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MERCHANDISE PLANNING
PLANNING, BUYING AND SOURCING
Submitted By
Tarini Chawla, Nikita Jain, Gunjan Dewan,
Apoorva Behal Saakshi Khera, and Hena Sahni, in Partial
Fulfilment of the Requirements for the Degree
Of B.A (H) in Fashion Retail & Merchandising.
21st April 2009
Mrs Ritu Jain
Date of Submission- 23ed April 2009
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Table of contents
2
S.NO NAME PG NO
1.
Acknowledgement 3
2.
Company profile 4
3. introduction
5-8
4. graphs 9-16
5. Six month plan 17-42
6.
7.
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ACKNOWLEDGEMENT
We wish to express our deep gratitude to our merchandise planning teacher Mrs Ritu
Jain for her guidance and valuable suggestions during the completion of the project. We
would also like to thank store manager and staff of the CANTABIL store in pritam pura
main market for their valuable time and assistance.
Thank you for your support and encouragement.
Yours Sincerely,
Tarini Chawla
Nikita Jain
Gunjan Dewan
Apoorva Behal
Saakshi Khera
Hena Sahini
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COMPANY PROFILE
CANTABIL
Cantabil International (P) Ltd commenced their journey in the year 2000, with a
collection of men's shirts and trouser. Subsequently, with in a short span of just 8years, they have successfully managed to carve a niche in the Indian Fashion
Industry. Today, they are recognized as "CANTABIL" - an Italian brand known
for its unique, distinctive & ultra comfy clothing. In short, range starts from the
sophisticated formalwear, party-wear and ends at casuals & the ultracasual
clothing.
The voyage started in the year 2000 when the first Cantabil store was inaugurated
in Delhi. Since then, with the persistent efforts of the young and dynamic
professionals, Cantabil has reached to 180 exclusive stores across India. Many
more openings have already been planned for 2009 and 2010. All of them have
been designed to create a special atmosphere that will allow the client to feel the
pleasure of buying fashion.
Today, backed up with continual efforts and an unstoppable creativity of the
inspired design team, Cantabil greets the opportunity to introduce the hottest trends
in Indian fashion industry in each season. And with the blessings of the almighty
and with the motivation of team, they have launched the women's wear in 2006.
There ladies collection starts from formal shirts and is extended to cargos.
With its stores, located in the prime commercial areas of cities across India,
Cantabil offers latest trends & lifestyle of today's men & women.
At Cantabil, design is conceived as a process, which is very-closely linked to the
consumers. It starts from stores from where they, constantly, review the demands
of their clients and ensure that they are being conveyed to their creative teams in
the most effective manner enabling them to come up with the clothing that their
clients require accurately.
They have set the industry standard for quality, design & style by using the finest
fabrics, craftsmen & mills. More importantly, Cantabil has renewed its passion for
style and exceptional service as it moves toward an exciting future.
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Introduction
Merchandise Planning"The great
wars of theworld werewon in the
planning tents,not on thebattleground.
In the large retail store, we find a dizzying array of goods to clothe our bodies,
decorate our homes and entertain our families. All of this merchandise comes in avariety of sizes, colours, makes and models. Bringing it all together requires the
successful coordination of numerous individuals and divisions, including buyers,
warehouse employees, financial staff, store operations,etc. Yet, merchandising
takes top priority. It doesnt matter how efficiently the other departments are
operating. If merchandising is not firing on all cylinders, the company cannot
succeed. The merchandise planning process allows the retail buyer to forecast with
some degree of accuracy what to purchase and when to have it delivered. This will
greatly assist the company in attaining its sales and gross margin goals. Buyers
must rely heavily on historical sales data, coupled with personal experience andtheir own intuition about market trends.
The foundation of this planning process is the six month merchandise plan, which
will be analysed in this project.
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There are two approaches to planning merchandise:
The top down approach
The bottom up approach
THE TOP DOWN APPROACH: In this process the budget trickles down. The
higher management takes decision on the amount, sourcing, pricing, stock etc.
