One of the most challenging tasks for retailers is providing the right merchandise at the right price at the right time

1. Buying and Pricing One of the most challenging tasks for retailers is providing the right merchandise at the right price at the right time

2. Retail Buyer • Their job is to • Decide the amount of money available to buy products for a specific time period • Understand when to buy • Do not want too little or too much merchandise in the store • Know what customers want to buy • Determines the best vendor or supplier • Negotiates the terms and discounts for the purchase and decides when the items need to be in the store • Purchase merchandise for the business

3. Deciding How Much Money to Spend • Determined by the Merchandise Plan • Open-to-buy is the amount of money available to purchase merchandise after other merchandise purchases have been subtracted for a specific time period

4. Merchandise Plan Basic budgeting tool, or strategy, used by retailers to meet sales goals

5. Merchandising Plan • Per department or per merchandise classification (group of similar items like sweaters, shirts, or tennis rackets) • Specific time period, usually 6 months • Good inventory control is critical

6. Parts of a Merchandising Plan • Planned Sales • Dollar figures for each month • Planned Stock • Dollar amount of merchandise a store has to meet the planned goal • Planned Markdowns • Dollar amounts of decreases in selling price • Include markdowns, adjustments and loss from shoplifting or pilferage • Planned Purchases • Dollar amount of needed merchandise to meet planned sales goals

7. Open to Buy Example • Planned Sales for May $100 • Planned Markdowns are $5 • Planned End of Month (EOM) Inventory is $300 • Planned Beginning of Month (BOM) Inventory $350 • Open to Buy for May will be $55 Planned Sales + Planned Markdowns + Planned EOM Inventory - Planned BOM Inventory = Open to Buy

8. Open to Buy Problem • You are running a beach shop • In June your planned sales total $3,300 • Your BOM inventory is $1,400 • You expect EOM inventory to be $1,500 • You expect $200 worth of markdowns this month • How much do you have Open to Buy?

9. Open to Buy Answer • $3300+$200+$1,500-$1400=Open to Buy • You will have $3,600 to buy other merchandise.

10. Price Amount of money a retailer asks a customer to pay for the merchandise or service

11. Price • Must be balanced • Too high and the customer will not buy • Too low and the customer will not see value • Must allow the retailer to make a profit

12. To Make a Profit, Price Must Include • Cost of the merchandise itself • Expense of getting the merchandise to the store • Share of the retailer’s overhead expenses • Return on investment • % used to show how much profit is made versus cost The retailer has control over these variables.

13. Return on Investment • Price – Expenses = Difference/Expenses = %ROI • Dry Cleaning is $5.00 for a suit • $3.80 are the expenses for the dry cleaner • 5.00-3.80=1.20/3.80=32% return on investment

14. Markup • The difference between the cost price of merchandise and the selling price of merchandise Selling Price – Cost = Markup

15. Uncontrollable Factors Affecting Price Environment • Competition • If your price is more, you need to add value • If your price is less, you need to be ready to sell larger quantities • Weather

16. Uncontrollable Factors Affecting Price Supply and Demand • A lot of product equals a lower price • Not a lot of product equals a higher price • Seasonal

17. Uncontrollable Factors Affecting Price Customer Acceptance

18. Calculate Open to Buy • Log in and go to BCIS/Meek/Calculate Open to Buy • Save to your H drive • Type your name is cell B12 and complete the calculations for Open to Buy • Save, Print, Turn into the box