Sales, BOM, & Markdowns Justifications

Perrys Sales Increase Justification

Last fall, Perrys total sales in the Juniors department accumulated to $1.5 million. This fall, Perrys planned sales are projected to be $1,545,000. This years total sales are based on an overall sales increase of 3% for the Juniors department. Sales are projected to rise due to increasing consumer confidence in the midst of a recovering economy. The retail industry is projected to be back-on-track and is said to show a definite increase in sales over the past year. Consumers have been gaining more confidence this year. The U.S. Census Bureau stated that, consumer confidence climbed to its highest level in 13 months at the end of March as optimism about jobs and income overcame higher prices at the gas pump. The projected 3% increase is also attributed to growth in population of the twelve to seventeen age bracket. From 2006-2010, this section of the population had been on a decline; however, 2011-2015 reports show an increase of one million. From 2007 to through the end of 2011, annual growth of department stores was on a decline of -3.1% due to a suffering economy; however, in 2012 to the end of 2016, the annual growth is projected to grow at an annual average rate of 0.7% over last year with an estimated $7.4 billon profit (Department Stores in the US, 2012, p. 1). From 2006 to the end of 2010, annual growth of womens clothing stores were on a decline of -1.2% due to a suffering economy; however, in 2011 to the end of 2015, the annual growth is projected grow at an annual average rate of 3.4% over last year with an estimated $2.3 billion prof it (Womens Clothing Stores in the US, 2011, p. 1).
NRF A quick look: Back to school by the numbers (2011) Farmers Almanac (2012)

The Department Stores industry has been fighting an uphill battle for the five years leading up to 2012 due to tough economic conditions and decreasing gross margins. The tumultuous economic conditions encouraged weak consumer confidence and low disposable income. Fortunately for Perrys, the economy is expected to begin recovery and fully recover in the years leading up to 2017. Better economic conditions will encourage better consumer confidence, therefore, increasing customers spending and per capita disposable income (Department Stores in the US, 2012, p. 3). More specifically to womens wear and juniors apparel, the industry is said to be improving at a much greater rate than department stores in general. Gross margins are also projected to improve in the years leading to 2016 due to imports and free marketing with the internet and social networks (Womens Clothing Stores in the US, 2011, p. 3).

Another factor that has added to Perrys increase in sales is its customer demographics based on VALS profiles. The Chart below shows the VALS consumer profiles for Perrys Department Stores total trade area. The highlighted profiles are the customers that contribute most to Perrys total demographics.

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It is important to Perrys overall success that its customers fall into the VALS profiles like they have. Innovators, Thinkers, Believers, Achievers, and Experiencers are all willing to spend their money. While some may have more discretionary income than others, or be interested in different product assortments, Perrys is confident that its 3% sales increase will be justified based on its customers its sales area. The characteristics of the top profiles pertaining to Perrys total trade area are explained below. Understanding these profiles boosts Perrys confidence and successfulness in reaching its goals. Achievers: For an Achiever, appearances are a reflection of status whether it is reflected by what schools their children attend or what clothes they are wearing. However, they may not have the money that would typically be attributed to this lifestyle. Therefore, they may look for items that still look expensive, but do not have the high price usually associated with a nice appearance and quality Achievers buying behaviors may look similar to this: o Achievers spent more than $100 for a mens business suit. o They purchased two or more pairs of mens casual slacks and dress slacks. o They purchased two or more mens dress shirts, T-shirts (not underwear), and designer jeans. o Achievers spent $400 or more on childrens clothing: Purchased eight or more items for an infant less than 1 year, babies 1 to 2 years, and children ages 3 to 12.

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o They purchased a womens evening dress, maternity clothes, casual slacks, three or more pair of dress slacks, two pairs of designer jeans, and two or more sweaters. Achievers contribute 21% to Perrys total business.

Experiencers: Experiencers are much more likely to take risks and try new things than most other customers; however, they still appreciate staple pieces such as basics and denim, but are more likely to pair a basic or staple piece with something more unconventional because they are confident in themselves and their ability to create their own looks. Experiencers are also more likely to spend on high dollar clothing than most other customers. Some may assume they are more reckless shoppers. Experiencers buying behaviors may look similar to this: o Experiencers purchased two or more mens business suits, sports jackets, dress shirts, and jeans. o They purchased three or more pairs of designer jeans, sweaters, and T-shirts (not underwear). o They spent $400 or more on childrens clothing, purchased eight or more items for infants and under 1 year, and children ages 1-5. o Experiencers spent $2000 or more on womens clothing. o They purchased a cloth coat and maternity clothes. o They purchased two or more evening dresses, pantsuits and blazers

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o Experiencers purchased three or more dresses, skirts, dress slacks, jeans, designer jeans, sweaters, blouses or shirts, and T-shirts. Strivers contribute 15% to Perrys total business.

