Application
This unit describes the performance outcomes, skills and knowledge required to undertake merchandise financial planning at the category and sub-category level for a retail organisation. It requires the ability to review a merchandise financial plan and allocate financial values to individual product categories.
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 retail 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. Determine category planning requirements. | 1.1. Access and review organisational merchandise financial plan to determine category financial planning requirements at the category and sub-category level. 1.2. Profile target market and identify relevant trends to optimise sales opportunities within category plan. 1.3. Determine open-to-buy or space capacity for the trading period. 1.4. Determine strategies and pricing structures to achieve gross margin and margin mix. |
2. Develop category financial plan. | 2.1. Plan and calculate inventory values using open-to-buy or space capacity method for each category. 2.2. Allocate inventory value to core and seasonal lines. 2.3. Assess risk level of inventory within each category and plan markdown value and stock exit strategy to maximise profitability and maintain inventory at budgeted levels. 2.4. Review promotional plan to determine impacts of planned promotional activity on category planning. 2.5. Identify and hold back a percentage of category plan spend for reaction to trade. 2.6. Document category plan using established organisational systems and processes. 2.7. Obtain input from relevant personnel and make adjustments to category financial plan based on feedback received. 2.8. Finalise category financial plan and gain required approval. 2.9. Communicate category financial plan to relevant personnel to inform range planning and merchandise buying. |
3. React to trade. | 3.1. Evaluate internal and external factors impacting category performance and make any required adjustments. 3.2. Use action levers to react to in-trade performance. 3.3. Re-plan category financial plan based on sales, inventory and profit values during trade. 3.4. Communicate changes to relevant personnel as required. |
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 a merchandise financial plan to create a category financial plan for one product category across a six-month trading period, using either:
open-to-buy method
space capacity method
document the above category plan detailing:
core and seasonal line spend
sub-category spend
percentage held back for reaction to trade
trial items
key winners
repeat items
deleted items
promotional items
key delivery dates
use action levers to adjust the above category plan in response to the following in trade activity:
seasonal changes
competitor activity
sales decreases
sales increases
supply challenges.
Evidence of Knowledge
Demonstrated knowledge required to complete the tasks outlined in the elements and performance criteria of this unit:
role and purpose of category financial planning
methods for creating merchandise category plan:
open-to-buy method:
at retail
at cost
space capacity method
internal and external factors impacting category planning:
merchandise strategy
merchandise financial plan
merchandise category structures:
category
sub-category
planned promotional activity
consumer trends
post-trade analysis
open-to-buy
space capacity in stores
like-for-like sales comparisons
stock-quit cycles
stock availability
full price, markdown and promotional
supplier performance
competitor performance
aged stock
category pricing structures and role in category financial planning:
volume
promotional
high-margin
good, better, best
everyday low pricing
values included within a category plan:
core and seasonal line spend
sub-category spend
trial items
key winners
repeat items
deleted items
promotional items
key delivery dates
role of re-forecasting processes
merchandise performance indicators and role in category plan:
sales
gross profit margin
margin mix
purchase margin
markdown value
levers to react to trade:
markdowns
promotions
repeats
re-pricing
competitor review
holding stock
new product trial
stock returns
impacts of, and strategies for, reacting to:
seasonal changes
competitor activity
sales decreases
sales increases
supply challenges
commonly-used merchandise category planning methods within the retail industry.
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 financial plan
in-trade performance data
templates for merchandise category planning
software for merchandise category 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 category financial plan. |
Technology skills to: | use complex features of merchandise planning systems to create and manipulate a category financial plan. |
Sectors
Retail
Competency Field
Merchandise Management