DIVISIONAL MERCHANDISE MANAGEMENT
THE BOTTOM UP APPROACH: since the sales executives
interact closely with the customer they provide information on what to buy, how
much to buy, sales, point of purchase, traffic etc.
6
GENERAL MERCHENDISE MANAGEMENT
DEPARTMENT MANAGER
LOWE LEVEL SALES
STAFF
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A six-month merchandise plan is the tool that translates profit objectives into a
framework for merchandise planning and control. Key components include
sales forecasts and stock planning. The plan is established for two distinct
selling seasons.
o Spring-Summer(Feb-July)
o Fall-Winter(Aug-Jan)
It is important to develop a merchandise plan as it helps us to provide an estimate
of the amount of capital required to be invested in inventory for specific period and
provides an estimate of planned sales for the period.
Some of the benefits of making a merchandise plan are as following
1. Increased Turnover.
2. Reduced amount of markdowns.
3. Improved maintained markup.
4. Maximized Profits.5. Minimum investment in inventory.
The six month merchandise plan comprises of an initial markup for the period.
The Planned net Sales, the planned BOM inventory which is also called the
Opening Stock, the planned EOM stock, called the closing stock, planned
reductions the planned Purchases at Retail and the planned Purchases at Cost.
TipTop down planning is the best approach for most small retailers. Start with total companyfigures, and then move to the departmental level
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This project was way comprehensive way to reinforced all we studied in this
semester about planning buying and sourcing. Through this project we answerd
two broad questions. Firstly, planning how much to buy and secondly whom to buy
from.
The project is divided into two chapters. Chapter one includes planning stock. In
this chapter we were expected to prepare a six month merchandise plan for which
we also prepared one questionnaire to be filled by cantabil customers. This was
made to know the customers and the sales pattern of the store for a week. The store
we selected was the one in pitampura. After this we were suppose to prepare a
range plan. The second chapter of this project involves compiling a vendors file.
For this purpose we chose the Cantabil store. We visited the store for five days and
conducted a survey through questionnaires and monitored the walk-in and traffic.On the bases of the questionnaire we could calculate the average bill size. The next
step was to create the six month merchandise. After which we formatted the range
plan.
The next chapter involved vendor identification. Since Cantabil manufactures its
own garments we sourced fabric from Krishna clothe market in chandani chowk.
The table and profile of each vendor is included in the project.
Detailed stepwise working of the range plan and the sixmonth merchandise plan isalso included in this report.
We as a group enjoyed working on this project since it reinforced all concepts
studied in this semester and previously regarding merchandising. The only
drawback was that it was extremely detailed to be done is a short span. And since
the store was not very cooperative in answering our questions, we found it quite a
task to compile the six month merchandise plan.
Tip Become an information junky when it comes toindustry trendsand fashion.
Graphs and analysis
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9
Q.1 How often do you visit CANTABIL?
Weekly 3
Monthly 17Quarterly 10
only during sales 20
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Q.2 Are you a regular loyal
customer?
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YES 15
NO 35
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Q.3 What sort of a purchase was
this?
Planned 12
impulsive 38
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Q.4 No. of items
bought were?
1 to 2 29
2 to 4 15
4 & above 6
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Q.6 What did you purchase from the store
today?
mens wear 24
woman's wear 15
kids wear 11
others 0
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Q.7 How much was the average price you spent on the
following?
men's wear 1299
woman's wear 799kids wear 499
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Q.8 How much are you willing to spend on the following
categories?
mens wear 1000womans wear 700
kids wear 500
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INFERENCE
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Six Months Merchandise Plan:
It is the tool that translates profit objectives into a framework for merchandise
planning and control. Key components include sales forecasts and stock planning.
