Page 68 - DMGT550_RETAIL_MANAGEMENT

Unit 4: Retail Buying Behaviour

Commercial Negotiations Notes
On successful submission of trial samples and acceptance by the Buyer and the Buyer being
convinced of the Intent, capability and quality of the Supplier engages the Supplier into
commercial negotiations. Generally the Merchandiser will provide Buyer’s agreement document
along with details of Terms of Contract detailing, Order Quantity, Delivery Expectations, Delivery
Mode, Pricing, Terms of Payment, and Procedure for acceptance of delivery, time cycle for
payment, mode of payment etc. Negotiations that ensue will cover commercial agreements
including order quantities for a certain period or season, discounts, advances etc.
Trial Procurement and Normal Procurement
On acceptance of the commercial terms between the Buyer and Supplier, the Buyer Merchandiser
releases Purchase Orders for a trial period or quantity. Trial supplies give a chance for both
parties to experience dealing with one another and understanding each other’s requirements.
Successful completion of trial orders results in Buyer issuing the Buying Agreement [covering
specific period of time] and Supplier singing the same in acceptance. As per the terms and
conditions laid down under the agreement the Merchandiser will then arrange to release specific
Purchase Orders or release Monthly Delivery Schedule as per the requirement.

Though the above process looks simple, it is time consuming and demands a lot of effort from
the Merchandiser to bring both parties together. An experienced and mature Merchandiser who
is good in relationship management as well as negotiations skills is able to approach the Supplier
on a Win-win approach and build a relationship to start with. Merchandiser’s job doesn’t end at
this stage. Further on he continues to manage the Supplier relationship and engage with Supplier
from time to time as per his business needs. Merchandisers have a very critical and important
role to play in the Company’s relationship and experience with Suppliers and their performance.

Did u know? On acceptance of the commercial terms between the Buyer and Supplier, the
Buyer Merchandiser releases Purchase Orders for a trial period or quantity.

Self Assessment

State whether the following statements are true or false:
1. Each retailer is using his own buying systems which often are hard to understand for new
suppliers.
2. Low-involvement purchases include those involving high expenditure or personal risk.
3. In Low-involvement decisions, the marketer needs to provide a good deal of information
about the positive consequences of buying.
4. Multi National Retail Companies normally follow strict rules regarding ethical practices
and human resource management including safety and health and expect the Suppliers to
follow the same.

5. Different International Retailers follow different internal processes for validating and
assessing the capability of the Supplier.
6. The first task starts with gathering market information and identifying the Suppliers who
may be available locally or overseas.
7. Research suggests that customers go through a four-stage decision-making process in any
purchase.

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