Six-‐Month Merchandise Plan Case Study Assignment
Merchandising Math Professor Jujuan Brown
Group E Anna Beyer Victoria Kuzmina Nandita Malik
Club Monaco
About Club Monaco Corporation designs, manufactures, and markets clothing, accessories, and home collections. It offers products ranging from clothing and accessories to eyewear, watches, sunglasses, and cosmetics for men and women. Club Monaco Corporation operates its own stores in North America, Canada, Hong Kong, Taiwan, Seoul, the United Arab Emirates, and the United States. The company was founded in 1985 and is based in Toronto, Canada. As of May 5, 1999, Club Monaco Corporation operates as a subsidiary of Ralph Lauren Corporation. Club Monaco is a mid-‐priced, high-‐end casual clothing retailer. The brand alternates between casual styles during the northern spring and summer and more formal offerings during autumn and winter. The company is best known for its classic "black and white" styles, from which pieces of color are paired. Its headquarter is in New York City in the heart of west Chelsea’s gallery district, Club Monaco appeals to the creative consumer—a group of cultural influencers who mix fashion must-‐haves with timeless classics. The represents a distinctly urban-‐casual point of view, best defined as a sophisticated play of opposites: mixing vintage with new, hard with soft and eclectic with minimal.
(http://rmo-‐comms.com/clients/club-‐monaco/)
Target Market
Club Monaco aims to target and embrace a younger demographic that likes to style based on a simple and sophisticated look.
Data Slide 2 For this assignment I used NY’s flagship store ZIP code information. Based on ZIP code data is taken from Nielsen (as of 2011) and VALS® analysis Slide 4 PRIZM®: lifestyle segmentation system, which combines demographic, consumer behavior and GEO data. P$YCLE®: segmentation system that uses demographic factors, which influence financial behavior. ConneXions®: segmentation system, which analyzes usage of technology and communication media. Slide 6 *Data taken from Men’s Lifestyle Monitor at Cotton Inc. (2012) As men continue to establish themselves as consumer power to be reckoned with, their shopping habits and expectations should be thoroughly reviewed. Club Monaco marketing strategy for their men customers is based on latest consumer behavior trends. Brand’s philosophy is in sync with “Fit-‐Comfort-‐Price/Quality” male consumer psychology, as Club Monaco is best known for its well-‐made, affordable basics, perfect for younger more trendy customers and mature more traditional ones.
Brands
Gloverall
Barbour
Ray-Ban
Groverall
Archival
Mark McNairy
Groverall is an authentic British brand that came into existence in the 1950’s. Gloverall marked the beginning of what was to become an iconic brand and originator of today’s duffle coat. The coat owes its popularity to the British Royal Navy. The style has been popular since World War I. It is also famous for its trench and classic coats.
John Barbour in England founded Barbour in 1894. It is popular for its waxed and quilted jackets. The brand offers sweaters, moleskin clothing, corduroy clothing, and Tattersall shirts as well. It has recently entered the "waterproofbreathable" market with own type waterproof liners, cordura external fabric and polar fleece sweaters.
Founded in 1937 by Bausch and Lomb, USA, Ray-Ban has been the most famous name when it comes to sunglasses. Quality, fashion, and style are the prominent features of Ray-Ban. A sunglass to protect the aviators of US army was the reason with which it was introduced. Over the years it went on to become a style statement for people across the country and then the world.
Mark McNairy
Mark McNairy is an American Fashion designer. His collection is knows as Mark McNairy New Amsterdam. Recently, McNairy has launched an English and American inspired footwear range as the first component of his famous label.
Archival Clothing was established in August of 2009 with the goal of creating products that would be good enough to feature on the Archival Clothing blog, in which heritage apparel is researched, written about and field tested. The brand believes in supporting US-based apparel companies and manufacturing traditions, with a long-term goal of helping to stimulate the domestic market and encourage US manufacturers to expand their offerings.
