This will provide you with a basis for planning your business in the months and years ahead.
Retail guru Debra Templar, of Templar Group, answers a fashion buyer's question on ranging decisions. A Family Tree is a useful system used to capture important information for your business. It’s a more detailed extension of the product classifications used in your range assortment plan.The most useful aspect of a family tree is the ability to capture accurate information which will provide valuable historical data as well as a basis for planning your business in the months and years ahead.This an example of a family tree:
Each item purchased would be given a code that registers with the appropriate description. Therefore, at the end of a period in the above example you would be able to determine how many Knitwear Key Items in wool you have sold.
How it WorksClassify Your Merchandise into Appropriate GroupingsThis is necessary to develop a sensible range that reflects demand and to make purchasing easier for the customer.You do this by constructing a family tree based on the hierarchy of decisions which customers make when they buy.This means identifying all the factors that customers (and therefore buyers) must consider in making that final decision to buy an item such as the type of product, function, brand, style, colour, fabrication and price.You will need to decide if the first decision is made on brand or on size and then fabric or colour and how flexible these are. For example, a customer won’t buy a shirt if they’re wanting a jacket but they might buy a grey or a blue one when they would have preferred a black one.
Determine the Breadth and Depth of StockBreadth within a classification such as shirts would relate to the range of choices for the key selection parameters and depth to the number of units held in each.Breadth is the most critical issue because you can’t stock everything. If you did try to stock everything you could not have enough depth or quantity of stock to satisfy demand for the popular items because you would be tying up money in items few would want and customers would be confused by the breadth of choice.You have to ensure that you have sufficient depth in the merchandise that represents the main thrust of your business. Clearly, this should reflect your target customer and market position.It is imperative that the business is credible in its major classifications and therefore carries sufficient depth in those classifications and categories that you anticipate to be most in demand. In a fashion boutique customers don’t want to see a lot of the same item because they are seeking uniqueness so this type of retailer might seek to have more colour or style variations.
Set Down the Model Stock to be Held on the SalesfloorThis will be the actual units to be stocked in each classification grouping which meets both your assortment objectives and your financial constraints.A lot of consideration has already gone into the selection of appropriate product for your business. Setting the correct unit quantities to each item is now the key to the success of that item. There are many methods and formulae that you can use to establish a quantity to be purchased however, before you start calculating this, you must consider the following:
- Size of the shop (floor and reserve space)
- Store turnover
- Unit capacity of fixtures
- Weeks stock on hand (SOH) that you want to have available
- Type of product – fashion, basic, etc.
- Life expectancy of the item
- Historical information
- Is it advertised or for a promotion?
- Pre-packed quantity restrictions.
Example of Unit Break Up| Product | Colour | Size | Total | Unit Cost | Unit Retail |
| KR250Long Sleeve Jacket | Black (50%) | Small (25%)Medium (50%)Large (25%) | 2505002501000 | $15.00 | $35.00 |
| White (20%) | Small (25%)Medium (50%)Large (25%) | 100200100400 | $15.00 | $35.00 |
| Taupe (15%) | Small (25%)Medium (50%)Large (25%) | 7515075300 | $15.00 | $35.00 |
| Navy (15%) | Small (25%)Medium (50%)Large (25%) | 7515075300 | $15.00 | $35.00 |
| KR 250Long Sleeve Jacket | TOTAL | SMALLMEDIUMLARGE | 50010005002000 | TOTAL COST $30,000 | TOTAL RETAIL $70,000 |
The success of a retail business depends on its merchandise. If the products are not what the customer wants, no amount of selling or promotion will overcome it.
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For the past 20 years Debra Templar has been working alongside small business owners teaching them about customers – how to find them, get them and keep them – and all that entails. She knows that businesses thrive or die depending on their offer to customers. Knowledgeable and pragmatic, Debra gets to the heart of the issue and offers cost-effective solutions, all with the aim of improving the business. This year Debra was recognised as one of Vend’s Top 50 Retail Influencers world-wide.www.thetemplargroup.com.auwww.facebook.com/debratemplartalksshop
