The art of Merchandise Mix and Inventory Hierarchy

The objective of merchandise hierarchy is achieving the following  

• The Right Product
• The Right Place
• The Right Quantity
• The Right Quality
• The Right Price
• The Right Mix or Assortment
• The Right Time

In order to satisfy every customer’s needs, the retail store must have the right product in right place, in right quantity, with right quality, at the right price, with the right mixes or sizes or variants at the right time. The function of Merchandise Hierarchy is to achieve all these ‘RIGHTS’ so that the sales are high with an ideal level of inventory holding and thus more Profits.  

While planning the merchandise mix, a retail organization has to start with a clear definition of its merchandise hierarchy.

The merchandise hierarchy is a disciplined way of grouping the merchandise mix at different levels, starting from a high-level grouping to the lowest level of the stock-keeping unit (SKU). The grouping may at times have even more than four-five levels such as Color, Size and Design.