Six-Month Merchandise Plan: Development

Preparing the Six-Month Merchandise Plan

(Section 3, Part 1)

This course provides step-by-step procedures, with needed formulas and additional information, for developing the Six-Month Merchandise Plan.

We recommend printing off the course content reference guide to assist you in the third section of How to Think Like a Buyer courses: Preparing the Six-Month Merchandise Plan.

Three Stage Development

Careful planning and monitoring of the Six Month Merchandise Plan or Budget is one of the major factors contributing to the success and profitability of the retailer. The merchandise plan is constantly monitored by the retailer and buyer and is used as a tool to measure the success or the lack thereof for the retail store or department.

Retailing Terminology

Retailing is all the business activities involved in planning and procuring goods and services from vendors and pricing, positioning, presenting, packaging, promoting, and ultimately selling those goods to the target consumer.

Merchandising is all the business activities involved in planning, creating, distributing, and marketing merchandise assortments and classifications to the target consumer while reflecting the company image. There are different types of merchandising based on which link or level (i.e., fiber, textile, apparel/home furnishings companies, retail stores) in the supply chain the merchandising is housed.

Terminology for Six-Month Merchandise Plan

The Six-Month Merchandise Plan/Budget is:

• A dollar plan that controls the merchandise activities of the retailer
• A blueprint, map, or guide for assisting the retailer in attaining realistic retail objectives and sales goals
• A projection in retail dollars of the amount of merchandise that is needed to achieve the planned sales goals
• A merchandise vehicle that coordinates the balance of sales and stock or inventory levels
• A tool to estimate the value of inventory needed in the store for a given period of time
• A merchandise vehicle that coordinates sales, stock or inventory levels, purchases, reductions (i.e., markdowns, shrinkage/shortages, employee discounts, customer returns, and allowances), initial markup, gross margin, and turnover
• A means by which the retailer can measure the effectiveness of current business operations by analyzing actual figures as compared to plan in order to evaluate and improve the buying process
• A plan for the future that can be reviewed and revised or adjusted throughout the period
• An organized “how-to” guide that may impact the retailer’s day-to-day merchandising activities