Products
Fashion Apparel Shirts (men & women): $80-$150 Dresses: $120-$180 Blazers (men): $350-$550 Trousers (men): $150-$250 Eyewear (brands include RayBan & Selima Elizabeth): $145- $235
Accessories- Women Handbags: $145-$595 Belts: $45-$89 Jewelry: $35- $60 Accessories- Men Bags: $75-$395 Belts: $35-$300 Small Accessories: $49-$295 Home collection Home, Books & Stationary: $26-$75 Markets “Made in the U.S.A.� collection for men The retailer launched an exclusive line that might appeal to the inner patriotism of consumers. Jackets and blazers range from $235 to $650, trousers cost $245, shirts are in the range of $140, ties cost $89.50, while denim is $139 to $149. This collection of forty items has been designed by Aaron Levine, artistic director of Club Monaco, and blogger Michael Williams of A Continuous Lean. Together they have created a line of casual shirts, jackets, ties and trousers, all manufactured in different workshops in the United States. The line's price points include shirts for $160 and ties under $100, rounded out by fine leather goods or shoes made in America by brands like Wolverine, Ernest Alexander, Rancourt, and Wood & Faulk Northwesterner. However, the line, which can be viewed on the Club Monaco website, is not content with just the U.S. market but is looking to promote its name beyond national borders.
Store Visuals
Chicago, IL
Short Hills, NJ
Santa Fe, NM
Lifestyle Visuals
Merchandise plan
Month February March April May June July
% Of Season’s Sales 15.5 17.5 19.0 18.0 15.5 14.5 -‐
Total a) Sales February Sales: 650,000(0.155)= $100,750.00 March Sales: 650,000(0.175)= $113,750.00 April Sales: 650,000(0.19)= $123,500.00 May Sales: 650,000(0.18)= $117,000.00 June Sales: 650,000(0.155)= $100,750.00
$ Sales $100,750.00 $113,750.00 $123,500.00 $117,000.00 $100,750.00 $94,250.00 $650,000.00
% Of Season’s Reductions 15 12 19 16 18 20 -‐
$ Allocated Reductions $21,450.00 $17,160.00 $27,170.00 $22,880.00 $25,740.00 $28,600.00 $143,000
July Sales: 650,000(0.145)= $94,250.00 b) Total Dollar Reductions & Allocated Reductions Total $ Reductions= 650,000(0.22)= $143,000.00 Monthly $ Allocated Reductions: February: 143,000(0.15)= $21,450.00 March: 143,000(0.12)= $17,160.00 April: 143,000(0.19)= $27,170.00 May: 143,000(0.16)= $22,880.00 June: 143,000(0.18)= $25,740.00 July: 143,000(0.20)= $28,600.00 c) BOM Inventory Values (BOM Stock Method) Average Stock for Season= Sales for the Season/ Stock Turnover for Season Average Stock for Season= 650,000/1.9 Average Stock for Season= $342,105.26 Average Monthly Sales: 650,000/6= $108,333.33 Basic Stock= Average Stock-‐Average Monthly Sales Basic Stock= 342,105.26-‐108,333.33 Basic Stock= $233,771.93 BOM Stock= Sales for the Month + Basic Stock February: 100,750+233,771.93= $334,521.93 March: 113,750+233,771.93= $347,521.93 April: 123,500+233,771.93= $357,271.93 May: 117,000+233,771.93= $350,771.93 June: 100,750+233,771.93= $334,521.93 July: 94,250+233,771.93= $328,021.93 d) EOM Inventory Values February: $347,521.93 March: $357,271.93 April: $350,771.93 May: $334,521.93 June: $328,021.93 July: $342,105.23 July EOM Calculation: 334,521.93 347,521.93 357,271.93 350,771.93 334,521.93 + 328,021.93 2,052,631.40
Season’s Average Stock Level (JULY EOM): 2,052,631.40/6= $342,105.23 e) Planned Purchases at Retail ($Monthly Sales)+($Monthly EOM)+($ Allocated Reductions)-‐($Monthly BOM) February: (100,750.00)+(347,521.93)+(21,450.00)-‐(334,521.93)= $135,200.00 March: (113,750.00)+(357,271.93)+(17,160.00)-‐(347,521.93)= $140,660.00 April: (123,500.00)+(350,771.93)+(27,170.00)-‐(357,271.93)= $144,170.00 May: (117,000.00)+(334,521.93)+(22,880.00)-‐(350,771.93)= $123,630.00 June: (100,750.00)+(328,021.93)+(25,740.00)-‐(334,521.93)= $119,990.00 July: (94,250.00)+(342,105.23)+(28,600.00)-‐(328,021.93)= $136,933.30 f) Initial Markup Percent Needed Planned Initial Markup %= (Expenses+Profit+Reductions+Alterations-‐Cash Discount)/ (Net Sales +Reductions) (34% + 7.5% + 22% + 0.5% -‐ 1.6%)/ (100% + 22%) (62.4%)/(122%)= 51.15%
Case Study
Case Study Question 1. I. Change the look of the store. II. Change the marketing strategies. III. Adequate stock planning. Case Study Question 2. Markdown is the most common tool used in price changing process as it can create/boost customer traffic, increase sales, which will result in having additional funds to buy new merchandise. It can also be a competitive method. Planning markdowns is the third step in merchandising plan after planning sales and planning
