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DeathtoStock_TheCollaborative_BuyingPlan

Buying Plan

NEIMAN MARCUS:

DRESS DEPARTMENT

For my Apparel Merchandising Retail Management class, I worked in a group of five to develop a comprehensive Fall/Winter 2015 buying plan for the Neiman Marcus dress department. Along with a partner, I focused specifically on creating a buying plan for the sub-classification of Cocktail Dresses.

Merchandise Classification

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A. Fall/Winter 2015: Sales Plan | Neiman Marcus Dress Department

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B. Fall/Winter 2015: Price Point Breakdown | Neiman Marcus Cocktail Dresses

  • Expected price points will closely mirror current price points as listed in the table above. Before markdowns, cocktail dresses will be priced at around $190 and will cap at $2,500.

  • Dresses in size XL or higher will have slightly higher price points due to limited styles (this is typical of larger sizes).

  • We will stick with this pricing strategy to maintain the exclusivity of the brands we carry, as well as to continue appealing to the high-end, label-conscious customer.

  • Based on in-store observations, our price position is slightly above that of our two competitors, Saks 5th Avenue and Nordstrom, whose selections are priced at $130 – $8,000 and $50 – $7,000, respectively.

Pricing Plan

  • Initial markup % is calculated on the 6-month plan.

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  • Markup Plan:

    • Neiman Marcus’ retail markup is determined by multiplying the maintained up percent & gross margin percent then subtracting the initial markup percent.

    • 59.26%- (45% * 20%) = 50.26%

  • Markdown Plan in Dollars:

    • Net Sales $46,681,526.00 * 20% = $9,336,307

  • According to the 6-month plan, we predict the Neiman Marcus cocktail dress sub-classification will have a total of $9,336,307 markdowns, or 20% of net sales.

  • To avoid markdowns, Neiman Marcus will implement email marketing campaigns to encourage and keep customers up to date, reminding them to visit the store and shop online via the Neiman Marcus iPhone app.

Assortment Plan

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  • Since our sub-classification (Cocktail Dresses) is already so specific, we decided to use dress length instead of style for our first assortment factor.

  • Color is one of the most important factors when selecting any type of clothing. We picked the top 8 colors (out of 15) to give the plan more focus.

  • Size is also important when picking out clothing (obviously). Sizes are broken down as they are on the Neiman Marcus website.

  • Price points are vital to Neiman Marcus brands, as the store's price point helps to separate it from its competitors.

  • Percentages were estimated using the current assortment factor breakdown on the Neiman Marcus website and adjusted according to current trends. The short dress length has the highest percent in the cocktail dress department. Traditionally, the cocktail dress is short in order to give women ease of wear.

  • White was given a significant percentage due to its strong presence on the runways this fall [2015].

    • Black and blue are traditionally popular dress colors. There are two shades of blue in the Pantone 2016 color trend report, ‘Serenity’ (15-3919) and  ‘Snorkel Blue’ (19-4049).

Merchandise Plan

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  • Total department planned sales figure was given to us by Whitney [TA].

  • Planned sales for Cocktail Dresses was found by finding the percent of Cocktail Dresses within the dress department (24.8%) and multiplying the total department planned sales figure by that percentage.

  • Planned net sales per month (%) was estimated using past department store average sales figures (US Census Bureau) and adjusting percentages based on Neiman Marcus' sales history.

  • Overall planned reductions for the season were estimated using past department store average markdown percentages (FOR/MOR).

  • Reductions (%) were distributed by month based on monthly net sales distribution and company sales history.

  • Overall planned inventory turnover was estimated using past department store average inventory turnover (FOR/MOR).

  • Monthly stock-to-sales ratio was estimated using past department store average SSRs (FOR/MOR) and adjusted based on monthly net sales distribution.

  • Gross margin percentage was based on past department store average gross margin percentage (FOR/MOR).

  • The rest of the figures were found using formulas. The formulas justify the figures.

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