The plan is established for two distinct selling seasons.
o Spring-Summer(Feb-July)
Fall-Winter(Aug-Jan)
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Components of the Six-Month Merchandise Plan:
1. Initial Markup for the Period.
2. Planned net Sales
3. Planned BOM inventory / Opening Stock
4. Planned EOM stock / Closing Stock.
5. Planned Reductions.
6. Planned Purchases at Retail
7. Planned Purchases at Cost.
Planning Sales:
After conducting a survey at Catabil, Pitam Pura with the help of questionnaires
we have analysed the following data which would help us construct the six months
merchandise plan.
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Day Footfall Conversion Avg bill size Sales
Sunday 86 39 1360 53000
Monday 35 11 1273 14000
Tuesday 50 17 1353 23000
Wednesday 42 15 1000 15000
Thursday 45 12 1500 18000
Friday 40 15 1000 15000
Saturday 75 16 1375 22000
Total 160000
WinningFact
There are only 2 ways to increase stock turns: Increase sales. Decrease inventory.
Working Note:
Sales = Average Bill Size* Conversions
Sunday: Average Bill Size / Conversions = 1360* 39= 53000
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Monday: Average Bill Size / Conversions = 1273*11= 14000
Tuesday: Average Bill Size / Conversions =1353* 17= 23000
Wednesday: Average Bill Size / Conversions =1000* 15= 15000
Thursday: Average Bill Size / Conversions =1500*12= 18000
Friday: Average Bill Size / Conversions =1000*15= 15000
Saturday: Average Bill Size / Conversions =1375*16= 22000
Now the total weekly sales is Rs 1,60,000
Therfore, the annual sales = 160000* 52= Rs 8320000
And the seasonal sales= 160000*26= Rs416000
Planning BOM Inventory:
This involves determining the amount of stock required to meet the planned sales.
Inventory Turnover= Net Sales/ Average Stock
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Now net sales for the season is 4160000
The stock is worth Rs 4992000
Thus Average Stock = Total Stock/ No. of months= 4992000 / 6= 832000
Therefore Inventory Turnover= 4160000/ 832000= 5 times
Since we had already got an estimated total stock and average stock from our
stock, now we would calculate the planned sales.
We will use the Basic Stock Method to calculate the Planned Sales for Each
Month.
BOM Inventory = Planned Sales for Period + Basic Stock
Basic stock = Average Inventory Average Monthly Sales
Average Stock= Net sales for season/ Stock Turnover
= 4160000/5 = 832000
Average monthly sales = Net sales/ No. of months
= 4160000 / 6 = 693333
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Basic Stock = Average stock Average monthly sales
832000- 693333= 138667
BOM Inventory = Planned Sales For Period + Basic Stock
February: 900000 = x + 138667
x = 900000-13866
= 761333
March: 1054000 = x + 138667
x = 1054000 138667
= 915333
April: 930000 = x + 138667
x = 930000 - 138667
= 791333May: 610000 = x + 138667
x = 610000- 138667
= 4713
June: 734000 = x + 138667
x = 734000 138667
= 595333
July: 764000 = x + 138667
x = 764000 138667
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= 625333
Planning EOM Inventory:
The EOM stock for any month is simply the planned BOM stock for the
following month.
February: 1054000
March : 930000
April : 610000
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May : 734000
June : 764000
July: -
Planned Reductions:
The next component to be planned is reductions which could be markdowns,
employee discounts and consumer discounts, and inventory shortages from
shoplifting or employee theft. Estimates for these reductions are based on pastexperience and are presented as a percent of planned sales on the six-month
merchandising plan e.g.
Planned Sales% = 6.8%
Planned Shortage% = 2.1%
Planned Employee Discount = 1.1%
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Therefore, total reductions are planned to be 10% of sales.
Total reductions (planned) = Total Planned sales * x%(10%)
As per our store the reductions are in terms of Employee Discounts, Markdowns
and Shortages. The reductions are as follows:
Employee discount: 1%
Markdowns : 3%
Shortage : 1%
Total : 5%
Total Reductions for the season = 5 % of 4160000
= 208000
The monthly reductions are as follows;
Month % reductions Value
February 15% 31200
March 25% 52000
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April 20% 41600
May 10% 20800
June 10% 20800
July
Total
20% 41600
208000
Winning Fact
It takes approximately $10 in extra sales to recover $1 lost due to theft.
