Assessment 3 Merchandise Strategy JEANNIE OCTAVIANI 00158822T
Brief You are the Senior Menswear Buyer at Glue Store. You are having some issues with The Academy Brand experiencing late deliveries and increased cost prices leading to margin pressure on your side. After much discussion the Head of Buying wants you to design a new house brand to replace The Academy Brand business across Glue Stores. The HOB has asked you to complete: 1. 2. 3. 4. 5. 6.
A thorough trend analysis Name and brand description for the new house brand A Sales Forecast for High Summer (Oct, Nov, Dec) | Approximate OTB for the period Complete a range plan based on OTB Determine target cost prices based on cost factors provided Split your range into 3 monthly drops
Part 1 – Brief You are designing a brand to replace the academy brand business in Glue Store. Who is this customer? In Part 1 you need to complete the following for your new house brand: • Brand description • Brand essence • Trend analysis What will the new brand look like and why? Include a few thumbnails of how you envisage this brand to look. This should be roughly 300 words all up
Part 1 – Brand Description & Essence Brand Name Kala Studio Brand Description Kala Studio is Ready-to-Wear Australian Brand providing staple pieces for mens. Providing high quality and durable material also effortless style that comes with accessible price. Kala Studio fulfills their target customer by filling in the gap for the market, creating a piece for everyone, every shape, and every skin color. Brand Onion Brand Personality : Effortless Freedom Approachable Real Brand Values : Narrative and storytelling, sizes for everyone, plenty color options, oremium high quality. Brand Essence : Young Active Everyday Target Customer Kala Studio target customer stands between 16-26 years old who are students and workers who live in the city and near the beaches. They have income between $30.000 - $40.000 a year. They typically shop in Glue Store, General Pants & Co, or Myer. They like to shop easily as they’re a part of Millennials. Kala Studio psychographic segmentation includes young men who are outgoing, active, and a part of medium to upper class economy. Kala Studio customer enjoys watching movies, listening to music, and going to the beach. They are also closely engaged with friends, social media, nature, and adrenaline. What's it look like & why In order to replace The Academy Brand, house brand’s branding needs to look double the coolness, fit more size of people nicely (in terms of various lengths), and offer different style of necklines and hems to fulfill customer demands. By providing that and sold with a lower price, customer should be looking at the house brand with the same insights. Reference Buyers' Briefing S/S 17: Menswear Key Items 2017, WGSN, accessed 8 December 2017, <http://www.wgsn.com>
Part 1 â&#x20AC;&#x201C; Brand Visualization
Part 1 â&#x20AC;&#x201C; Target Customer
Part 1 â&#x20AC;&#x201C; Trend Analysis Minimalist Print Bomber
Easy Fit Tanks
Cropped Skater Pants Polo Shirt
Slouchy Tee Utility Cargo Pants Long Slit Hem Shirt
Part 2 – Brief The new brand is set for launch in high summer starting October 1. From sales history given to you on the Academy Brand you need to complete a sales forecast for the period accounting for the following factors: • • •
• • •
Glue has added 4 new stores since last summer taking the total stores to 50 stores Australia wide You want your new brand to sit $5.00 under the average Academy price points across all categories As Academy Brand will be difficult to replace, the chances are you will not replace the sales entirely your first season. The HOB has given you a target and expects you can reach 70% of the Acad Brand Sales. However given heavy demand of Tees and Tanks you only expect unit sales to shrink by 20% With GP targets given to you, you will need to work out your target cost prices Use data given on the next page to complete Part 2 Present final Sales Forecast in a spreadsheet – see week 9 slides
Part 2 â&#x20AC;&#x201C; Sales Data PART 2 Sales Data No. Product Class 1 2 3 4 5 6
Tees Tanks Shirt SS Swim Shorts Walk Shorts Chinos
Units Sold Academy 7000 4500 2700 5500 6000 1700
Unit Decline % 20% 20% 30% 30% 30% 30%
Unit Forecast 5600 3600 1890 3850 4200 1190
Average Sell Academy $30 $20 $45 $40 $50 $90 Total
Store Sell Price New Price Reduction Points Growth % $5 $25 8.70% $5 $15 8.70% $5 $40 8.70% $5 $35 8.70% $5 $45 8.70% $5 $85 8.70%
Sales Forecast $152,174 $58,696 $82,174 $146,467 $205,435 $109,946 $754,891
Part 3 – Brief Using information provided to you below and your Forecasted Sales Figure from Part 2 formulate your OTB for the upcoming season. •
• • •
From your Sales Forecast generated in Part 2 you are aiming for a sell through rate of 80%. You will you mark down the remaining 20% of stock by 30%. Calculate the forecasted markdown figure. Ending Inventory has been estimated at 10% of the total Sales Forecast Beginning Inventory. In this case you have leftover Academy stock which will effect your OTB estimation. You currently have $150,000 worth of Academy Brand which will serve as your Beginning Inventory.
