A Beginners Guide to Retail Merchandising and Planning

What does a merchandiser or planner need to be successful in the retail sector? - article by First Friday.

Maybe you have just started your career in merchandising or planning, or perhaps you are a training manager wanting to know more about the role so you can put together a training programme. In either case, you need to start by understanding the roles and responsibilities of merchandisers and planners.

Let’s begin by explaining the job roles as these can differ quite a lot between retail organisations…

What does a Retail Merchandiser or Planner do?

The most common Head Office roles are Buyers and Merchandisers – their department is often referred to as B&M. But some structures have Planners rather than Merchandisers, and in many cases they do exactly the same job whereas in others there is a subtle difference.

An image of a target with arrows listing: the right product, right place, right time, right quantity, right price

You may have heard the phrase that merchandising can be described as getting…

The right product, in the right place, at the right time, in the right quantity and at the right price

That might sound like a simple objective, but the journey to achieve it can be complex and require skills learned and enhanced over time.

To explore this, we need to break down the key responsibilities of a merchandiser or planner in more detail.

Planning and Developing a Merchandising Strategy

Together with the buyer they are responsible for planning & developing a strategy for their business area. This will include details such as:

  • Gathering hindsights and history
  • Financial targets
  • Customer insights
  • Competition & market insights
  • Product trends
  • Selling channel strategies
  • Supply chain & vendor strategies
  • Stock planning

It will be someone at a senior level who actually has this responsibility, but even a junior member of the team needs to be clear of what the strategy for their product area is and how this impacts what they do and the decisions they make.

Merchandise Planning and the WSSI

The next key task is to develop financial plans which deliver the strategy for all the KPIs such as sales, stock, intake & OTB, markdown. This is often called Merchandise Planning or Merchandise Financial Planning and best practice recommends that the WSSI tool is used.

The WSSI is an industry wide tool which merchandisers use to both plan and manage their product areas and it drills down the hierarchy to enable planning which relates to product groups and time periods.

WSSI : what is it and why is it important?

If you’re not sure what a WSSI is, we have an article which explains what WSSI is and how it should be used.

It is definitely essential that merchandisers understand how powerful the WSSI tool is regardless of whether you have a sophisticated system to manage it for you.

Range & Assortment Planning

One of the outputs of the WSSI is to create pots of Open To Buy (OTB) by product category, which is effectively the money that will be spent on buying product ranges.

When you plan with a WSSI there is a dynamic relationship between the stock plan and the sales target – so a merchandiser uses this to create a range framework or an assortment plan for the options that are required at any point in time to achieve the sales targets (usually called the “Range Width”) and the quantities of each that should be bought (known as the “Range Depth”).

The buyer then determines which actual products should go into the range.

Stock Management

Once the range has been determined a key focus for the Merchandiser is stock management. They will need to know:

  • How much to buy of each product and when to bring it into the business
  • How much to send out to each store and how much to hold back for replenishment
  • How to determine which options are sent to all stores and which are held for larger stores
  • How to range products on the website and ensure stock is available
  • How to plan whether there are key or core lines in the range that should never be out of stock and manage line level stock plans for them
  • How to anticipate when a product comes to the end of its selling life and needs to be cleared from the business to avoid high levels of terminal stock
  • How to buy the right amount of stock to support planned promotional events in the marketing calendar

Trading Performance

The product range arrives into the business and the next task for the Merchandiser is to analyse and report on the trading performance – what is selling well and how will it be optimised; what is not so strong and how will it be dealt with.

Reports are used to show ‘what’ is happening, but the Merchandiser needs to understand ‘why’ in order to take the right action.

Managing Markdown

Knowing how and when to spend the precious markdown budget is a key skill.

Sometimes there is a planned event like Black Friday where additional stock is bought, and markdown is used to reduce prices for a temporary period.

Sometimes a tactical promotion is needed in season to react to a specific issue either in your business or in the competition.

But sometimes you will just need to spend markdown to clear poor performers and make way for new ranges.

Whatever the reason the Merchandiser needs to know how to plan and execute these events by spending the least amount of markdown budget that they can, to deliver the best possible  results – either in the clearance of stock or in driving customer traffic to increase sales and profits.

Forecast & Maximise Profit

This whole journey of activities results in a continuous cycle of forecasting and reforecasting to manage the product category, by making decisions which maximise the resulting profit for the business and the return on investment.

A better definition of Merchandise Planning might therefore be:

“The systematic and analytical approach to the buying and selling of product, with efficient management and use of inventory and assortment.  Blending analysis and planning with a proactive and commercial mindset.”

What are the skills and capabilities that make a great Merchandiser or Planner?

As well as training on the technical aspects of the job, a successful Merchandiser or Planner will demonstrate these skills and capabilities:

 Skills and capabilities: Numerate: Ability to analyse and interpret data , solve complex problems and make business decisions Commercial: Commercial awareness and customer focus Systems & process : comfortable with systems and data, proficient in Excel and a process thinker Leadership: Strong organisational and time management skills. Able to give clear direction Communication : Ability to communicate clearly and effectively to peers and team members, strong influencing skills Resilient : resilient under pressure, ability to ‘think on your feet’ and lead change

Some of these traits will be inherent within the individual from the start, but others can be taught and refined as their career develops, so its best to look for training programmes which cover both commercial, technical and behavioural skills.

Where can I find the best training for Merchandisers and Planners?

Training for Merchandisers and Planners is one of the core parts of our business and as a result of this experience we can develop bespoke training for you, or you can sign up to a range of off-shelf training courses accessible via our Training Academy.

It’s essential to ensure the foundations of retail are well-established as well so any programme should begin with the Retail Basics.

Every business is different, and each individual will progress at their own speed, but a typical set of learning paths for a Merchandiser or Planner might look like this:

A typical learning path: Onboarding at entry level: Understanding the Retail Product Life Cycle Retail calculations & jargon Store, visits & competitor shopping Use of business systems, MIS & Reports Becoming an Asst Merchandiser/ Planner: Evaluating Trading Performance Managing Key Lines Order Management Allocation & Replenishment Price Management – markdowns & promotions Becoming a Merchandiser or Planner: Creating a Strategy Merchandise Planning & WSSI Assortment Planning & Range Building In Season Forecasting Becoming a Manager & Leader

We also believe that the best merchandisers are those who work hand-in-hand with their buying colleagues and can relate easily to the product category they are working on. You might even hear people say that the relationship between a buyer and a merchandiser is a bit like a marriage – lots of support and mutual appreciation for each other, but with a good dose of healthy tension!

With that in mind, we’ve also created a partner piece to this beginner’s guide, focusing on Retail Buying, that you can use to familiarise yourself with the skills a great buyer needs to develop.

Alternatively, head over to our Training & Development pages to find out more about our bespoke courses and training services.

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Clare Edwards

About the author: Clare Edwards

A Principal Consultant and Head of the First Friday Training Academy, Clare has over 30 years of retail experience which she uses to support clients to develop their commercial knowledge, technical capability and soft skills.

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