Module 4: The Buying Process

1. Module 4: The Buying Process

2. Lesson 1 • Determine the needs and wants of retailers

3. Controlling the Flow of Goods • A retail business exists to make a profit for its owner • Retailers must determine the right time and the right price for purchasing goods to resell • A balanced inventory of goods must be available

4. Buying Goods • In a small, independently owned store, the buying function is performed by the owner • Sometimes small independent stores unite to form a voluntary chain (like IGA or Home Hardware) in order to place large combined orders with suppliers • In large, independently owned or corporate chain stores, the individual department head usually does the buying • Sometimes these stores assign specialized buyers to be responsible for goods sold in two or more related departments

5. Buying Goods • When a corporate or franchised chain is closely controlled from a central office, merchandise is usually selected by a central buyer or buying department • Goods are shipped to local stores directly from either a producer or wholesaler or from a central warehouse owned by the retail chain • The type of merchandise stocked by the store can determine who a buyer will be • A high-priced fashion store might employ a resident buyer • A resident buyer (usually located primarily in Montreal, Toronto and Vancouver) acts as an intermediary for the store and provides the retailer with regular market info on style trends and new colours or models

7. Duties of a Buyer • One of the most exciting and demanding jobs in merchandising • The buyer must constantly share info and views with the person responsible for selling (usually the sales manager)

8. Product Planning • Begins with the choice of products to offer its targeted customer group • Pricing, advertising and all other variables affecting sales are influenced by product planning • A buyer: • accurately forecasts the type and quantity of merchandise that a store’s customers want, • prepares a merchandising budget to determine how much the store can afford to spend to meet customers’ demands and • makes merchandise mix decisions

9. Merchandise mix – refers to the type, quality, assortment, and number of merchandise lines carried by the store • Buyers think in terms of product lines – in terms of a series of related goods • Purchasing – a buyer actually purchases on the store’s behalf • Buyers find and evaluate various merchandise sources; • Decide which suppliers to buy from; • Negotiate price, credit, shipping arrangements and return privileges; and • Sign the contracts outlining agreements with suppliers

10. Pricing – buyers may be asked to establish prices of goods for resale and to identify the need for price adjustments on current stock • A buyer continually monitors the speed at which items are selling • Slow-selling merchandise may be cleared through a sequence of price reductions

11. Sale Promotion Planning – buyers frequently select items to be featured in the retail business’s advertisements • buyers work with advertising and sales promotion staff to plan displays and to carry out special sales events • A buyer provides sales personnel with P.O. P. (Point of Purchase) advertising materials and literature received from suppliers

12. Record-keeping and Analysis – all records related to merchandise, such as purchase orders, are the buyer’s responsibility • The buyer continuously monitors merchandise sales and examines related records to be certain that merchandise mix and promotional goals are being met

13. Supervising – a buyer might be responsible for selecting, training and supervising various staff members • Assistant buyers • Stock clerks • Sales personnel • A buyer might be responsible for periodic physical inventory counts and the presentation of new products or product lines to those involved in sales • A buyer is usually involved in setting central policies for the store

14. Sources of Buyer Information • Customer profiles • Past records and statements • Information supplied by customers • Surveys and pretesting new products • Focus groups • Customer evaluation cards • Salesperson’s experience with customers • Wholesalers’ sales representatives and producer’s agents • Resident buyers and other buyers

15. Sources of Buyer Information • Attendance at special events • Trade shows • Suppliers’ showrooms • Preseason showings • Tours of producer’s facilities • Comparison shopping • Continued formal education • Conferences, seminars ,and courses • Trade journals

16. Focus on Retailing Assignment • Create an organizer to identify the types of information provided to the store buyer from each of the sources listed.

17. Determining Merchandise Mix(text page 373…provide a definition/examples for each bullet) Types of Goods • Convenience Goods • Staple Goods • Impulse Goods • Shopping Goods • Speciality Goods • Product Mix: includes research, product development, packaging and branding. To identify it as part of the McDonald’s product mix, all products have Mc in the name. • Promotion Mix: consists of advertising, sales promotion, and publicity. • Pricing Mix: price charged for product • Place Mix: includes physical distribution, storage, inventory management, and channel selection.

18. Branding (text page 374…provide a definition/example for each bulleted item) • Brand name • National Brands • Private (Store) Brands • Generic Brands

19. Branding Assignments • Assignment #1 • Assignment #2 • Assignment #3 • Assignment #4

20. Product Style (text page 377-78…provide a definition/example for the bulleted terms) • Fashion • Fad Assignment