Innovators: Outstanding customer service and the ability to interact with knowledgeable salespeople are important to Innovators. Also, visual merchandising is very important. Perrys should put customer service high on their list of priorities as well as maintaining an aesthetically pleasing environment. Quality and price remain important. As for pricing a quality strategies please see the Achievers section of this report. Innovators buy not to flaunt their financial success, but to reflect their personalities and taste. They are very knowledgeable of what is current and new, so Perrys should pride itself in providing up-to-date merchandise. Innovators buying behaviors may look similar to this: o Innovators purchased two or more mens business suits and two or more sports jackets. o They spent more than $250 on a mens sports jacket. o They bought two or more pairs of mens dress slacks and two or more pairs of mens casual slacks. o Innovators spent more than $100 for both designer jeans and mens T -shirts (not underwear). o They purchased three or more mens sweaters and sport shirt s. o They spent more than $400 on childrens clothing.
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o Innovators spent more than $2,000 on womens clothing. o They purchased two or more evening dresses, pantsuits, blazers and designer jeans. o Innovators, purchased three or more dresses, skirts, casual slacks, dress slacks, and sweaters Innovators contribute 14% to Perrys total business.

Thinkers: Thinkers are very likely to spend a lot of time in the store looking through merchandise, at ads, or online to find the best offered price for an item before purchasing it. Thinkers attitudes pertaining to customer service are very similar to the attitudes of Innovators; however, Thinkers expect that a service representative will know everything there is to know about a product in case of a question. Customer service representatives are crucial in creating a positive shopping experience for the customers not only in being there, but also in their knowledge of the products. Thinkers buying behaviors may look similar to this: o Thinkers spent less than $100 for a mens ski jacket. o They spent more than $100 for a mens business suit and more $250 for a mens sports jacket. o They purchased two or more pairs of mens casual slacks and two or more pairs of mens dress slacks. o Thinkers purchased three or more mens sport shirts. o They bought a womans cloth coat, raincoat, parka, and ski jacket.
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o They purchased three or more pairs of womens dress slacks, casual pants, and sweaters. Thinkers contribute 14% to Perrys total business.

Believers: To believers, proven name brands, reliability, and durability remain important. Knowing that a store provides all three of these concepts takes the guesswork out of the customers buying experience. Perrys should stock items that have been proven successful in other stores for this type of customer. These items could include Rubbermaid for the home, Bali intimate apparel, or Nike active apparel to name a few. Merchandise offered for these customers should appear basic and practical. They also may find American-made products more appealing. This could mean stocking basic clothing such as T-shirts and denim, plain ceramic plates that match any dcor, or intimate apparel that is functional under clothing with American-made options. No matter the product, it should be easy to care for and have a long lasting product life. Believers buying behaviors may look similar to this: o Believers spent less than $50 on a mens lightweight jacket. o They spent less than $50 on mens sport shirts. o They purchased three or more pairs of mens jeans. o Believers bought clothing for children between the ages of 6 and 12. o They spent between $300 and $500 on womens clothing. o They purchased one womens T-shirt, one blouse or shirt, one sweater, one pair of dress slacks, one pair of casual slacks, one pantsuit, a parka, and a raincoat.
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o Believers purchased one to two pairs of womens jeans. Believers contribute 13% to Perrys total business.

Fall 2012 weather is predicted to be colder than last year which will drive customers into the store earlier than they would typically shop for their fall wardrobes. Winter is also predicted to be cold which will boost sales through the winter months. Month by month weather predictions will be available in the monthly justification section of the Perrys Project.

NRF A quick look: Back to school by the numbers (2011) Farmers Almanac (2012)

