Page 114 - DMGT554_RETAIL_BUYING

Unit 8: Merchandise in Retailing

Self Assessment Notes

Fill in the blanks:
5. More often than not, a retail store is only as good as its .................................
6. Global travel and the spread of mediums of ................................. have also made the consumer
more conscious of global trends and products

8.4 Merchandise Sourcing

The term “sourcing” means finding or seeking out products from different places, manufacturers
or suppliers. The importance of sourcing in a retail environment can best be understood from
the fact that sourcing of merchandise is a key element of cost. In recent years, sourcing and
supply management has emerged as one of the greatest focus areas in the retail business, for
suppliers as well as for retailers. Sourcing is not without its risks, but at the same time, it holds
the key to improving service, product offer, and overall profitability. It enables the retailer to
have winning products. Negotiations and cost management play a key role and hence, it becomes
necessary to ensure that sourcing is well and truly integrated with the retailer’s overall business
strategy, and that sourcing activities closely follow the direction set by the overall business
strategy.
Having determined the type of merchandise to be stocked in the retail store, the merchandise
then needs to either be manufactured or sourced.

!
Caution The process of merchandise sourcing starts with the identification of the sources
of supply.

The first decision that has to be faced is whether the merchandise should be sourced from
domestic or regional markets or from international markets. This is largely related to the type
of the retail organization, the product being offered and the target consumer.

Example: Products like high fashion garments, exclusive watches, perfumes, cosmetics
etc may be obtained from the international marketing.
The process of merchandise buying is a five step process, which involves the following:
1. Identifying the sources of supply

2. Contacting and evaluating the sources of supply
3. Negotiating with the sources of supply
4. Establishing vendor relations

5. Analyzing vendor performance
Self Assessment

State whether the following statements are true or false:
7. The term sourcing means finding or seeking out products from different places,
manufacturers or suppliers.

8. The process of merchandise buying is a six step process.

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