Merchandising at Nine West Retail Stores

Central Concern:
The Chairman of Nine west retail stores Chain Jerome Fisher decided that changes were needed in the
merchandising organization within NWRS, the retailing division. He believed this was critical to the success of
the company. NWRSs main objective was to decide what products to carry at which location means proper
retail merchandising for the convenience and easiness of costumer.
Jerome Fisher predicted that the role of retail director would change in the near future, due to technology, The
Companys sales growth complicated merchandising decisions since this now included a broad geographic
area with variations in fashion preferences. This was expected to become even more complicated as leading
specialty stores were planning on launching footwear brands, which gave the NWRS a new source of
competition. Merchandising had become even more difficult, due to the decision to diversify product to
include sunglasses, jewelry, legwear, and apparel. Fisher wanted to expand the company to a complete lifestyle
brand. Also, he planned to launch an online division.
Company Background:
Founded by Jerome Fisher and Vincent Comuto in New York in 1977 as a manufacturer and wholesaler of
womens footwear with more than 7000 retail stores in 40 countries
Retail division was started in 1983 and contributed around 49% of the revenue
In 1996, sales grew by 28% to $1.6 bn and net income increased by 33% to $95 million.
Company international presence and high growth was achieved through addition of new stores and acquiring
other footwear companies.
In May 1995, the acquisition of U.S. Shoe Corporations footwear division, made them largest womens
footwear company and in future company is intended to evolve into a complete life-style company.
Footwear industry:
The footwear industry had seen little real growth from 1990 on. From 1990 to 1995, the industry only saw a
compound growth of 0.44%.