stocks. Markdowns are planned based on past experience as well as on current situation. As with planned sales figures, planned markdowns should be as realistic as possible. As we’re reviewing Spring-‐Summer season, traditional markdown will take place during sale season, which is in July (4th of July is the big marketing event; July will see big commercial operations and huge advertising campaigns around our “Made in the U.S.A.” men collection). Smaller markdowns will happen during season. For example, winter collection stock (out-‐of-‐season goods) will still be available, although Spring-‐ Summer collections will be an obvious focus. In order to free stock space and still make profit of last season’s merchandise, markdowns for outerwear and knitwear in February/early March are logical. There could be also promotional or special markdowns, which are made exclusively for online store’s merchandise and aimed at our younger target market (for example, a markdown on beachwear collection in late May). This type of markdowns will be hugely promoted via social networks (which our brand actively uses) and it will be a significant part of season’s marketing plan. Therefore, our top month for markdowns with maximum net sales will be July. Smaller, but still important, markdowns will happen in February and late May. Case Study Question 3. As we are preparing Feb – Mar – Apr – May – Jun – Jul merchandise plan, we are examining Spring-‐Summer season. Our brand’s merchandise choice is, obviously, based on given season’s needs. We also take into consideration Club Monaco’s flagship store location – New York. (Dollar sales curve is for fashion apparel and is based on Anna’s sales figures per month) Month
Dollars ($)
Percent (%)
February
100,750.00
15.5
March
113,750.00
17.5
April
123,500.00
19.0
May
117,000.00
18.0
June
100,750.00
15.5
July
94,250.00
14.5
February is quieter month, coming after January sales. There still be stock of autumn-‐ winter collection, which should be sold. March starts to build anticipation for spring-‐summer collection, as weather becomes warmer with more sunny days. (A point for consideration: Easter can fall either in March or April. Sales curve will display this accordingly as sales usually increase during Easter time.) April is our top month in terms of profit; therefore, we are going to heavily invest in seasonal merchandise promotion and advertising. Spring-‐summer collection is presented in its entirety at the store. May is also an active month, although focus will begin to shift from spring merchandise to summer one – more light and open. June will register noticeable drop in sale. One of the factors may be end of semesters at Universities and students’ moving out of town. July is month of seasonal sales, so average value of item will drop dramatically, which will result in decrease of sale. July precedes August, which is a “back to school/university” month. Many of customers will safe in July in order to be able to purchase in August. Case Study Question 4. Sales planning is the first step of merchandising plan. Sales goals should be realistic and accurate, because it’s the basis of all other figures in the plan; sales are planned on a net basis. Sales are influenced by many factors, external and internal. Of course, merchandiser should take into account customer’s tastes (and shifts in target market preferences), ability to buy. But also, external factors as employment level, health of economy, competitors’ activities, fashion directly influence planning. We are discussing 6-‐month merchandising plan, spanning from February to July, and we should take into account holiday season (Easter), summer sales season in July, post-‐January sales
decline in February among other things. Regarding internal changes, marketing strategy and level of investments in marketing plan, changes in store policies and formats should also be considered. Adding/focusing on e-‐commerce and m-‐commerce are two big operations, which have direct effects on planning at all levels (merchandising, marketing, finance and corporate). Historical data on sales plans and actual figures for given season (Spring-‐Summer, in out case) should be carefully studied. Stock planning is the next step after sales estimation. Stocks are highly important as they represent capital investments and every retailer is interested in ROI, in the end. Moreover, in order to meet planned sales figure, the amount of stock at the BOM should be defined. Therefore, there is a direct relationship between planned stock and planned sales. Planned turnover also impacts ROI or efficiency of capital invested into stock. It also evaluates planned stock. In theory, stock turnover should be rather high (more popular products have higher stock turnover, obviously).