Assessor Resource

SIRRMRM004
Develop a merchandise financial plan

Assessment tool

Version 1.0
Issue Date: April 2024


This unit describes the performance outcomes, skills and knowledge required to undertake merchandise financial planning for a retail organisation. It requires the ability to forecast sales, inventory and profit to create a merchandise financial plan that maximises organisational profitability and performance.

The merchandise financial plan documents a high-level budget for the financial management of merchandise and is used to influence financial planning at a category level.

This unit applies to individuals working in merchandise management-related roles in a diverse range of retail sectors and business contexts. They operate with independence and are responsible for making a range of operational business decisions related to the management of merchandise.

No occupational licensing, certification or specific legislative requirements apply to this unit at the time of publication.

You may want to include more information here about the target group and the purpose of the assessments (eg formative, summative, recognition)


Evidence Required

List the assessment methods to be used and the context and resources required for assessment. Copy and paste the relevant sections from the evidence guide below and then re-write these in plain English.

ELEMENTS

PERFORMANCE CRITERIA

Elements describe the essential outcomes.

Performance criteria describe the performance needed to demonstrate achievement of the element.

1. Review organisational financial information.

1.1. Access and review merchandise strategy to determine financial and merchandise objectives for a specified trading period.

1.2. Access and review organisational profit and loss statement to determine organisational financial position and objectives as required.

1.3. Review post-trade analysis data to determine past merchandise financial performance.

1.4. Source and analyse relevant internal and external factors impacting merchandise financial planning.

1.5. Identify merchandise financial planning activity that will maximise profitability and organisational financial performance.

2. Develop merchandise financial plan.

2.1. Plan sales value for the specified trading period using organisational systems and processes.

2.2. Determine gross profit margins that meet financial objectives.

2.3. Plan markdown value to account for potential markdowns and shrinkage and to minimise profit loss.

2.4. Plan optimal inventory values against key performance indicators that maximise profitability and minimise loss.

2.5. Review organisational promotional plan to determine impacts of planned promotional activity on sales, inventory and profit planning.

2.6. Establish merchandise performance indicators.

2.7. Document sales, inventory and profit values using established organisational systems and processes.

2.8. Obtain input from relevant personnel and make adjustments to merchandise financial plan based on feedback received.

2.9. Finalise merchandise financial plan and gain approval as required.

2.10. Communicate merchandise financial plan to relevant personnel.

3. Review and re-plan merchandise financial plan.

3.1. Review in-trade financial performance against actual and budgeted sales, profit and inventory values.

3.2. Investigate and account for variances in sales, inventory and profit values.

3.3. Identify available rebates and incorporate into merchandise financial plan as required.

3.4. Re-plan sales, profit and inventory values in response to the actual sales results.

3.5. Re-plan sales, profit and inventory values in response to internal and external influences on performance.

Evidence of the ability to complete tasks outlined in elements and performance criteria of this unit in the context of the job role, and:

review merchandise and organisational financial data to develop a month-by-month merchandise financial plan for a six-month trading period that includes:

sales

gross margin profit

buying margin

markdown value

inventory values

performance indicators

re-plan sales, profit and inventory values based on actual merchandise performance and in response to:

internal factors impacting merchandise performance

external factors impacting merchandise performance

review merchandise financial plan against performance indicators and make recommendations for future improvement.

Demonstrated knowledge required to complete the tasks outlined in elements and performance criteria of this unit:

merchandise financial planning:

purpose

impact on organisational profit and loss

role in determining:

open-to-buy

space capacity planning

key financial values:

inventory

sales

profit

role of post-trade analysis data in developing merchandise financial plan

common types and applications of merchandise planning processes:

bottom-up

top-down

key merchandise financial planning strategies to:

maximise profitability

minimise loss

merchandise performance indicators, how they are calculated, and role in merchandise planning:

sales

gross profit margin

Gross Margin Return on Investment

sell-through rate

stock turn

forward cover

purchase margin

markdown percentage

internal and external factors impacting merchandise planning:

percentage increase or decrease on last year

promotional activity

consumer behaviour

competitor activity

store openings

store closures

store refurbishments

online strategy

economic factors

critical path

aged stock and impact on inventory and profitability

merchandise reductions and how they are incorporated into the merchandise plan:

markdowns

inventory shrinkage

rebates and impact on merchandise financial plan

responses to in-trade activity:

re-forecasting

accounting for variances in:

sales

inventory

profit

commonly used merchandise planning methods within the retail industry:

formats and structures

systems.

Skills must be demonstrated in a retail environment. This can be:

an industry workplace

a simulated industry environment.

Assessment must ensure access to:

relevant documentation:

merchandise strategy

post-trade analysis data

in-trade performance data

templates and software for merchandise financial planning.

Assessors must satisfy the Standards for Registered Training Organisations’ requirements for assessors, and:

have worked in the retail industry for at least three years where they have applied the skills and knowledge within this unit of competency.

Submission Requirements

List each assessment task's title, type (eg project, observation/demonstration, essay, assingnment, checklist) and due date here

Assessment task 1: [title]      Due date:

(add new lines for each of the assessment tasks)

Assessment Tasks

Copy and paste from the following data to produce each assessment task. Write these in plain English and spell out how, when and where the task is to be carried out, under what conditions, and what resources are needed. Include guidelines about how well the candidate has to perform a task for it to be judged satisfactory.

ELEMENTS

PERFORMANCE CRITERIA

Elements describe the essential outcomes.

Performance criteria describe the performance needed to demonstrate achievement of the element.

1. Review organisational financial information.

1.1. Access and review merchandise strategy to determine financial and merchandise objectives for a specified trading period.