August Sales, BOM, & Markdowns Justification

Sales BOM Markdowns

Last Year $225,000 $877,500 $89,500

This Year $231,800 $900,000 $108,200

As college and grade school students are beginning to get ready for back-to-school, sales in August will reflect a growing demand for new, trendy clothes. Last year showed a 6.8% increase over 2010, but recovery was proven slow based on the depressive state of the economy (Back to School Shopping, 2012). Due to the unfortunate state of the economy back to school shopping suffered, but did show signs of improvement. While August is only the introduction leading into the September back-to-school shopping season, customers are becoming more confident in their finances, so they are much more likely to wander out early and begin making purchases. Customers now have more money in their pockets; however, this does not mean that they will be throwing it around. As the economy begins its revival, back-to-school shoppers will still be in search of the great deals that have been attributed to a suffering economy. This customer group falls under the Thinkers VALS profile. Thinkers are very likely to spend a lot of time in the store looking through merchandise, at ads, or online to find the best prices out there. Thinkers contribute to 14% of Perrys total business. Perrys plans on stocking full lines of back-to-school clothes in August, but most of this merchandise will be marked down in Perrys Back to School Sale. August will use a total of $108,200 in markdowns this year compared to
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$89,500 in markdowns last year. The big jump in markdown dollars is to compensate for a larger volume of customers, more purchases, and more merchandise on the floor. A Mintel study concluded that most teenagers across age groups claim to wear what they want, thus reinforcing the importance of marketing to the teenagers and not only the adults. The Kids are behind their parents purchases. 61% of teenagers, age twelve to seventeen, report being happy with how they look in new clothes. This statistic suggests that they may be more likely to look to clothing, apparel and other products to change or improve their appearance (Back to School Shopping, 2012). This information is vital to Perrys marketing strategies and promotional strategies this month. Teenagers want to feel like they are in control of their own style. By marketing directly to them, Perrys will increase the amount of control they feel over their buying decisions and make them happier with their purchases thus decreasing the amount of returns. Parents also want their children to look good. Another Mintel study suggested that 31% of parents acknowledged buying clothing for their kids that they think friends, teachers or other parents would approve of (Back to School Shopping, 2012). This group of adults falls under the Achiever VALS profile. To achievers, appearances are a reflection of status. Achievers make up 21% of Perrys total businesses. According to the 2012 Farmers Almanac, August will bring thunderstorms and showers in the beginning of the month through to the middle of the month. Rain towards the end of the month will be local and scattered with fairly windy conditions. August will end with fair weather conditions as September approaches. August weather will not affect the buying behaviors of customers too much. As summer comes to an end, customers will want to retreat to an area
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where they still feel like they are doing something fulfilling. Rainy weather will not permit outside activities, so customers are more likely to come indoors. Since the temperatures will remain fair, customers will not feel as though they need to lock themselves in their house and get ready for winter; however, lower temperatures will call for warmer clothing.

NRF A quick look: Back to school by the numbers (2011) Farmers Almanac (2012)

September Sales, BOM, & Markdowns Justification

Sales BOM Markdowns

Last Year $300,000 $900,000 $45,000

This Year $309,000 $927,000 $59,500

Sales Despite a few scattered thunderstorms, September is predicted to be a relatively dry month as students head back to school from the 4 th to the 7th. September cools off quite a bit from the 20th to the end of the month, compared to the previous months, which will drive customers into Perrys to purchase clothes for the cooler climate. Customer confidence continues to be on the rise throughout September, but customers are still conscious about the dollar signs on price tags. While most customers this year would have done their back-to-school shopping in August, some customers are still searching for extra items to add to their wardrobes. While Septembers planned sales are higher than last years sales, sales this year are not raised too high due to the nature of the season. Customers now have completed most of their back-to-school shopping and are prepping for the fall and winter seasons due to the cooler climate. Overall, September will only account for 11% of the seasons total sales. Markdowns Markdowns this month will be significantly lower than last month; however, the markdown dollars Perrys does have will be used at the beginning of the month while back -toNRF A quick look: Back to school by the numbers (2011) Farmers Almanac (2012)

school shopping transitions from August into September right before the start of the new school year. The decrease in markdown dollars is due to a slower selling month as well as transitioning in the full fall lines. There will not be much merchandise on the floor as the month progresses; therefore, not as many markdown dollars are needed to accommodate a smaller stock. BOM Septembers BOM is also planned to be the same as Augusts BOM, because Perrys anticipates less sales, therefore, there will not be as much merchandise needed to fill the customers needs. September is going to be a transitional month for Perrys from its back -toschool stock, to its full-line fall apparel. This months customers are going to be people that want to get a head start on the fall season, and have clothing before anyone else does. According to VALS Profiles, this customer would fall under the Experiencers Profile which contributes to 15% of Perrys total business. This customer is likely to buy our introduction fall line at full price with the assumption that they are ahead of the game. The other type of customer that will shop during this time is the bargain hunter. This customer may not care about trendiness or style; they simply want the merchandise at what seems to be a great deal. This customer may also be incredibly interested in current styles and trends, but may not have the means to buy the items full price. According to VALS profiles, these customers would fall under the Thinkers and Strivers Profiles which contribute to 14% and 8% of Perrys total business. Both customers are very important to Perrys sales goals.

