Merchandise Planning is the planning and control of inventories to meet desired sales and product-related objectives. It also includes the planning of the size and assortment of the merchandise inventories, as well as a variety of functions dealing with the purchase, display, pricing, promotion, and sale of merchandise.
The Indian retail market is predominantly unorganized as organized retail just accounts for close to 10% of country’s annual retail business. All the major industries like FMCG, Pharma, Building material, Plywood, Sanitaryware, Tyres etc. are primarily unorganized and require state or region level distributors to penetrate their products, given the way the markets are structured and operated. So be it new brands which plan to enter market or existent brands which plan to diversify into newer cities, a distribution network is essentially required.
In a world of intense competition and frequently changing consumer tastes & preference, a lot of stores experience declining sales. It is quite common that a brand has some stores reaping good sales year-on-year while others becoming stagnant or declining.
Lifetime customer value (LCV) is an idea that each customer should be analyzed in terms of current and future profitability to a brand. When a profit figure can be assigned to each customer, the marketing manager can then decide which customers to target.
The past profit that a customer has produced for the brand is the sum of the margins of all the products purchased over time less the cost of reaching that customer. This is feasible for firms which maintain their customer data like e-commerce firms and businesses selling products & services in an organized retail set-up. For other firms, there is dearth of customer data like businesses having unorganized selling channels (for eg. Kirana stores, pharmacies) and firms which have products which do not come with any warranty and hence no customer data is gathered for providing post-purchase service (for eg. Building material, paint & hardware etc.). For such businesses, a consumer panel can be built by considering a sample of consumers from all types of important markets. Frequently reaching out to this panel will generate awareness around consumer’s present consumption basket.