PLANNED PURCHASES AT RETAIL:
Planned purchases each month should be adequate to implement the six-month
merchandise plan. On the merchandise plan, purchases must be planned at retail
first since all the other figures were based on retail. The following formula is used
to calculate planned purchases at retail:
Planned = Planned Sales + Planned EOM + Planned Reductions BOM
Purchases
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Using the above formula we have calculated the purchases at retail for each month:
February: 761333+ 1054000+ 31200 900000 = 946533
March : 915333 + 930000 + 52000 1054000 = 843333
April : 791333+ 610000+ 41600 930000 = 512933
May : 471333 + 734000 + 20800 610000= 616133
June : 595333 + 764000 + 20800 734000 = 646133
July : 625333 + 0 + 41600 764000 = - 97067
PLANNED PURCHASES AT COST:
From the seasonal data, initial markup for the period is planned as x%.
Using the following formula, calculate planned purchases at cost.
Planned Purchases = (100% - Initial Markup%) * Planned Purchases atretail
at Cost
The planned purchases at cost lets buyers know how much money they will have to
spend on merchandise for the season as well as individual months.
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As asked from the store we were intimated that their markup comes upto 50%.
Therefore planned purchase at cost for each month is as follows:
February: ( 100% - 50%) * Planned purchase at retail
50/100 * 946533 = 473267
Purchases at cost= 946533 473267 = 899207
March : (100% - 50%) * Planned purchase at retail
50/100 * 843333 = 421667
Purchases at cost= 843333 421667 = 421666
April : (100% - 50%) * Planned purchase at retail
50/100 * 512933 = 256467
Purchases at cost= 512933 256467 = 256466
May : (100% - 50%) * Planned purchase at retail
50/100 * 616133 = 308067
Purchases at cost= 616133 308067 = 308066
June - (100% - 50%) * Planned purchase at retail
50/100 * 646133 = 323067
Purchases at cost= 646133 323067 = 323063
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July : 100% - 50%) * Planned purchase at retail
50/100 * - 97067 = - 48534
Purchases at cost= - 97067 48534 = -48533
OPEN -TO BUY
Open-to-Buy is the amount the buyer has left to spend for a period and is
reduced each time a purchase is made.
Calculating OTB
OTB = Planned Purchases Merchandise on Order
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July : Purchases at Retail - - 97067
- Merchandise on order - 30000
OTB - - 67067
Planning how much to buy?
Total purchases at cost for the season = Rs 21,59,935
% contribution towards sales by each department to the store
Men department : 60% of 2159935 = Rs 1295961
Women department : 30% of 2159935 = Rs 647981
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Kids department : 10% of 215994 = 215994
We have taken the shirts section from the mens department to show how much we
need to buy and along with it we have taken the maximum selling styles, sizes and
colors.
