hierarchy decisions. Pricing strategy should also reduce intra-company competition. Pricing strategy addresses internal and external competition and includes:
§ Assortment: Product pricing by category to address internal competition.
§ Competition: Product pricing by category to address external competition.
Recommended Growth Strategy
Opportunities for future growth are determined by the team and should be fully supported by the information the product category team compiled. The growth strategy includes:
· Category and sub-category development
· New or expanded assortments
· Reduced or eliminated products, categories or sub-categories
Student Instructions
Each team should begin by selecting a retailer. The team should profile the retailer, its place in the industry and its position on merchandise assortments and its positioning against its competition. Information at the corporate level that can be gathered which relates to the merchandise strategy (e.g., mission statement) should be included in the presentation. Bearing in mind the retailer selected, each team should select a product category or sub-category to be the focus of the merchandise strategy. For example:
· Retailer: Macy’s
· Product Category: Men’s sportswear
· Product Sub-Category: Men’s woven sport shirts
This selection scheme can be developed for any type of retailer. The goal is to select a category that is big enough but not so large as to require multiple strategies. (For example; Menswear would require multiple strategies). It may be best to review your selection with your instructor. Within each team, members should each be assigned a specific role of buyer, assistant or planner. Each team member has a specific role to play and information to gather. Throughout the merchandise strategy process you may need to use public industry data to fill in for information you will not be able to gather from the retailer directly. This may include store trips and on-line searches.
It is recommended that an initial meeting be held by the team to develop the mission statement. The mission statement sets the direction of the team in the process of gathering the appropriate information and analyzing the product, customer, pricing and areas of growth.
When all the information is gathered each team should again meet to develop the recommended growth strategy based on the mission statement and the data assembled from all team members. Next, each team should develop a brief Power Point style presentation detailing their findings regarding; Mission Statement, Customer Profile, Product Guidelines, Pricing Strategy, and Recommended Growth Strategy. Each presentation should be structured in this order and address at a minimum, each of the points outlined for each topic. Team member can use the notes section for each slide to detail the information they gathered, how it was obtained and how they came to their conclusions. If information is obtained from published materials, proper citation should be given.