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October Sales, BOM, & Markdowns Justification

Sales BOM Markdowns

Last Year $210,000 $861,000 $66,000 Sales

This Year $200,900 $803,400 $54,100

As customers prepare for fall, they will be faced with an uncharacteristically cold October, which will encourage colder climate apparel shopping. October is predicted to be a relatively dry month except for a few showers towards the middle of the month. While precipitation is cooperating with shoppers and stores, shoppers will be hit with unseasonable cold weather and frosts, which will drive them into Perrys to get warm. Tr ick-or-treaters will enjoy a fair weathered Halloween as well. According to the National Retail Foundation (NRF), retailers are expected to have a spike in Halloween sales this year. Holiday spending is expected to rise and more and more people prepare to celebrate Halloween (Daily Finance). Columbus Day is also expected to be a great selling weekend. This year, Columbus Day is Monday, October 8th. Columbus Day weekends as well as Halloween are both great opportunities to throw some great sales into the mix and use Perrys $54,100 in markdowns. Markdowns Overall sales in October are projected to be much less than August and September due to the back-to-school nature of those two months. Also, October is the only month in which
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Perrys Juniors Department has planned a markdown. October will be a much slower sales month, but with Halloween and Columbus Day sales, Perrys is sure to drive customers into the Juniors department. BOM Octobers BOM will be much lower than September and October because of the slower sales period leading up to Holiday Sales. Octobers stock will not be replenished as often, and the sales floor will most likely be made up of assorted sizes and colors left over from the previous months with some new merchandise mixed in throughout.

NRF A quick look: Back to school by the numbers (2011) Farmers Almanac (2012)

November Sales, BOM, & Markdowns Justification

Sales BOM Markdowns

Last Year $255,000 $918,000 $51,500

This Year $390,000 $919,300 $75,700

Sales November leads way to start off what promises to be a very busy holiday season. Consumer confidence is on the rise; the economy and the consumer have both been recovering cautiously from the recession of 2008. Sales this season are expected to rise, however Perrys is wary to keep an eye on the recovering American consumer. Last year sales were better in emerging markets than in traditional markets around the Holiday season. Though holiday sales did rise 3.5% last year, for the year before it was 5.2%, consumer sentiment is to blame as home-owners saw prices dwindle down over this past year. Consumers are on a slow and

cautious recovery as the market improves at an uncertain rate. However, shoppers this year are taking their time to find the best deals and really organizing their shopping lists ahead of time (HKTDC, 2011). November of 2011 led off on a cool and damp start as pleasant weather did not occur until the beginning of the second week. From November 8 th to 11th pleasant cool weather occurred, followed by heavy showers and thunderstorms from the 12th to the 15th. The 16th19th was windy and cold as storms continued to appear through the 20 th to the 23rd. Fair

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weather prevailed through the 24th to the 27th and clouds loomed over-head through the rest of the month. For 2012 the weather for November is predicted to be fair through the 1st-3rd. Then, stormy with heavy rain through the 4th to the 7th as a cold front settles in. Rain continues through the 8th-11th and could lead to possible snow flurries. Through the 12 th to the 15th the weather is fair and sunny. Then stormy and cool from the 16 th to the 19th the cold weather subsides by Thanksgiving, and for the rest of the month the weather is fair with a mix of cold rains. Inventory and assortments will reflect weather conditions of the season. Light and

medium weight rain coats will be an important item this season and must be kept in stock at all times through the month of November, as this month promises to be a wet one. Heavy weight jackets will be offered but at lower quantities due to the occasional occurring cold weather days throughout this month. Markdowns Markdowns will be 14% for the month of November, contrasting an overall markdown percent of thirty-five for the total year, and ten percent for the month of October. Promotions will start to slowly roll out though the beginning of this month and then slightly be held on pause until Black Friday. Throughout the month $75,700 markdown dollars will be taken. Perrys plan is to run one promotional event the first wee k of November and one in the second week as well. The event takes place in the Juniors department and $20,000 in markdowns will be taken in these two weeks, saving the other $55,700 for Black Friday which usually produces our highest sales of the year.
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BOM Beginning of month inventory will be stocked at $919,300 with a turnover ratio of 3.5, resulting from our planned sales of $262,700. Inventory will be held at higher rates

corresponding with higher growth in population of our target market group. Inventory will also correspond with predicted weather patterns for the season as well as a detailed look back at last years weather of the season.

