Application
This unit describes the performance outcomes, skills and knowledge required to undertake merchandise financial planning for a retail organisation. It requires the ability to forecast sales, inventory and profit to create a merchandise financial plan that maximises organisational profitability and performance.
The merchandise financial plan documents a high-level budget for the financial management of merchandise and is used to influence financial planning at a category level.
This unit applies to individuals working in merchandise management-related roles in a diverse range of retail sectors and business contexts. They operate with independence and are responsible for making a range of operational business decisions related to the management of merchandise.
No occupational licensing, certification or specific legislative requirements apply to this unit at the time of publication.
Elements and Performance Criteria
ELEMENTS | PERFORMANCE CRITERIA |
Elements describe the essential outcomes. | Performance criteria describe the performance needed to demonstrate achievement of the element. |
1. Review organisational financial information. | 1.1. Access and review merchandise strategy to determine financial and merchandise objectives for a specified trading period. 1.2. Access and review organisational profit and loss statement to determine organisational financial position and objectives as required. 1.3. Review post-trade analysis data to determine past merchandise financial performance. 1.4. Source and analyse relevant internal and external factors impacting merchandise financial planning. 1.5. Identify merchandise financial planning activity that will maximise profitability and organisational financial performance. |
2. Develop merchandise financial plan. | 2.1. Plan sales value for the specified trading period using organisational systems and processes. 2.2. Determine gross profit margins that meet financial objectives. 2.3. Plan markdown value to account for potential markdowns and shrinkage and to minimise profit loss. 2.4. Plan optimal inventory values against key performance indicators that maximise profitability and minimise loss. 2.5. Review organisational promotional plan to determine impacts of planned promotional activity on sales, inventory and profit planning. 2.6. Establish merchandise performance indicators. 2.7. Document sales, inventory and profit values using established organisational systems and processes. 2.8. Obtain input from relevant personnel and make adjustments to merchandise financial plan based on feedback received. 2.9. Finalise merchandise financial plan and gain approval as required. 2.10. Communicate merchandise financial plan to relevant personnel. |
3. Review and re-plan merchandise financial plan. | 3.1. Review in-trade financial performance against actual and budgeted sales, profit and inventory values. 3.2. Investigate and account for variances in sales, inventory and profit values. 3.3. Identify available rebates and incorporate into merchandise financial plan as required. 3.4. Re-plan sales, profit and inventory values in response to the actual sales results. 3.5. Re-plan sales, profit and inventory values in response to internal and external influences on performance. |
Evidence of Performance
Evidence of the ability to complete tasks outlined in elements and performance criteria of this unit in the context of the job role, and:
review merchandise and organisational financial data to develop a month-by-month merchandise financial plan for a six-month trading period that includes:
sales
gross margin profit
buying margin
markdown value
inventory values
performance indicators
re-plan sales, profit and inventory values based on actual merchandise performance and in response to:
internal factors impacting merchandise performance
external factors impacting merchandise performance
review merchandise financial plan against performance indicators and make recommendations for future improvement.
Evidence of Knowledge
Demonstrated knowledge required to complete the tasks outlined in elements and performance criteria of this unit:
merchandise financial planning:
purpose
impact on organisational profit and loss
role in determining:
open-to-buy
space capacity planning
key financial values:
inventory
sales
profit
role of post-trade analysis data in developing merchandise financial plan
common types and applications of merchandise planning processes:
bottom-up
top-down
key merchandise financial planning strategies to:
maximise profitability
minimise loss
merchandise performance indicators, how they are calculated, and role in merchandise planning:
sales
gross profit margin
Gross Margin Return on Investment
sell-through rate
stock turn
forward cover
purchase margin
markdown percentage
internal and external factors impacting merchandise planning:
percentage increase or decrease on last year
promotional activity
consumer behaviour
competitor activity
store openings
store closures
store refurbishments
online strategy
economic factors
critical path
aged stock and impact on inventory and profitability
merchandise reductions and how they are incorporated into the merchandise plan:
markdowns
inventory shrinkage
rebates and impact on merchandise financial plan
responses to in-trade activity:
re-forecasting
accounting for variances in:
sales
inventory
profit
commonly used merchandise planning methods within the retail industry:
formats and structures
systems.
Assessment Conditions
Skills must be demonstrated in a retail environment. This can be:
an industry workplace
a simulated industry environment.
Assessment must ensure access to:
relevant documentation:
merchandise strategy
post-trade analysis data
in-trade performance data
templates and software for merchandise financial planning.
Assessors must satisfy the Standards for Registered Training Organisations’ requirements for assessors, and:
have worked in the retail industry for at least three years where they have applied the skills and knowledge within this unit of competency.
Foundation Skills
Foundation skills essential to performance in this unit, but not explicit in the performance criteria, are listed here, along with a brief context statement | |
SKILLS | DESCRIPTION |
Numeracy skills to: | apply financial formulas and perform retail financial calculations to inform the development of a merchandise financial plan. |
Technology skills to: | use complex features of merchandise planning systems to create and manipulate a merchandise financial plan. |
Sectors
Retail
Competency Field
Merchandise Management