A Comprehensive Glossary of Fashion Merchandising

Fashion merchandisers are individuals who source the appropriate products for the right customer at the right time, in the right amount, and at the right location. We will now be talking about a few terms associated with fashion merchandising. This comprehensive glossary will equip you with the knowledge needed to pursue a successful career in fashion merchandising.

• Assessment:

The role of a fashion merchandiser involves forecasting and planning future trends and consumer behaviour within the fashion industry. A skilled merchandiser adeptly leverages historical data for comprehensive business analysis in fashion. This process entails anticipating colour schemes, designs, emerging fashion trends, consumer preferences, and shopping habits. Moreover, they actively participate in seasonal planning and the development of promotional strategies, foreseeing the upcoming season's popular trends.

• Assortment Plan:

In essence, merchandising assortment planning involves a fashion merchandiser to determine the ideal merchandise mix, encompassing both breadth and depth tailored to their target customers to navigate the impact of fashion business management. Breadth pertains to the range of categories offered at each store, such as shirts, t-shirts, trousers, and wedding suits at Peter England. Meanwhile, depth delves into the specifics within each category, considering factors like colours and sizes for each clothing item, like shirts, within the brand's offerings.

• Automatic Reorder:

It refers to an automatic replenishment system installed by fashion merchandisers in retail outlets. This system operates by triggering a direct alert to the manufacturer or vendor when the inventory falls below the minimum cutoff level at a retail outlet or e-commerce platform. The purpose of this system is to promptly restock inventory at the store, ensuring the fulfilment of customers’ demands. Typically, this system is installed for specific merchandise that fashion merchandisers and retailers anticipate will outperform.

• Average Gross Sale:

Majorly used by retail merchandisers to see the overall sales performance and potential of the business—an effective trait of fashion business management. This metric is calculated by dividing the total revenue generated in a given time period by the number of days in that period.

• Backup Stock:

Some inventory is intentionally kept at the backend of the store or at a warehouse by fashion merchandisers to restock once the inventory goes low. This is done at the store level to avoid overcrowding of merchandise on the shelves.

• Balanced Stock:

It’s a case scenario where fashion merchandisers keep optimal levels of inventory at the store to avoid overstocking or understocking, so an optimal level of inventory is maintained to effectively utilise the retail space both front-end and back-end. This is carried forward when merchandisers effectively forecast demand and regularly monitor the inventory using technology and automation.

• Basic Stocks:

These are stocks which a fashion merchandiser keeps in store all the time, front-end and back-end. These products are like staples, necessary items for any brand. For instance, Levis brand would always keep a pair of classic blue denim jeans and jackets no matter what's trending in the market, white shirts by Marks and Spencer etc.

• Bestseller (Best-runner):

Inventory which thrives in the market throughout a season or year-round without any discounts. For instance, Shoppers Stop launches a plain red king-size bedsheet and it achieves strong sales without discounts across all stores pan India, this particular merchandise will be considered a best seller/best-runner.

• Branch Store:

It means a fashion store owned and operated by the central or corporate office itself which sets the overall strategy, policies, and guidelines for the entire chain (branch store and franchise store). Sometimes these stores are also referred to as flagship stores.

• Buyer (Fashion Buyer):

A buyer is responsible for making purchases on behalf of the company. They with the help of fashion merchandisers finalise the product assortment that they predict is going to be in high demand based on the historical data. They focus on product selection, trend analysis, vendor management, order placement, inventory management, seasonal planning and data analysis.

• Classic Merchandise:

It means products or items which are timeless styles, they are merchandise which never goes out of fashion. For instance, a pair of blue denim jeans, a little black dress, ray ban aviators by any luxury fashion brand. These are designs which are elegant and everlasting. Luxury brand management roles and responsibilities, when translated into the savvy actions of fashion merchandisers, define the essence of a luxury brand's offerings

• Cross-selling:

This terminology is mostly used at a retail outlet or on an e-commerce website. Fashion merchandisers try to sell two or more categories together to maximise sales by increasing the average transaction value. For instance, at a luxury store like Gucci, a sales representative is trying to sell a bag with accessories or footwear. This can also be done by fashion brands which try selling merchandise at stores with bundle offers.