31.4
31.6
31.8
32
32.2
32.4
32.6
1990 1995
Market Size CAGR (1990-95): 0.44%

Footwear represented 46% of the total retail market in 1995, yet sales were expected to rise only 3-5% over the
next five years. Most shoe segments only experienced a small increase in sales in the early 90s.
The basis for differentiation was most often quality, style, and sometimes manufacturing location (esp. France,
Italy.)
Merchandising Structure
The retail directors of NWRS were similar to both the buyers and merchandisers of other retail companies.
However, retail directors, who were each responsible for 50 to 60 stores, managed style selections, purchasing,
pricing, and display. They reported to a merchandise manager who in turn reported to the president of NWRS.
The president was responsible for allocating decisions for creating a point of view across the entire
organization. He or she was also to oversee the compliance of retail directors with company goals. NWRS,
unlike traditional retail organizations, was divided by region.
Merchant Incentive Structure
Retail directors were rewarded based on performance and year-end bonuses. Since the outcomes of a regional
director were easier to monitor then the actions themselves, compensation and performance based rewards
were tied to outcomes. A retail director was capable of earning up to 15% of their annual salary for such
rewards. To be eligible, he or she had to exceed both goals and plans.
Store Organization and Incentive Structure
Field organization was crucial to day-to-day operations. Because of the NWRSs centralization, retail directors
relied on regional sales managers to be their eyes and ears. Regional sales managers qualified for bonuses of
up to 15%. 5 or 6 area sales managers, who could occur bonuses of up to 10%, would report to one regional
sales manager. Each store employed a store manager, and several assistant managers. The store manager was
responsible for producing weekly business analysis and highlighting the stores successes and failures.
They were reviewed based on annual sales, expenses, turnover, and shrinkage Field employees were rewarded
based on the achievement of sales and by reviews by corporate EPS. Promotion for field employees were
present, but infrequent.
Demand Forecasting
Retail directors broke this down by store and SKU, and used a combination of historical data, exogenous
variables, and intuition.
They relied heavily on historical variables to forecast demand.
Their product portfolios consisted of safe and risky styles.
Each risky style was evaluated based on rick and potential reward, and also considered in product
diversification. Fashion trend forecasting consisted of input from designers and
NWRS merchandise managers who would travel to Europe to view the fashion and new materials. These
inputs were combined with the prediction of consumer tastes and likely success of a theme.
Seasonal Budgeting
To set the financial budget, a retail director submitted a formal request, attempting to make an argument as to
why the stores should have increased funding. Regional directors then determined appropriate levels of
merchandise and created an aggregate total budget for their region.
The merchandise manager and president developed category level forecasts. They had to be both effective
managers and competent merchants.
The ultimate objective was to make certain the most promising opportunities underwent the planning process
when the final budget was approved.
Merchant Product Selection
After the completion of seasonal budgets in December, retail directors visited the wholesale divisions shoe
week show to preview the upcoming fall collection. Within a week, retail directors were required to project
the styles that would be represented in their stores. They also had to forecast initial store quantity
commitments, which represented 40-50% of the entire seasons buy. The other 50-60% was set aside for
reorder merchandise, and to buy new products which had appeared on the market. By this time, many trends
had surfaced, and the direction became apparent.
Rolling Financial Forecasting
Once the formal budget and purchase orders are finalized, retail directors continue to warehouse and additional
information and apply this knowledge to updated financial forecasts. Forecasts would be updated if a major
event, such as production problems or competitor going out of business, occurred. It also allowed for
showcasing successes and supported funding for specific products or locations.
Merchandise Display Decisions
Merchandise display recommendations were created by retail directors and visual marketing directors, and
were communicated to the store in the form of planograms. Merchandise was put together in groups, to be
aesthetically pleasing. Retail directors had to make sure that shipments arrived in the correct order so the store
could implement the displays, and also needed to ensure that specific regional preferences were satisfied.
Retail Pricing
The NWRS, who again controlled pricing, dictated a suggested retail price to products purchased from their
wholesale division to ensure consistency in pricing. For the wholesale division, NWRS sourced the best costs,
and chose to either pass the savings on to the customer, or to keep it within the company. But merchandise sold
to department stores was often discounted, forcing regional directors to match the new lower price to drive
sales. 40 50% of merchandise was generally secured at regular price. Promotions and markdowns were
developed to arrive at profitability requirements. After a products lifestyle, which lasted about 12 weeks, the
product was often sold to off-price retailers through merchandise jobbers to ensure brand integrity.
Tough Decisions
Because Fisher planned to expand into lifestyle products, he realized the forthcoming few years would be the
companys most crucial.
Major issues they were working for are Success, changes in merchant organizational structure, market
competition, efficiency, possible incentive modifications. In addition, the use of IT was increasing in the
market, yet the organization lacked familiarity with computer techniques and capabilities, and with computer
oriented merchandising.
Alternative Courses of Action
The first milestone would be creating an online store for the company.
Nine west could either train or hire new employees to create and maintain this new division, or they could
source to a different company.
Instead of vertically integrating this new product, Nine West may either choose to license select product or
acquire small companies altogether. With the latter, they would be able to alter the new company to fit into the
Nine West vision. It would be greatly beneficial for the acquired company to already have a strong sourcing
department, as existing Nine West employees would most likely be unfamiliar with manufacturing this new
product. However, this would be a case of vertical integration or expansion, and may change the dynamics of
the company. However, a synergy would still exist between management in NWRS and new companies.
If Nine West so chooses, vertical integration would require much more work, but would allow the company to
maintain total control over all aspects of products. Nine West would have to hire new product designers,
production specialists, market researchers, etc. to ensure the success of the brand.
Issues and Recommendation
The company faces two issues 1) creating an online division and 2) expanding into the lifestyle market.
Because the companys distribution of product is divided into regions, Nine West would need to research
sales as a whole for their new online division. Because Nine West distributes too many department and
specialty stores, they may choose to research which styles they are selling on their websites, and which are
making the most profit. Because Nine West is vertically integrated, manufacturing would only need to be
increased on select styles, or on online exclusive styles. Because Nine West chooses to offer different widths
of shoes in their stores, the ones that are the least performing may become online exclusive items.
Instead of maintaining prices regionally, the company would now need to maintain stronger company
standards on pricing because a customer from any region could now buy the item online.
Process benchmarking is the most crucial marketing technique for the company at this time. Nine West would
need to do extensive research on other companies who have also expanded to include full lifestyle brands.
Instead of immediately introducing additional merchandise to all stores, select high-traffic high-performance
in key areas should begin to carry test merchandise. This merchandise could also be carried on their new
website.
It would be less time consuming and require much less training for Nine West to acquire new companies to
produce new products.
Also, because Nine West employees are unfamiliar in general with technology, a company should be sourced
to create and maintain the online division. A new department of the NWRS could be created to maintain
synergy between all companies.
Similar Style of industry in Pakistan:
English Boot House:
Introduction:
English Boot House is a local Pakistani manufacturer and retailer of outdoors wear with a focus on
footwear.EBH footwear is marketed towards people intending outdoor and casual use. The company also sells
apparel such as clothes, watches, glasses and leather goods.
In 2007 till 2012, EBH was named for consumers Choice award in Pakistan.

