Merchandise Management and Visual Merchandising
What this domain tests
Merchandise management is about buying the right range and pricing it profitably; visual merchandising is about presenting it so it sells. Questions test assortment terminology, markup versus margin, GMROI, markdowns and display principles.
Range and buying
- Breadth = number of categories carried; depth = number of SKUs or sizes/colours within a category.
- Assortment planning starts from category roles (destination, routine, convenience, seasonal) and sales history.
- Open-to-buy (OTB) = planned purchases minus stock already on order and received; it prevents over-buying.
- Private labels improve margin and differentiation but need quality control.
Margin mathematics
Gross margin = selling price − cost. Margin % on selling price = (SP − Cost) ÷ SP × 100. Markup % on cost = (SP − Cost) ÷ Cost × 100. GMROI = gross margin rupees ÷ average inventory at cost. Markdown is a permanent price reduction; shrinkage is stock loss.
Visual merchandising principles
Window display with one clear focal point; colour blocking; pyramid or triangle arrangement with the tallest item at the back; rule of thirds; signage that states price and benefit in few words; lighting to highlight, not to dazzle; change displays seasonally; keep sightlines to the store interior open.
Worked example
An item costs ₹600 and sells at ₹1,000. Margin = ₹400; margin on selling price = 400 ÷ 1,000 = 40%; markup on cost = 400 ÷ 600 = 66.7%. Reasoning: the same rupee profit gives two different percentages because the denominators differ - read whether the question asks for margin or markup.
Traps that cost marks
Reporting markup when margin is asked (and vice versa); overloading a window so there is no focal point; treating markdown and shrinkage as the same thing.