Calculation of units for each of the assortment
Shirts- Basic collar ( 30% 0f 388788 = 116636)
Styles Sizes - % -
value
Colors
Black grey blue
white
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Basic Collar
32 20 23327 6998 2332 6998
6998
36 15 17495 5249 1750 52495249
38 25 29159 8748 2916 8748
8748
40 30 34991
10497 3499 10497
10497
42 10 11664 3499 1166 3499
3499
Working Note:
Size 32
( Average price according to range plan for basic collar shirts is Rs 1299)
Black = 30% of 23327 = 6998
Units = Value / Average Price = 6998/ 1299 = 5 units
Grey = 10% of 23327 = 2332
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Units = 2332/ 1299 = 2 units
Blue = 30% of 23327 = 6998
Units = 6998 / 1299 = 5 units
White = 30% of 23327 = 6998
Units = 6998 / 1299 = 5 units
Size 36:
Black = 30% of 17495 = 5249
Units = Value / Average Price = 5249/ 1299 = 4 units
Grey = 10% of 17495 = 1750Units = 1750 / 1299 = 1units
Blue = 30% of 17495 = 5249
Units = 5249 / 1299 = 4 units
White = 30% of 17495 = 5249
Units = 5249 / 1299 = 4units
Size 38 :
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Black = 30% of 29159 = 8748
Units = Value / Average Price = 8748/ 1299 = 7 units
Grey = 10% of 29159 = 2916
Units = 2916 / 1299 = 2 units
Blue = 30% of 29159 = 8748
Units = 8748 / 1299 = 7units
White = 30% of 29159 = 8748
Units = 8748 / 1299 = 7 units
Size 40 :
Black = 30% of 34991 = 10497
Units = Value / Average Price = 10497/ 1299 = 8 units
Grey = 10% of 34991 = 3499
Units = 3499 / 1299 = 3 units
Blue = 30% of 34991 = 10497
Units = 10497 / 1299 = 8 units
White = 30% of 34991 = 10497
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Units = 10497 / 1299 = 8 units
Shirts- Half Sleeves ( 30% 0f 388788 = 116636)
Styles Sizes % value Colors
Black grey blue
white
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Half Sleeves
32 15 17495 5249 1748 3499
6998
36 25 29159 8748 2916 58319
11664
38 30 34991 10497 3499 6998
13996
40 30 34991 10497 3499 6998
13996
Working Note:
Size 32 ( Average price according to range plan for half sleeve shirts is Rs 949)
Black = 30% of 174951 = 5249
Units = Value / Average Price = 5249/ 949 = 6 units
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Grey = 10% of 174951 = 1748
Units = 1748 / 949 = 2 units
Blue = 20% of 174951 = 3499
Units = 3499 / 949 = 4 units
White = 40% of 174951 = 6998
Units = 6998 / 949 = 7 units
Size 36:
Black = 30% of 29159 = 8748
Units = Value / Average Price = 8748/ 949 = 9 units
Grey = 10% of 29159 = 2916Units = 2916 / 949 = 3 units
Blue = 20% of 29159 = 5831
Units = 5831 / 949 = 6 units
White = 40% of 29159 = 11664
Units = 11664 / 949 = 12 units
Size 38:
Black = 30% of 34991 = 10497
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Units = Value / Average Price = 10497/ 949 = 11 units
Grey = 10% of 34991 = 3499
Units = 3499 / 949 = 4 units
Blue = 20% of 34991 = 6998
Units = 6998 / 949 = 7 units
White = 40% of 34991 = 13996
Units = 13996 / 949 = 14 units
Size 40:
Black = 30% of 34991 = 10497
Units = Value / Average Price = 10497/ 949 = 11 units
Grey = 10% of 34991 = 3499
Units = 3499 / 949 = 4 units
Blue = 20% of 34991 = 6998
Units = 6998 / 949 = 7 units
White = 40% of 34991 = 13996
Units = 13996 / 949 = 14 units
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Shirts- Full Sleeves (40% 0f 388788 = 155515)
Styles Sizes % value Colors
Black grey blue
white
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Full Sleeves
32 10 15552
6221 1555 3110
4666
36 20 31103 12441 3110 6221
9331
38 40 62206 24882 6220 12441
18662
40 30 46655 18662 4665 9331
13997
Working Note:
Size 32 (Average price according to range plan for full sleeve shirts is Rs 1349)
Black = 40% of 15552 = 6221
Units = Value / Average Price = 62217/ 1349 = 5 units
Grey = 10% of 15552 = 1555
Units = 1555 / 1349 = 1 units
Blue = 20% of 15552 = 3110
Units = 3110 / 1349 = 2 units
White = 40% of 34991 = 4666
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Units = 4666 / 1349 = 3 units
Size 36 :
Black = 40% of 31103 = 12441
Units = Value / Average Price = 12441/ 1349 = 9 units
Grey = 10% of 31103 = 3110
Units = 3110 / 1349 = 2 units
Blue = 20% of 31103 = 6221
Units = 6221 / 1349 = 5 units
White = 40% of 31103 = 9331
Units = 9331 / 1349 = 7 units
Size 38 :
Black = 40% of 62206= 24882
Units = Value / Average Price = 24882/ 1349 = 18 units
Grey = 10% of 62206 = 6220
Units = 6220 / 1349 = 5 units
Blue = 20% of 62206 = 12441
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Units = 12441 / 1349 = 9 units
White = 40% of 62206 = 18662
Units = 18662 / 1349 = 13units
Size 40:
Black = 40% of 46655= 18662
Units = Value / Average Price = 18662/ 1349 = 13 units
Grey = 10% of 46655 = 4665
Units = 4665 / 1349 = 3 units
Blue = 20% of 46655 = 9331
Units = 93311 / 1349 = 7 units
White = 40% of 46655= 13997
Units = 13997 / 1349 = 10 units
Range plan
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45
product fabrics sizes design styles colors Retailprice(Rs.)