Brief History:
English Boot House has over 57 years of footwear company shoe experience shared with its founders, leading
industry focused on the consumer in the country and the leader in comfort footwear technically
advanced. Imagine, over 57 years of research, study, buy and sell shoes-shoes are their life. English Boot
House offers one of the finest collections of shoes in Pakistan.
In 1951, EBH founder Qasim Wahid began his shoe-making career in a small Shoe making company,
Karachi, as an apprentice stitcher.
In 1954, Qasim bought half of business of his company, mainly doing contract work for other
manufacturers.
In 1956, Qasim bought the remaining interest and brought his sons into the company.
In 1957 till 1980 Qasim and co added casual and boat shoes to its boots product line and start
supplying shoes as per requirements and needs of retailers.
In the 1980s, the company expanded and open first outlet with the name of English Shoes.
In the 1990s, the EBH Company registered as a private limited company and launches proper
showroom outlets in Clifton, Tariq road and Hydri market Karachi with the name of English Boot
House and start proper newspaper and flier marketing in Karachi.
1n the 1997, the EBH company start selling other product ranges like, women bags, men waist belts,
men and women purses and valets, professional business and medical bags and other leather stuff and
with the passage of time they realize the huge requirements of quality stuff so the expand their
showrooms (Now 8 in Karachi 1 in Lahore and 2 new stores would be open in Lahore and 1 in
Islamabad till the end of 2015)
EBH Karachi 1: Atrium Mall, Miss EBH Service Shoe Shop, Zaibunnisa Street City: Karachi
EBH Karachi 2: SD-31, Block G, Masjid Taimurya Road, North Nazimabad, Karachi.
EBH Karachi 3: Dolmen Mall, Block 3, Tariq Road, off. Shaheed-e-Millat Road, Karachi.
EBH Karachi 4: Millennium Mall, Rashid Minhas Road, Gulshan-e-Iqbal, Karachi.
EBH Karachi 5: Park Towers Clifton, Karachi. Landmarks
EBH Karachi 6: Main Clifton Road, Karachi. Landmarks: Aghas Super Market, Clifton.
EBH Karachi 7: Miss EBH (Exclusively Ladies) -Sunar Centre, Blenkin Street, Sadder, Karachi.
EBH Karachi 8: 124-F, Tariq Road, PECHS, Karachi.
EBH Lahore 1: Central Avenue Premium Brands Plaza, Near Hussain Chowk, Noor Jahan
Road, Gulberg-III, Lahore.
1n the 2010, the EBH company start selling other product online with the help of face book and e
marketing.
Facing similar problem:

As EBH launch the variety of products in all men and women wear along with fancy gadgets they are really
facing the problem of proper merchandising, after visit of every outlet one can easily judge that every shop is
different in term of shop display and merchandising style, which might create confusion for costumer in
finding product ranges as well as proper SKU finding.