• CRM (Customer Relationship Management):

Customer Relationship Management is a strategic approach aimed at comprehensively managing and analysing customer’s buying patterns throughout the customer’s life cycle. By gaining a deep understanding of the customer, fashion labels employ a variety of techniques to cultivate long-term, mutually beneficial relationships. Effective CRM relies on a deep understanding of customer needs and preferences, aligning with the 'Product' component of the 4Ps.

• Discount Stores:

Discount stores represent a unique retail model, providing merchandise at significantly lower price points compared to regular flagship or franchisee stores. In India, notable examples of such discount stores include D-Mart, Big Bazaar, Vishal Mega Mart, and others. By maintaining lower price points, discount stores aim to cater to a broad consumer base and make quality products more accessible to a larger audience.

• Dropshipping:

It is a type of method where a retail store or e-commerce store doesn't keep the merchandise in stock, rather a product is delivered directly by the wholesaler or manufacturer to its customers. In this category, fashion brands don't hold the inventory. This is especially done by e-commerce platforms which take the order and get it fulfilled by its vendor/s. For instance, print-on-demand services usually work on a dropshipping model.

• Ensembles:

A curated look that complements each piece. Stores often create multiple ensembles to cross-sell merchandise, boosting transaction value. For example, at Zara, alongside individual items on shelves, you'll find ensembles to assist customers.

• Fashion Fad:

It is a fashion trend that comes and goes out of fashion very quickly. They have a relatively shorter life span. For instance, low-rise jeans were a fad; they came into fashion in the early 2000s and quickly vanished from the streets.

If there is fad merchandise on the market, fashion merchandisers order fewer units of that particular merchandise.

• Gross Margins:

It's a retail term denoting the gap between revenue earned and the cost of goods sold.

Gross Margin (%) = [(Revenue - Cost of Goods Sold) / Revenue] x 100

• Hard Goods:

Hard goods in fashion means goods which are physical and durable rather than just apparel and accessories. For instance, footwear, furniture, electronics, jewellery, watches etc.

• Haute Couture:

Haute Couture, the pinnacle of luxury fashion, is a term that every aspiring fashion business manager should be familiar with. Haute Couture refers to the high-end, custom-made creations by designers or fashion labels. For example, an exclusive, high-end garment made for celebrities attending the Oscars.

• Impulsive Merchandise:

These are strategically placed at the checkout counter of a fashion brand. For instance, H&M showcases perfumes and mobile accessories at the counter—enticing customers to make spontaneous purchases.

• Inventory Shrinkage:

Refers to stock shortages caused by loss, often resulting from theft. To prevent inventory shrinkage, Fashion Merchandisers instruct sales representatives to affix RFID tags on each garment, safeguarding the brand against losses.

• Knock-offs:

Imitations or replicas of existing merchandise in the market.

• Low-Margin Retailing:

This business model operates on a slim margin, where the gap between the selling price and cost of goods sold is minimal. Fashion merchandisers associated with such brands generate revenue through high-volume sales. An example is fbb (fashion at big bazaar) retailing in Big Bazaar.

• Made-To-Measure:

A term indicating that products can be customised and tailored to fit customers based on their size, preferences, and adjustments. For example, having a suit tailored at Raymond.

• Markdowns:

It is retail terminology where merchandise is sold at a reduced price. Fashion retailers or merchandisers use this method to sell off excessive inventory. Sometimes when there is seasonal merchandise which the fashion brand has to get rid of then also they use markdowns to sell out items.

• Markup:

In retail, markup denotes the percentage difference between the cost of a product and its selling price. It serves as an indicator of the profit earned by a fashion brand on each item they aim to sell.

