Page 130 - DMGT554_RETAIL_BUYING

Unit 9: Buying Decisions

of items that will satisfy the wants and needs of the broad section of targeted consumers. One Notes
element of the stock plan approach is the model stock or basic stock list. This list will contain
those items that the customer expects to find in stock at all times. These are the musts or
never-out items which are sometimes referred to as the bread-and-butter items.
The number of items in all stock plans is multiplied by the price line to arrive at the dollar value
of the planned inventory. Adjustments in the stock plan may be necessary if the financial
constraints preclude an ambitious stock assortment.

9.3.4 Buying Plan

One of the most important aspects of market penetration is to have the items in stock when the
customers want to buy them. This implies going into the market to buy the goods early enough
to ensure delivery to the store at the proper time.

Example: To ensure on-time delivery of children’s Easter clothes, you must place the
orders and commit the resources in the previous September.
So, buying for a retail store requires advance planning to determine the merchandise needs for
each month and then placing the commitments without procrastination. Since, retailers offer for
sale the new items months before the actual calendar date for the beginning of the new season,
it is imperative that buying plans be formulated early enough to allow for intelligent buying
without any last minute panic purchases. The main reason for this early offering for sale of new
items is that the retailer regards the calendar date for the beginning of the new season as the
merchandise date for the end of the old season. For example, March 21st, from a merchandising
viewpoint, is the end of spring while June 21st is the end of summer and December 21st the end
of winter.
The period following the calendar date for the beginning of the season is used by the retailer to
sell closeouts, job lots, imperfects, irregulars, seconds, distress merchandise, off-price purchases
and markdowns from regular stock.

In summary, the buying plan should detail:
 When the market should be visited to see, examine, and study the new offerings for the
coming season;

 When commitments should be placed; and
 When the first delivery should be received at the store.

9.3.5 Selling Plan

The selling plan is closely allied to the buying plan. Once, the merchandise has been purchased,
plans must be formulated to ensure the sale of the greatest number of units during the period of
customer acceptance. The selling plan should detail:
(a) When the items should be promoted through advertising, window and interior displays,
etc.;
(b) When the inventory should be peaked;
(c) When reorders should no longer be placed;

(d) When markdowns from regular stock should be taken; and
(e) When the item should no longer be in stock.

LOVELY PROFESSIONAL UNIVERSITY 125