Use the above information and the OTB formula to estimate the OTB for your new brand for the high summer season.
Part 3 â&#x20AC;&#x201C; Markdown Value PART 3 Calculating Markdown Value No. Product Class 1 2 3 4 5 6
Tees Tanks Shirt SS Swim Shorts Walk Shorts Chinos Total
Sales Sell Through Unsold Stock Mark Down Forecast $151,200 80% $30,240 30% $58,320 80% $11,664 30% $81,648 80% $16,330 30% $145,530 80% $29,106 30% $204,120 80% $40,824 30% $109,242 80% $21,848 30% $750,060
MD VALUE $9,072 $3,499 $4,899 $8,732 $12,247 $6,555 $45,004
Part 3 – Open to Buy Brief Brief : • 4 New Retail Stores • Forecast Sales : $754,891 • Beginning Inventory : $150,000 • Planned Markdowns : $45,004 • Forecasted Ending Inventory : $75,489
Part 3 â&#x20AC;&#x201C; Open to Buy OTB Forecast : Planned Sales = $754,891 + Markdowns = $45,004 + Ending Inventory = $75,489 - Beginning Inventory = $150,000 OTB* = $725,384 *Note â&#x20AC;&#x201C; this figure we have generated in retail terms
Part 4 – Brief In part 4 you will need to complete a range plan with the using the OTB you have calculated. 1. Find OTB Per Class based on “Range Make Up” Percentages 2. Use the average sell price to calculate units required 3. Using total store number and units per SKU per store calculate total quantity required per SKU 4. Use units required and total quantity per SKU to obtain total SKUs required OTB $720,070.00
Part 4 â&#x20AC;&#x201C; Range Plan PART 4 Range Plan No.
Product Class
Range Make Up
1 2 3 4 5
Tees Tanks Shirt SS Swim Shorts Walk Shorts
30% 12% 5% 18% 25%
OTB Per Class $216,021.0 $86,408.40 $36,003.50 $129,612.6 $180,017.5
6
Chinos
10%
$72,007.00
Total
100%
$720,070
Average Sell Price
Units Required
Total Stores
$25 $15 $40 $35 $45
8641 5761 900 3703 4000
50 50 50 50 50
$85
847
50
23852
Units per SKU QTY per SKU per Store 12 600 12 600 10 500 10 500 12 600 8
400
Total SKU Required 14 10 2 7 7 2 42
Part 5 – Brief Originally the cost price had been FIS meaning your supplier had given you one price to meet your requirements which included pick and pack, shipping as well as duties and customs. They have an issue with the factory in China are have told you they can only ship in one bulk, meaning your stock with not be picked and packed per store and you will have to take care of shipping plus duties and customs. • • • • •
Analyise the additional cost below and calculate new landed cost and GP% Work out a new FOB price that will take account of your original margin requirements PART 5 Determine Target Cost Prices Add additional costs to the original cost price and add 10% to get the new landed cost Find the current GP% using the landed cost and target sell
Part 5 â&#x20AC;&#x201C; Target Cost Price PART 5 Determine Target Cost Price Additional Costs No.
