MAHESH M VANJERI

Assistant Professor
Dept. of Management Studies
SDM College of Engineering & Technology
Email ID : mvanjeri@gmail.com
Cellular : +919916924252
 RETAIL MIX – 2
Merchandise
Management
Chapter – 13
(Stage 6.) Buying Merchandise

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SDM CET, Mgmt. Studies
 Brand Alternatives
• National (Manufacturer)
Brands
– Designed, produced, and
marketed by a vendor and
sold by many retailers
• Private-Label (Store)
Brands
– Developed by a retailer and
only sold in the retailer’s
outlets
Categories of Private Brands

●
Comparable to, even superior to, manufacturer’s
Premium brand quality, with modest price savings

Imitate the manufacturer’s brand in appearance and

●
●

Copycat packaging, perceived as lower quality, offered

at a lower price

●
Developed by a national brand vendor and
Exclusive Brands sold exclusively by the retailer

●
Target a price-sensitive segment by offering a
Generic Brands no-frills product at a discount price
National Brands or Private Labels?
 Buying National Brand Merchandise

• Buying decision for fashion apparel/accessories:

– 5-6 times a year
– Many months before delivery
– Withhold open-to-buy (OTB) for new items with fashion
change

• Buying decision for staple merchandise:

– Less frequent
– Continuous replenishment
 Developing and Sourcing
Private Label Merchandise
• In-House: Large retailers like The Gap, have
divisions specialized in:
– Identifying trends, designing, specifying products
– Selecting manufacturers
– Monitoring and managing manufacturing conditions
and product quality
• Acquisition
• Outsource
 Negotiating with Vendors

• Two-way
communication
designed to reach
an agreement
when two parties
have both shared
and conflicting
interests.
Royalty-Free/CORBIS
 Negotiating with Vendors
(Continued)
Negotiation Issues:
• Price and gross margin
• Additional markup opportunities
• Terms of purchase
• Exclusivity
• Advertising allowances
• Transportation
 Types of Buying Systems
Staple Merchandise Fashion
Predictable Demand Merchandise
History of Past Sales Unpredictable
Demand
Relatively Accurate
Forecasts Limited Sales
History
Difficult to Forecast
Sales
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SDM CET, Mgmt. Studies
 Staple Merchandise Buying System

Monitor Compare
Forecas
Order Inventor
t SKU Sales
Merchand y to
Sales and
ise Basic
Inventor
y Stock
List

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SDM CET, Mgmt. Studies
MERCHANDISE BUDGET PLAN
FOR FASHION MERCHANDISE

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SDM CET, Mgmt. Studies
 Steps in Preparing Plan
• Forecast Six Month Sales for Category
• Breakdown Total Sales Forecast into Forecast for
each Month (monthly sales)
• Plan Reductions for Each Month
• Determine Beginning of the Month (BOM) Stock to
Sales Ratio
• Calculate BOM Inventory
• Calculate End of Month (EOM) Inventory
• Calculate Monthly Additions to Stock

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SDM CET, Mgmt. Studies
Indian Retailscape

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SDM CET, Mgmt. Studies
Indian Retailscape

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SDM CET, Mgmt. Studies
 Futurebrands
• A subsidiary of Future Group
• Created to build powerful & valuable brands
• Transform the traditional notion of a private label
brand
• Futurebrands is the licensor of select brands under
apparel, home products, consumer durables &
food & beverage categories initially to Pantaloon
Retail

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SDM CET, Mgmt. Studies
 Futurebrands
• It will invest in advertising & brand building
activities to enhance the selected brands’ equities.
• In the long-term these brands can enjoy the same
trust that the best manufacturer (national) brands
enjoy.
• Some key brands:
– Dreamline – home category
– Dream Kitchen – kitchenware
• Source: www.pantaloonretail.in (January 9, 2012); Pantaloon Retail Limited, Annual
Report 2006-07)
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SDM CET, Mgmt. Studies