• Open to Buy (OTB):

A term commonly used by retail merchandisers, "Open to Buy" refers to the amount of merchandise a retailer can acquire during a specific period. When calculating OTB, fashion merchandisers consider not only current inventory levels and anticipated sales but also the application of the '5 Rs' of retail strategy. This ensures that the right product is available at the right price, in the right place, at the right time, and with the right promotion to generate optimal sales.

OTB = Planned Sales + End-of-Month Stock − Beginning-of-Month Stock

• Sales per square foot:

It is retail terminology used by fashion merchandisers or retailers to calculate the efficiency of the retail space. It says total sales divided by total retail space. It is a good way to measure the optimal utilisation of retail space. Higher sales per square foot represent higher profitability.

• Seasonal Merchandise:

Refers to products available for purchase during specific seasons, typically for a limited duration. Examples include winter apparel or accessories for the rainy season.

• SKU (Stock Keeping Unit):

It is a unique alphanumeric number assigned to each product. It is specific to each product, it is for fashion merchandisers to analyse each product’s performance individually.

• Soft goods:

A retail industry term referring to products primarily crafted from pliable materials like fabric or textiles. These items are known for their flexibility and can encompass a diverse range of products. Examples include clothing such as shirts, dresses, or pants, accessories like scarves, hats, or gloves, as well as home items like linen, bedding, blankets, towels, curtains, upholstery, or drapes.

• Store Manager:

An integral member of the retail store or outlet responsible for overseeing day-to-day operations. They collaborate closely with retailers and fashion merchandisers, providing ongoing feedback on merchandise, sales performance, popular items, and customer reviews. Additionally, they manage staff, oversee visual merchandising, and employ strategies to prevent inventory shrinkage. Their primary focus is on achieving sales targets.

• Trade Shows:

This is an event where businesses show their products and services to other businesses or potential customers. In trade shows fashion merchandisers display their upcoming collections to take feedback from distribution channel partners, existing, and potential customers etc. For instance, Auto Expo is a trade show showcasing the latest innovations. We also have the India International Trade Fair (IITF) showcasing products from various industries. We also have the India International Garment Fair (IIGF) organised by the Apparel Export Promotion Council (AEPC), IIGF is a major sourcing event for apparel manufacturers and exporters.

• Trend:

It represents the direction in which fashion is heading. Trends evolve or change over time due to shifts in societal preferences, advancements in technology, or emerging cultural influences. For example, in 2023, prevalent fashion trends included a boho-inspired Y2K denim skirt, giant headphones, cotton boxer shorts, Messi’s Non–Barbie Pink Miami Jersey, Quilted bag, Friendship bracelet, Cat-eye sunglasses, and more.

• Vendor (Manufacturer):

The role of a fashion merchandiser is multifaceted, encompassing a wide scope of responsibilities, from forecasting trends to managing inventory. A vendor which produces products for retailers, wholesalers or direct customers.

• Visual Merchandising:

The job of a visual merchandiser or a fashion merchandiser, is to style and strategically place merchandise in a way that entices customers to make purchases. They act as a "Personal Stylist" for the store, aiming to maximise shopping cart value and profits. By creating an aesthetically pleasing and engaging store environment, they enhance the overall shopping experience. This is achieved through careful store layout and design, determining the flow within the store, and grouping complementary category products for effective cross-selling. The store communicates its identity through thoughtful display and lighting choices. Trendy clothes are showcased on mannequins to highlight the latest collection, while fully stocked shelves reinforce the brand's commitment to offering a diverse range of products.

Explore More About Fashion Merchandising

- For further insights from the author, Shraddha Kochar, and to delve deeper into the realm of fashion merchandising do read about Green marketing and Greenwashing practices in the fashion industry.

- Interested in reading more about fashion business management. Here’s a curated list of the top 10 books on fashion business management. Looking to build a career in fashion merchandising. The article provides some relevant opportunities in this field.

- Ever wondered how fashion retail captures your attention? Discover the secrets behind the changing sphere of visual merchandising. If you want to read about the visual merchandising trends of 2023, then you’re in the right place.