Topic 9 by DTL- Merchandise Buying and Handling

7/28/2019 Topic 9 by DTL- Merchandise Buying and Handling

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Merchandise Buying

and Handling


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introduction

* Branding is one of the important strategic merchandising

decisions of retailers

* The types of brands a retailer chooses to carry are essential cues

that customers use to evaluate a store

* Brands influence customer loyalty to a store and its image


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14-3

Merchandise Management

BuyingSystems

Planning

Merchandise

Assortments

Buying

Merchandise

Pricing

Retail

Communication

Mix


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14-4

Merchandise Branding Strategies

* Manufacturer (National) Brands* Designed, produced, and marketed by a

vendor and sold by many retailers

* Private-Label (Store) Brands

* Developed by retailer and only sold in

retailers outlets. Ex: SM Bonus

* Licensed Brand

* Developed by licensee and right sold to

either manufacturer or retailer. Ex: Walt

* Disney, Nickelodeon, Mattel

TheMcGraw-HillCompanies,Inc./Ji

llBraaten,photographer


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14-5

Private Labels

Advantages* Unique merchandise not available

at competitive outlets

* Difficult for customers to compareprice with competitors

* Higher margins

Disadvantages

Need to develop expertise

in developing and

promoting brand

Unable to sell excess

merchandise

Typically less desirable for

customers


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14-6

Manufacturer (National) Labels

* Advantages* More desired by customers

* Resell excessive merchandise

* Dont need skills and people todevelop and promote merchandise

Disadvantages

Lower margins

Vulnerable to

competitive pressures Limit retailers

flexibility


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Most Recognized Appareland Accessory Private Label Brands


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Ethical and legal issues in purchasing

merchandise

Slotting allowances fees paid by vendor for space in a retail

store. It becomes unethical if retailers will charge very high fees

Buy Backs retailers allow vendors to create space for its goods

by buying back competitors inventory

Charge backs deducting money from the amount owed to a

vendor due to mistakes in labels, billings

Commercial Briberya vendor offers something of value to

influence purchasing decisions


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* Counterfeit merchandise goods made and sold without

permission of the owner of a trade mark, copyright, patent

* Gray market and Diverted merchandise or smuggled

* Exclusive territories considered illegal when competition is

restricted


merchandise


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* Exclusive dealing agreements a manufacturer restricts a retailer

into carrying only its products and nothing from competing

vendors

* Tying Contracts when a vendor and a retailer enter into

agreement that requires the retailer to take a product it doesnt

necessarily desire


merchandise


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* Refusals to deal a manufacturer refuses to sell a retailer for the

sole purpose of benefiting a competing retailer

* Dual Distribution a manufacturer competes directly with its

retailers


merchandise


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Managing the Inventory

Successful retailers, such asLane Bryant, realize that athird of all women now weara size larger than 14. As a

result they disregarded pastsales records and now offerlarge selections of plus sizesfeaturing the latest looks,including the same designer-made fitted dresses and coats

worn by fashion models.

LO 3


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Managing the Inventory

Predicting future sales for

toys is always difficult.

During the 1996 Christmas

season many retailers werecaught by surprise when

Rosie ODonnell featured

Tickle Me Elmo on her

television show just before

Thanksgiving.

LO 3


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Selection of Merchandising Sources

In selecting merchandising sources the following criteria should be considered:

* After sale service

* Transportation time

* Distribution center processing time

* Inventory carrying cost* Country of Origin

* Fashionability

LO 4


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Vendor Negotiations

Negotiation

is the process of finding mutually satisfying solutions when the

retail buyer and vendor have conflicting objectives.

The retailer must negotiate price, delivery dates, discounts,

shipping terms, and return privileges.

LO 5


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Vendor Negotiations

Trade Discount

Quantity Discount

Promotional Discount

Seasonal Discount

Cash Discount

Delivery Terms

LO 5


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Trade Discount

Trade Discount is also referred to as a functional discount and isa form of compensation that the buyer may receive forperforming certain wholesaling or retailing services for themanufacturer.

Often expresses in a chain, or series, such as list less 40-20-10.The computations would look like this:

List price $1,000Less 40% - 400

600Less 20% - 120

480Less 10% - 48Purchase price $432

LO 5


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Quantity Discount

Quantity Discount is a price reduction offered as an inducement

to purchase large quantities of merchandise.

Non-Cumulative Quantity Discount is a discount based on a

single purchase.

Cumulative Quantity Discount is a discount based on the

total amount purchased over a period of time.

Free Merchandise is a discount whereby merchandise is offered in

lieu of price concessions.

LO 5


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Promotional Discount

Promotional Discount is a discount provided for the retailer

performing an advertising or promotional service for the

manufacturer.

LO 5


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Seasonal Discount

Seasonal Discount is a discount provided to retailers if they

purchase and take delivery of merchandise in the off season.

LO 5


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Cash Discount

Cash Discount is a discount offered to the retailer for the

prompt payment of bills.

LO 5


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In-Store Merchandise Handling

Shrinkage is the loss of merchandise due to theft, loss, damage, or

bookkeeping errors.

Vendor collusion occurs when an employee of one of the retailers

vendors steals merchandise as it is delivered to the retailer.

Employee theft occurs when employees of the retailer steal

merchandise where they work.

Customer theft is also know as shoplifting and occurs whencustomers or individuals disguised as customers steal merchandise

from the retailers store.

LO 6


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In-Store Merchandise Handling

* Hijacking theft of merchandise while in transit.LO 6

Topic 9 by DTL- Merchandise Buying and Handling

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