Product Class
Target Sell
GP Required
FIS Price (AUD)
Pick and Pack
Storage
Shipping
Customs & Duties
Landed Cost (AUD)
Current GP
1 2 3 4 5
Tees Tanks Shirt SS Swim Shorts Walk Shorts
$25 $15 $40 $35 $45
65% 65% 55% 60% 55%
$8.75 $5.25 $18.00 $14.00 $20.25
$0.50 $0.50 $0.50 $0.50 $0.50
$0.15 $0.15 $0.15 $0.15 $0.15
$0.70 $0.70 $0.70 $0.70 $0.70
10% 10% 10% 10% 10%
$11.11 $7.26 $21.29 $16.89 $23.76
56% 52% 47% 52% 47%
6
Chinos
$85
60%
$34.00
$0.50
$0.15
$0.70
10%
$38.89
54%
Part 5 â&#x20AC;&#x201C; Target Cost Price Additional Costs No.
Product Class
Target Sell
GP Required
FOB Price (AUD)
Pick and Pack
Storage
Shipping
Customs & Duties
Landed Cost (AUD)
New GP
1 2 3 4 5
Tees Tanks Shirt SS Swim Shorts Walk Shorts
$25 $15 $40 $35 $45
65% 65% 55% 60% 55%
$6.50 $3.40 $15.10 $11.30 $17.20
$0.50 $0.50 $0.50 $0.50 $0.50
$0.15 $0.15 $0.15 $0.15 $0.15
$0.70 $0.70 $0.70 $0.70 $0.70
10% 10% 10% 10% 10%
$8.64 $5.23 $18.10 $13.92 $20.41
65% 65% 55% 60% 55%
6
Chinos
$85
60%
$29.90
$0.50
$0.15
$0.70
10%
$34.38
60%
Part 6 – Brief Complete a monthly phasing plan based on the following splits : • October – 25% • November – 40% • December – 35%
Part 6 â&#x20AC;&#x201C; Monthly Passing PART 6 Monthly Passing No. 1 2 3 4 5 6
Product Class Tees Tanks Shirt SS Swim Shorts Walk Shorts Chinos
Cost $8.64 $5.23 $17.99 $13.59 $20.19 $33.94
Sell $25 $15 $40 $35 $45 $85
GP 65% 65% 55% 61% 55% 60%
Units 8641 5761 900 3703 4000 847 23852
Total Cost Total Retail $74,658 $216,025 $30,130 $86,415 $16,191 $36,000 $50,324 $129,605 $80,760 $180,000 $28,747 $71,995 $280,810 $720,040
Part 6 â&#x20AC;&#x201C; Monthly Passing No. 1 2 3 4 5 6
Units 8641 5761 900 3703 4000 847 23852
TOTAL Total Cost Total Retail $74,613.65 $216,021.0 $30,098.93 $86,408.4 $16,188.07 $36,003.5 $50,308.20 $129,612.6 $80,747.85 $180,017.5 $28,747.74 $72,007.0 $280,704.44 $720,070.0
Units 2160.25 1440.25 225 925.75 1000 211.75 5963
OCTOBER Cost $18,653.41 $7,524.73 $4,047.02 $12,577.05 $20,186.96 $7,186.94 $70,176.11
Retail $54,005.25 $21,602.10 $9,000.88 $32,403.15 $45,004.38 $18,001.75 $180,017.5
Units 3456.4 2304.4 360 1481.2 1600 338.8 9540.8
NOVEMBER Cost $29,845.46 $12,039.57 $6,475.23 $20,123.28 $32,299.14 $11,499.10 $112,281.8
Retail Units $86,408.40 3024.35 $34,563.36 2016.35 $14,401.40 315 $51,845.04 1296.05 $72,007.00 1400 $28,802.80 296.45 $288,028.0 8348.2
DECEMBER Cost $26,114.78 $10,534.63 $5,665.82 $17,607.87 $28,261.75 $10,061.71 $98,246.55
Retail $75,607.35 $30,242.94 $12,601.23 $45,364.41 $63,006.13 $25,202.45 $252,024.50