Professional Documents
Culture Documents
Buying Merchandise
McGraw-Hill/Irwin
Retailing Management, 7/e
Merchandise Management
Managing
Merchandise
Assortments
Chapter 12
Merchandise
Planning
Systems
Chapter 13
Buying
Merchandise
Chapter 14
Retail
Pricing
Chapter 15
Retail
Communication
Mix
Chapter 16
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Questions
What branding options are available to retailers?
How do retailers buy national brands?
What issues do retailers consider when buying and
sourcing private label merchandise internationally?
How do retailers prepare for and conduct negotiations
with their vendors?
Why are retailers building strategic relationships with
their vendors?
What legal and ethical issues are involved in buying
merchandise?
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Brand Alternatives
National (Manufacturer)
Brands
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Spectrum of
National vs. Private Label
National
Brands
% Store
Brands
The Gap
Macys
Wal-Mart
Limited
Target
Home
Depot
Marks &
Spencer
IKEA
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Premium
Generic
Copycat
Exclusive
co-brands
Exclusive Co-Brands
American Beauty by Estee Lauder
in Kohls
Exclusive Brands
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Relative Advantages of
Manufacturer versus Private Brands
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Disadvantages
Lower margins
Vulnerable to competitive
pressures
Limit retailers flexibility
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Private Labels
Advantages
Disadvantages
Require significant
investments in design, global
manufacturing sourcing
Need to develop expertise in
developing and promoting
brand
Unable to sell excess
merchandise
Typically less desirable for
customers
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Less frequent
Continuous replenishment
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MAST
one of the worlds biggest contract manufacturers, importers, distributors of
apparel
Have manufacturing operations and join ventures in 12 countries
Also provides private label merchandise for Abercrombie & Fitch, Lane Bryant,
New York & Company, Chicos
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Consumer Needs
Product Design
Factory Sourcing
Manufacturing Control
The
TheSupply
SupplyChain
Chain
Shipping Control
Forwarder Consolidation
Local
Forwarding Consolidation
Consumer
Wholesaler/ Retailer
Customs Clearance
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Europe/Mediterranean
South Asia
(13 locations)
(11 locations)
London
Huddersfield
Amsterdam
Romania
Florence
Turin
Tunis
Istanbul
Denizli
Izmir
Oporto
Jordan
Cairo
Bangalore
Chennai
Mumbai
New Delhi
Karachi
Lahore
Dhaka
Colombo
Sharjah
Bahrain
East Asia
HONG KONG - Head office
(21 locations)
Shanghai
Dalian
Nanjing
Beijing
Seoul
Taipei
Hepu
Macau
Africa
Southeast Asia
(3 locations)
(9 locations)
Durban
Mauritius
Madagascar
Singapore
Bangkok
Shah Alam
Manila
Hanoi
Ho Chi Minh City
Jakarta
Phnom Penh
Saipan
Qingdao
Tokyo
Ningbo
Liuyang
Huizhou
Dongguan
Longhua
Guangzhou
Shenzhen
Zhongshan
Shantou
Zhanjiang
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Reverse Auctions
B
Traditional Auction
Why reverse?
One buyer (the retailer), multiple sellers
Sellers bid for buyers business
Price falls
No strategic relationships with vendors
Reverse Auction
S
S
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Global Sourcing
Costs Associated with Global Sourcing Decisions
Remote production
facilities in developing
economies with low
labor costs
Managerial Issues
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Services include
Retail Exchange
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Two-way
communication
designed to reach an
agreement when two
parties have both
shared and conflicting
interests.
Royalty-Free/CORBIS
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Margin Guarantees
Slotting Allowances
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Slotting Allowances
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Types of Relationship
Vendor
Win
Lose
Win
Buye
r
Lose
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Strategic Relationships
Retailer
vs.
Vendo
r
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Mutual Trust
Open Communication
Common Goals
Credible Commitments
Stockbyte/Punchstock Images
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Partnering
Anticipate Future
Long-Term
Considers all Elements
Win-Win Collaboration
Governed by Trust
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Counterfeit Merchandise
Gray Markets and
Diverted Merchandise
Exclusive Dealing
Agreements
Tying Contract
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Commercial Bribery
A vendor or its agent offers to give or pay a retail
buyer something of value to influence
purchasing decisions.
A fine line between the social courtesy of a free
lunch and an elaborate free vacation.
Some retailers with a zero tolerance policy
Some retailers accept only limited entertainment
or token gifts.
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Chargebacks
A practice used by retailers in which they deduct
money from the amount they owe a vendor
without getting vendor approval.
Two Reasons:
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Buybacks
Stocklifts, Lift-outs
Used to get products into retail stores.
Two scenarios:
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Counterfeit Merchandise
Goods made and sold without the permission of the owner of a trademark, a
copyright, or a patented invention that is legally protected in the country
where it is marketed
Major problem is counterfeiting intellectual property
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Not Counterfeit.
Is legal.
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Tying Contracts
An agreement that requires the retailer to
take a product it doesnt necessarily desire
(the tied product) to ensure that it can buy a
product it does desire (the tying product)
Illegal when they lessen competition
Ok to protect goodwill and quality reputation
of vendor legal for a vendor to require a
buyer to buy all items in its product line
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Refusals to Deal
Suppliers and retailers have
the right to deal or refuse to
deal with anyone they choose.
Except when it lessens
competition.
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