Page 115 - DMGT554_RETAIL_BUYING

Retail Buying

Notes 9. The first decision that has to be faced is whether the merchandise should be sourced from
domestic or regional markets or from international markets.

8.5 Timing for Purchase

Once the buying plan has been finalized, taking into account both the qualitative and quantitative
considerations, and the decision as to which resources should be contacted for purchasing, the
timing for purchase is the next issue to be addressed. All retailers do not have the same purchasing
time frames. The policies of each company dictate when it is best to purchase to be most profitable.
The traditionalist who buy at full price and the opportunistic merchants who buy when the
merchandise is bargain priced have two different approaches in terms of their timing of their
purchases.

Notes Prediction of purchase timing and quantity decisions of a household is an important
element for success of any retailer.
This is especially so for an online retailer, as the traditional brick-and-mortar retailer would be
more concerned with total sales. A number of statistical models have been developed in the
marketing literature to aid traditional retailers in predicting sales and analyzing the impact of
various marketing activities on sales.
However, there are two important differences between traditional retail outlets and the
increasingly important online retail/delivery companies, differences that prevent these firms
from using models developed for the traditional retailers: (1) the profits of the online retailer/
delivery company depend on purchase frequency and on purchase quantity, while the profits of
traditional retailers are simply tied to total sales, and (2) customers in the tails of the frequency
distribution are more important to the delivery company than to the retail outlet. Both of these
differences are due to the fact that the delivery companies incur a delivery cost for each sale,
while customers themselves travel to retail outlets when buying from traditional retailers.
These differences in costs translate directly into needs that a model must address. For a model
intended to be useful to online retailers the dependent variable should be a bivariate distribution
of frequency and quantity, and frequency distribution must accurately represent consumers in
the tails.
Self Assessment

Fill in the blanks:
10. The profits of the online retailer/delivery company depend on purchase .................... and
on purchase ....................

11. Customers in the tails of the frequency distribution are more important to the ....................
than to the retail outlet.
12. For a model intended to be useful to online retailers the dependent variable should be a
.................... distribution of frequency and quantity.
13. The profits of traditional retailers are simply tied to ..............................

8.6 Promotional Merchandising

In Retail commerce, visual display merchandising means merchandise sales using product design,
selection, packaging, pricing, and display that stimulate consumers to spend more. This includes

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