1.2. Access and review organisational profit and loss statement to determine organisational financial position and objectives as required.

1.3. Review post-trade analysis data to determine past merchandise financial performance.

1.4. Source and analyse relevant internal and external factors impacting merchandise financial planning.

1.5. Identify merchandise financial planning activity that will maximise profitability and organisational financial performance.

2. Develop merchandise financial plan.

2.1. Plan sales value for the specified trading period using organisational systems and processes.

2.2. Determine gross profit margins that meet financial objectives.

2.3. Plan markdown value to account for potential markdowns and shrinkage and to minimise profit loss.

2.4. Plan optimal inventory values against key performance indicators that maximise profitability and minimise loss.

2.5. Review organisational promotional plan to determine impacts of planned promotional activity on sales, inventory and profit planning.

2.6. Establish merchandise performance indicators.

2.7. Document sales, inventory and profit values using established organisational systems and processes.

2.8. Obtain input from relevant personnel and make adjustments to merchandise financial plan based on feedback received.

2.9. Finalise merchandise financial plan and gain approval as required.

2.10. Communicate merchandise financial plan to relevant personnel.

3. Review and re-plan merchandise financial plan.

3.1. Review in-trade financial performance against actual and budgeted sales, profit and inventory values.

3.2. Investigate and account for variances in sales, inventory and profit values.

3.3. Identify available rebates and incorporate into merchandise financial plan as required.

3.4. Re-plan sales, profit and inventory values in response to the actual sales results.

3.5. Re-plan sales, profit and inventory values in response to internal and external influences on performance.

Evidence of the ability to complete tasks outlined in elements and performance criteria of this unit in the context of the job role, and:

review merchandise and organisational financial data to develop a month-by-month merchandise financial plan for a six-month trading period that includes:

sales

gross margin profit

buying margin

markdown value

inventory values

performance indicators

re-plan sales, profit and inventory values based on actual merchandise performance and in response to:

internal factors impacting merchandise performance

external factors impacting merchandise performance

review merchandise financial plan against performance indicators and make recommendations for future improvement.

Demonstrated knowledge required to complete the tasks outlined in elements and performance criteria of this unit:

merchandise financial planning:

purpose

impact on organisational profit and loss

role in determining:

open-to-buy

space capacity planning

key financial values:

inventory

sales

profit

role of post-trade analysis data in developing merchandise financial plan

common types and applications of merchandise planning processes:

bottom-up

top-down

key merchandise financial planning strategies to:

maximise profitability

minimise loss

merchandise performance indicators, how they are calculated, and role in merchandise planning:

sales

gross profit margin

Gross Margin Return on Investment

sell-through rate

stock turn

forward cover

purchase margin

markdown percentage

internal and external factors impacting merchandise planning:

percentage increase or decrease on last year

promotional activity

consumer behaviour

competitor activity

store openings

store closures

store refurbishments

online strategy

economic factors

critical path

aged stock and impact on inventory and profitability

merchandise reductions and how they are incorporated into the merchandise plan:

markdowns

inventory shrinkage

rebates and impact on merchandise financial plan

responses to in-trade activity:

re-forecasting

accounting for variances in:

sales

inventory

profit

commonly used merchandise planning methods within the retail industry:

formats and structures

systems.

Skills must be demonstrated in a retail environment. This can be:

an industry workplace

a simulated industry environment.

Assessment must ensure access to:

relevant documentation:

merchandise strategy

post-trade analysis data

in-trade performance data

templates and software for merchandise financial planning.

Assessors must satisfy the Standards for Registered Training Organisations’ requirements for assessors, and:

have worked in the retail industry for at least three years where they have applied the skills and knowledge within this unit of competency.
Copy and paste from the following performance criteria to create an observation checklist for each task. When you have finished writing your assessment tool every one of these must have been addressed, preferably several times in a variety of contexts. To ensure this occurs download the assessment matrix for the unit; enter each assessment task as a column header and place check marks against each performance criteria that task addresses.

Observation Checklist

Tasks to be observed according to workplace/college/TAFE policy and procedures, relevant legislation and Codes of Practice Yes No Comments/feedback
Access and review merchandise strategy to determine financial and merchandise objectives for a specified trading period. 
Access and review organisational profit and loss statement to determine organisational financial position and objectives as required. 
Review post-trade analysis data to determine past merchandise financial performance. 
Source and analyse relevant internal and external factors impacting merchandise financial planning. 
Identify merchandise financial planning activity that will maximise profitability and organisational financial performance. 
Plan sales value for the specified trading period using organisational systems and processes. 
Determine gross profit margins that meet financial objectives. 
Plan markdown value to account for potential markdowns and shrinkage and to minimise profit loss. 
Plan optimal inventory values against key performance indicators that maximise profitability and minimise loss. 
Review organisational promotional plan to determine impacts of planned promotional activity on sales, inventory and profit planning. 
Establish merchandise performance indicators. 
Document sales, inventory and profit values using established organisational systems and processes. 
Obtain input from relevant personnel and make adjustments to merchandise financial plan based on feedback received. 
Finalise merchandise financial plan and gain approval as required. 
Communicate merchandise financial plan to relevant personnel. 
Review in-trade financial performance against actual and budgeted sales, profit and inventory values. 
Investigate and account for variances in sales, inventory and profit values. 
Identify available rebates and incorporate into merchandise financial plan as required. 
Re-plan sales, profit and inventory values in response to the actual sales results. 
Re-plan sales, profit and inventory values in response to internal and external influences on performance. 

Forms

Assessment Cover Sheet

SIRRMRM004 - Develop a merchandise financial plan
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SIRRMRM004 - Develop a merchandise financial plan

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