Averageprice(Rs.)
Costprice
Shirts Cotton 30,32,34, Checks Basiccollar
White,gray,
999/-1599/-
1299/- 999/-
Linen 36,38,40, Plains Chinesecolar
Black,reds,
1599/-1999/-
1799/- 1499/-
Denim 42,44,46 Stripes Half sleeves
Shadesof yellow,
799/-1099/-
949/- 599/-
polyester Printed Fullsleeves
Greenetc.
1099/-1599/-
1349/- 1099/-
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Vendor plan
46
Est. in
1979 10th
march
Wholesale at
retail
Raymond
J.
HampsteaD
Reid and
Taylor
suiting fabric
shirt fabrics
trouser
fabrics
Mr Nakul
Kedia
10% on
wholesale
None Cheaque 30 days
for new
clients &
60-90 days
for old
clients
No other
charges
(delivery
charges payed
by them)
Line
120/m
Cotto
125/m
150/m
Est in 1989
14th Jan
Wholesale
and retail
Shirting
fabric and
suiting
fabrics
harry
collection,
Vimals, siya
ram and
Raymond
Mr Anil
Dhawan
7-10% on
wholesale
Deliver
with 10-15
days
Advance
payment in
cash
Payment
on
delivery
Transportation
charges
Cotto
whol
Rs 11
retail
185/m
whol
Rs11
Est in 1967 Retail and
wholesale
Dress
material and
allreadymade
fabrics
Mr.
Paramjit
singh
5-10% on
wholesale
Delivery as
per
availability
POD 60 days
for old
clients
No other
charges
Cotto
20/m
linenRs85
150/m
Wholesale
cloth
merchants
Wholesale
and retail
Mayor vimal
Gwalior and
other
dressing
material and
suiting
fabrics
Mr. Arun
Anand
10-12% on
wholesale
Time
period
depends on
delivery
location
Payment
by
cash/DD/
cheque
40- days
for buyers
and POD
for new
clients
Deliver charges
included
Cotto
Rs15
linen
160/m
Wholesale
fabric
merchants
Wholesale
and retail
Woolen,
cotton, linen,
mixed
fabrics,
polyester
Mr. Goldy
singh
10% on
wholesale
20 days
booking
Advance
payment in
cash and
POD in
cheaque
As per
availability
of stock
Delivery
charges payed
by client
Line
120/
Cott
Rs 1
150/
-
8/8/2019 Cantabil Group 3
47/49
Merchandise planningpearl academy of fashion
Visiting card Sample swatches
47
Visiting card Sample swatches
-
8/8/2019 Cantabil Group 3
48/49
Merchandise planningpearl academy of fashion
48
Visiting card Sample swatches
Visiting card Sample swatches
Visiting card Sample swatches
-
8/8/2019 Cantabil Group 3
49/49
Merchandise planningpearl academy of fashion
After visiting several vendors and finalizing 5 we have decided to choose HP
vendors. The reason we chose them is because they provide cheapest fabrics and
no extra charges are included also their mark up is lowest. Besides than theyprovide fabrics to other brand as well who manufacture shirts. Thus we believe it is
the best option.