Merchandise and Category Management
This chapter will explain the different attributes of a retailer’s merchandise mix and the factors to consider when merchandise planning. The chapter discusses the merchandise mix, the development and importance of store brands and the integration of merc
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Merchandise and Category Management
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Abstract
This chapter will explain the different attributes of a retailer’s merchandise mix and the factors to consider when merchandise planning. The chapter discusses the merchandise mix, the development and importance of store brands and the integration of merchandise planning into the broader process of category management.
12.1
Merchandise Mix
Product assortment is at the core of the retailing offer. A retailer’s total product offering is called its merchandise mix or product range (Varley 2014, p. 82). At a strategic level, merchandise management includes the process of selecting the right items for a store and, at an operational level, ensuring they are available when customers want to purchase them. The latter function is discussed in more detail in Chap. 18 and 19. Items in the assortment are organised into groups called categories. Merchandise planning involves selecting the right categories and the items within them. Selecting the appropriate items for a store or an online shop requires choosing the breadth and depth of the assortment, quality levels and the brand portfolio. The lowest level of detail identifying a product in a retailer’s assortment is the stockkeeping unit (SKU), which identifies a particular item. For example, a pair of trousers of a certain brand in a particular style, colour and size is one SKU, or a bottle of a specific ketchup brand in a specific size and variant. The number of SKUs at various retailers varies tremendously. While hard discounters often carry around 1000 SKUs, a supermarket has 10,000–15,000 SKUs. A typical hypermarket assortment reaches around 80,000 SKUs. A © Springer Fachmedien Wiesbaden 2017 J. Zentes et al., Strategic Retail Management, DOI 10.1007/978-3-658-10183-1_12
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12 Merchandise and Category Management
DIY store can have around 50,000 SKUs, and a home accessories and furniture store like IKEA will have as many as 12,000 SKUs in a store. Items in the assortment can be grouped using many different criteria. The length of the product lifecycle is one important classification criterion (Berman and Evans 2013, pp. 386–387): • Staple merchandise defines products which the retailer carries permanently and which have relatively stable sales. A hammer or a paintbrush at a DIY retailer or jeans and white T-shirts at a department store are examples of staple goods. • Fashion merchandise refers to products that have cyclical sales because of changing tastes and lifestyles. Colours and cuts of clothing change, and fashion products offered one year are usually out of date the next. • Seasonal merchandise refers to products that only sell well during particular periods. Barbecues, skiing equipment, shorts and similar products have very high sales during one season, but are hardly sold at all during other seasons. • Fad merchandise generates very high sales for a short period. Toys and games, certain clothing accessories or certain music CDs are often fads. Tamagochis and Pokémon are examples of classic fads. Mo
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