NRF A quick look: Back to school by the numbers (2011) Farmers Almanac (2012)

December Sales, BOM, & Markdowns Justification

Sales BOM Markdowns

Last Year $390,000 $975,000 $134,000

This Year $417,200 $1,042,900 $167,700

Sales December sales are planned to increase seven percent from last year. Last year sales amounted to $390,000; this years goal is to reach $417,200 in sales. We believe this is a realistic goal as consumers are still careful while spending their money as re flected in last years sales numbers. Growth is expected, but it will be slow and steady this year just like last year, as consumers are feeling comfortable but also unsure about the economy here in America. This past year brought competition from other countries to the consumers attention as China took place of America in the number one spot of the largest economy in the world. Despite this, consumer confidence continues to grow here in the USA. This holiday season is sure to be delightful with plenty of cheer to go around! Though this past year the weather was unseasonably warm with almost no snow at all, this coming year is going to be a bit more wintery than last. Weather reports are predicted to start off with snow in the beginning days of December. From the 4th to the 7th the snow will give way to clear skies and cold winds. Then a heavy rain is predicted to fall between the 8 th and 11th. The 12th to 15th will remain cold with snow accumulation, followed by icy conditions from the 16 th to the 19th. Rain will continue as cloudy weather looms overhead from the 20 th to 23rd. Some snow
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might be headed our way for Christmas from the 24 th to the 27th. Cold and rainy weather is predicted from the 28th to the 31st. Markdowns Our advertisements will take note of this in our American Holidays ad campaign starting December 1st. This year holiday sales are all about a doing good and feeling good about what you are doing. Perrys will push the do whats good for you and your country theme this holiday season. Promotions will be targeted at our junior consumer and their parents through quick online advertisement videos prompted through social media sites. Consumers will be encouraged to purchase gifts for their loved ones from retailers here in the US instead of turning to online worldwide retailers. Supporting Perrys is good for American business, jobs and the economy. This will be an important way to boost our sales for this year in a market that is becoming more and more international. Further encouraging sales Perrys will take $167,700 worth of markdowns, thus making markdowns 31% for the month of December. Perrys will run many promotional events leading up to December 25th 2012. American consumers still need to know they are obtaining products with the upmost value, and this will encourage them to continue to make purchases even if their shopping lists have been completed. Perrys is counting on these two factors to really increase holiday sales this year; 1.) Do good feel good shopping theme, 2.) Amazing value in promotional markdowns.

NRF A quick look: Back to school by the numbers (2011) Farmers Almanac (2012)

BOM Inventory should correspond with predicted weather patterns, BOM will be held at 1,042.9 with turnover ratio expected to be 2.5. Turnover could be a little higher but it is predicted due to snow fall that there will be days Perrys is very slow. Merchandise will reflect the happy times of the season and holiday music will play throughout the store while customers are making their holiday purchases.

NRF A quick look: Back to school by the numbers (2011) Farmers Almanac (2012)

January Sales, BOM, & Markdowns Justification

Sales BOM Markdowns

Last Year $120,000 $756,000 $64,000

This Year $123,600 $778,700 $75,700

Sales This month is traditionally a slower sales month as consumers transition into a new year. Though Perrys still plans on January being the slowest month in sales, this years goal is still planned at a 3% growth from last year. Growth will remain modest throughout this month, thus reflecting the slow and steady growth in sales for the entirety of fall/winter 2012. As stated by the Congressional Budget Office, U.S. economic projections will continue to grow, real growth will continue to rise at a rate of about 2% nationwide during 2012. January is predicted to be a stormy and chilly month in 2013. The 1 st through the 3rd may bring some snow flurries or a sleet-y rain. Days following remain wet with mixed

precipitation leading up to fair skies from the 8 th-12th. The 13th-15th starts out stormy then gives way to fair, mild weather. From the 16th-19th the weather will be cloudy with scattered showers and then a chance of snow between the 20 th to the 23rd. Markdowns To encourage growth in sales during this traditionally slow month in retail, Perrys will be taking 14% or $75,700 of the total markdown dollars for this fal l/winter season. Perrys will have two weekend sale events during this month, one the first weekend of the month and
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another the last weekend. The initial sale will receive 25% of the markdown dollars. This sale hopes to target customers waiting for the post holiday sales, or who received money or gift cards as gifts this holiday season. Purchases amounting to $200 will receive a five-dollar store credit and a flyer about the second sale at the end of the month. BOM The rest of January will be stormy, damp and cold. BOM for January will be $778,700. Turnover ratio is projected at 6.3 which is high but typical of this month, and has been kept the same as last year. This high turnover rate can be explained by lagging sales and large numbers of returns.

NRF A quick look: Back to school by the numbers (2011) Farmers Almanac (2012)