RETAIL EXAM 3 - This Exam contains: -Guarantee passing score -9...

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RETAIL EXAM #3

Actual Qs and Ans Expert-Verified Explanation

This Exam contains:

-Guarantee passing score -99 Questions and Answers -format set of multiple-choice -Expert-Verified Explanation

Question 1: SKU

Answer:

the smallest unit available for inventory control Ex: for soft goods merchandise, a SKU usually means a particular brand, size, color, and style (a pair of size 5, rinsed wash, blue, straight-legged Levi jeans is a SKU)

Question 2: Shopper Marketing Goals

Answer:

-Improve the shopping experience across the store -Increase trip frequency and basket size -Increase exposure to and relevance of brands; increase brand equity via the retail environment Question 3: The reason we use the sales-to-stock ratio to calculate GMROI (instead of inventory turnover) is that....

Answer:

GMROI is a type of return on investment measure, so the investment is inventory is expressed at cost.the difference between the sales-to-stock ratio and inventory turnover is the numerator of the equation.-when you are calculating sales-to-stock ratio, the numerator is net sales.-when you are calculating inventory turnover, the numerator is the cost of goods sold.Inventory Turnover = (1-Gross margin percentage) x sales-to-stock ratio -Ex: if the sales-to-stock ratio is 9.0 and the gross margin percentage is 0.40, the inventory turnover for the category is 5.4.

((1 - 0.40) x 9.0))

Question 4: Inventory Turnover

Answer:

a measure of the number of times inventory is sold or used in a time period such as a year.-high turnover is good; increases sales

Question 5: Determine Variety and Assortment

Answer:

the process of determining the variety and assortment for a category is called editing the assortment Ex. of an assortment plan for girl's jeans: includes 10 types of varieties (skinny or boot-cut, distressed denim or rinsed wash, and 3 price points reflecting different brands). For each type, there are 81 SKUs (3 colors x 9 sizes x 3 lengths). So, the retailer plans to offer 810 SKUs in girl's jeans.

when editing the assortment for a category, the buyer considers:

• the firm's retail strategy

• the effect of assortments on GMROI

• the complementaries among categories

• the effects of assortments on buying behavior

• the physical characteristics of the store

Question 6: Forecasting Staple Merchandise

Answer:

project past sales trends into the future, while making adjustments for any anticipated factors, such as promotions and weather, that may affect future sales Use of Historical Sales -based on extrapolating historical sales because sales are constant from year to year -these statistical forecasts are based on the assumption that the factors affecting item sales in the past will be the same and have the same effect in the future (so, even though sales for staple merchandise categories are relatively predictable, controllable and uncontrollable factors can have a significant impact on sales) Adjustments for Controllable and Uncontrollable Factors -controllable factors include: the opening and closing of stores, the price set for the merchandise in the category, special promotions for the category, the pricing and promotion of complementary categories, and the placement of the merchandise categories in the store -uncontrollable factors include: weather, general economic conditions, special promotions or new product introductions by vendors, and the new product, pricing, and promotional activities by

competitors Buyers need to adjust the forecast on the basis of statistical projections to reflect the effects of these controllable and uncontrollable factors Question 7: The strategic choice to organize, lead and manage the business from a foundation of category strategic business units. Category management becomes the overall framework to guide decision making in the business process.Ex: "A food store that wants to improve turnover sales should create a mission statement and an overall marketing strategy. If these are not written clearly and precisely, category managers do not know enough to make their decisions consistent with the overall strategy." -Dr. Brian Harris Ex: "...before talking about the category, it's essential to talk about the company's mission statement - the vision of what the company is and hopes to be." -Tim Sullivan, senior account executive for Coors Brewing Co. in an interview with Progressive Grocer

Answer:

Information Systems

Question 8: Retail Strategy

Answer:

the number of SKUs offered in a merchandise category is a strategic decision Ex: Best Buy's customers are interested in comparing many alternatives, so the retailer must offer several SKUs in each consumer electronics category.-the breadth and depth of the assortment in a merchandise category can affect the retailer's brand image too.(Retailers might want to increase the assortment in categories that are closely associated with their image) Ex: Staples carries only a few SKUs of candy bars bc candy is not part of the core office supply assortment for which it is known. But it carries a much broader and deeper assortment of paper products, bc its customers expect to find such options when they visit the store.Question 9: "a process of managing categories as strategic business units, producing enhanced business results by focusing on delivering consumer value" "a collaborative continuous process between manufacturers and retailers to manage a product category at retail. The purpose is to optimize shopper satisfaction"

Answer:

Why Category Management?

Question 10: Different Types of Merchandise

Answer:

-staple merchandise -fashion merchandise (fad merchandise) -seasonal merchandise

Question 11: Complementary Merchandise

Answer:

when buyers develop assortment plans, they need to consider the degree to which categories in a department complement each other

Question 12: Fashion Merchandise

Answer:

these categories are in demand only for a relatively short period of time.new products are continually introduced into these categories, making the existing products obsolete.(In some cases, the basic product does not change, but the colors and styles change to reflect what is "hot" that season)

Ex: athletic shoes, tablets, smartphones, and women's apparel

forecasting is difficult: buyers for fashion merchandise categories have much less flexibility in correcting forecasting errors.(Ex: if the tablet buyer for best buy purchases too many units of a particular model, the excess inventory cannot be easily sold when a new upgraded model is introduced) due to the short selling season for most fashion merchandise, buyers often do not have a chance to reorder additional merchandise after an initial order is placed.(order too little, retailer might not be able to satisfy demand and get a rep of not having the most popular merchandise in stock; order too much they will have to put it on sale at a discount or dispose of it in some way at the end of the season) be as close to out of stock as possible at the same time that the SKUs move out of fashion -unpredictable demand -limited sales history -difficult to forecast sales

Question 13: Evaluating Merchandise Management Performance

Answer:

ROA is not a good measure for evaluating the performance of merchandise managers bc they do not have control over all of the retailer's assets or all the expenses that the retailer incurs.-merchandise managers have control only over what merchandise they buy (the retailer's merchandise inventory), the price at which the merchandise is sold, and the cost of the operating expenses, such as store operations, HR, real estate, and logistics and information systems .