Assignment
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, consisting of several groups, each representing a different category and composed of buyers, assistant buyers, and planners. He laid out a process to have each group gather valuable information on the categories for which it is responsible to be used in the creation of an overall merchandise strategy. Each group would gather information on customers, pricing and products and evaluate the information to identify growth areas for their category.
But first Tom required each product category team group to develop a mission statement reflecting how the team would approach their business going forward. Tom requested each category group upon completion of their merchandise strategy, to prepare a brief presentation that 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 groups' product category and should be arranged in the following order: MISSION STATEMENT The mission statement is designed to be the guiding principles of the group and would include the following:
• Need: Why does the company need this product category?
• Integration with corporate: How does this category further the corporate mission?
Objective: What are the short and long term goals for this category?
• Strategy: What will the group do to achieve all the above? CUSTOMER PROFILE 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 preference 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 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 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 group and should be fully supported by the information the group 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 group should begin by selecting a retailer. The group 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 that 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. 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 online searches. It is recommended that an initial meeting be held by the group to develop the mission statement. The mission statement sets the direction of the group 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 group should again meet to develop the recommended growth strategy based on the mission statement and the data assembled from all group members. Next, each group should develop a brief PowerPoint 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. Group members 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.
DISCUSSION QUESTIONS
1. Which of the main components of a merchandise strategy are most valuable? Why
2. Why is a mission statement so important to a merchandise strategy?
3. Does every merchant team have a merchandise strategy? Why or why not?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.