Buy custom Creating a Fashion/Retail Store essay

Part A

In the course of this research I am going to execute the role of a buyer for the own fashion store. As a result, the paper is going to have the following structure. First of all, I am going to describe the overall concept of the store. Next, I will create purchase budget for the shop. This budget will be based on the assumption that we have $1 214 000 to spend on merchandise. All the accessories are going to be purchased in retailers. The purchases will be made for summer season – 6 months from February to July.

To begin with I would like to provide information about the concept of our store. The company specializes in retailing of women’s apparel, shoes and accessories. The company’s main competitors are the same local small retailers. Thus, the target market is the local market at the moment. However, I believe that the company is going to enter new levels in the future.

The company’s stores vary in terms of types – from small “home store” to a specialized minimarkets. Also, these stores are situated in the different locations, including village, specialty centers, malls, etc.

Generally, the company specializes in different business segments, talking about demographic and financial characteristics of the customers. Its products are available for people with the average level of income and with the level of income higher than average. Recently the company has entered the upscale segment of the market.

The company has been always trying to exceed the expectations of its clients. That is why it usually implements innovations in its business. For example, taking into account the growing role of the Internet in the modern world, the company develops an online sales channel. There is a possibility for any client to look at the company’s products in the Internet and order them. It is very comfortable, especially considering the fact that it is possible to communicate with the sales representatives of the company via the Internet. Simply speaking, you can find a desired item, check its availability, talk with the sales representative and order the product without a necessity to leave your home.

The company is going to use the instruments of direct marketing to promote its products. For example, the company issues its own catalogue, where all the products of the company and their prices are presented. The catalogue is issued and sent once a month. Every person can order a catalogue in the company’s store.

As the strategic directions the company considers strategic alliances and acquisitions and also development of online business, which has been already mentioned in this research. First of all, expansion of the company’s assortment should be considered.

One of the strategic prerogatives of the company is the development of clothing for men and children. The main disadvantage of such strategic step, as the experience has shown, may possibly be the confusion of the traditional customers. However, in this case, such confusion should not be dramatic, because the company does not replace its traditional assortment, but proposes some new products. That is why the company can find the new customers, not losing the traditional and loyal ones. The most difficult task would be to allocate financial resources in the most appropriate way. Thus the possible benefits from this decision are going to be higher than the initial costs.

The other strategic direction is the development of online sales channel. The role of the Internet in the modern society just cannot be overestimated. We cannot imagine our life without computers and chatting online. About 2 billion people have an access to the Internet nowadays. It means that the size of online market is just tremendous. Moreover, it is only going to grow in the nearest future.

More and more people desire to use the Internet for shopping nowadays, because it provides a lot of benefits for them. Among these benefits the following ones can be pointed out: people do not have to waste their time as they can make shopping from home, and they have a broader access to different assortment of companies and products.

The companies also can get a lot of benefits from such trend. They do not have to construct special stores, they do not have to waste money on storage of products and, moreover, some businesses do not have to pay sales taxes on the products sold via the Internet. That is why the online sales channel develops really fast nowadays.

The company should not miss this trend and that is why it develops its own online shop. This step is going to bring a lot of financial and other benefits for the company in the nearest future. Thus, we have provided the general description and concept of the company and the store. Now we know the specific of the business and even the strategic directions. It is time to make some purchases and prepare the budget for the upcoming season.

Part B

We have the planned sales for the store. They are provided in the Excel spreadsheet in the Part B. The value of planned sales for the whole period under consideration is $1 700 000.00. This number can be used to calculate all the required indicators: open to buy, average monthly sales, average monthly on order, and mark down for each month.

Average monthly sales can be calculated as the total sales divided by the number of months. Therefore, the average monthly sales will be $283 333.00. The most important things to calculate are open to buy and mark down. In my opinion, one of the most appropriate definitions of the term open to buy is the following.

An Open-To-Buy relates directly to retail merchandise, is structured specifically to address the needs of retailers, and is a tool designed to assist retailers manage and replenish their most significant asset, their inventory investment (Retail Perspectives).

Simply speaking, open to buy is an instrument that is used by retailers in order to plan their inventories. Inventories are kept according to the planned sales. As a result, efficiency of their usage is highly increased. All the calculations are provided in the following tables. The first table contains required data for calculations.

Table 1

 

Planned sales

On order

Employee discount

Shortages

EOM

BOM

February

300 000,00

125 000,00

2%

2%

200 000,00

160 000,00

March

200 000,00

30 000,00

3%

4%

80 000,00

200 000,00

April

350 000,00

150 000,00

4%

5%

110 000,00

80 000,00

May

150 000,00

100 000,00

0%

7%

90 000,00

110 000,00

June

400 000,00

150 000,00

5%

2%

210 000,00

90 000,00

July

300 000,00

40 000,00

7%

3%

70 000,00

210 000,00

Total

1 700 000,00

595 000,00

 

 

760 000,00

850 000,00

The next table contains data that had to be calculated: open to buy, average monthly sales, average monthly on order, and mark down for each month.

Table 2

 

February

March

April

May

June

July

Open to buy

221 000,00

56 000,00

244 000,00

180 000,00

390 000,00

141 000,00

Average monthly sales

283 333,33

283 333,33

283 333,33

283 333,33

283 333,33

283 333,33

Average monthly on order

99 166,67

99 166,67

99 166,67

99 166,67

99 166,67

99 166,67

Mark down %

4%

7%

9%

7%

7%

10%

As we can see from the table, the overall open to buy for the whole season is $1 232 000.00. It is a bit higher than the planned value. However, it can be explained by some minor mistakes, which are not significant.

Part C

In this part of the term paper I have to break the sales budget in the different sections, according to styles and types of the products. This break down and the purchase budget are provided in the Excel spreadsheet.

Part D

The questions to be answered in this part of the term paper are based on the results of the previous analysis.

1. After careful analysis of the economic data from the U. S. Government, the XYZ store set a sales plan increase for the next years spring season (2013) of 9.7%.  Based on this years sales plan what is the companies projected sales plan for the next season?

In order to answer this question one just should assume that the sales for this season are going to grow of 9.7% next season. The total projected sales for the next season are going to be $1 864 900.00 ($1 700 000.00 * 1.097).

2. In the 2011 spring sales period the XYZ store had actual sales of $1,850,000.00.  What was the increase/decrease for sales into 2012? Suggest reasons for the change from one season to the next.

As we know the sales are $1 700 000.00 in the current season. It means that these sales have decreased of 9.19% this year. On the other hand, they are going to grow next season of 9.7%. Thus, we can see significant fluctuations in the company’s sales. We can even say that the business is quite seasonal. The question is what are the reasons for such a situation. I believe that the main reason for it can be the changing economic situation and abilities of people to buy the clothes. As we know, we are living in the conditions of the global financial crisis, which significantly affects sufficient demand of customers.

Buy custom Creating a Fashion/Retail Store essay

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