Page 165 - DMGT554_RETAIL_BUYING

Retail Buying

Notes their suppliers. Retailers have many resources available to assist them in identifying potential
vendors. Following is a list of some of these resources:
1. Trade shows

2. Chambers of commerce
3. Resident buying offices
4. Trade organizations
5. Vendor’s place of business

6. Wholesale market centers
7. Manufacturers
8. Raw producers (In the case of food marketers, the store can often buy products directly
from the producers, such as chicken farms, dairy farms, and so on.)
9. Internet buying services
10. Directories (such as the Thomas Register)
Sometimes vendors seek out retailers and set up appointments to show their products and
services.

Self Assessment

Fill in the blanks:
4. Once a ................... order has been planned, the retailer must identify potential vendors to
supply merchandise to the retail operation.
5. The retail buyer also needs to be aware of the ................... arrangements the supplier uses.
6. Retailers have many resources available to assist them in identifying ...................

11.3 Negotiation with Vendors

The climax of a successful buying plan is the active negotiations, which involves finding mutually
satisfying solutions for parties with conflicting objectives, with those suppliers who you have
identified as suitable supply sources. The effectiveness of this buyer-vendor relationship depends
on the negotiation skills of the buyer and the economic power of the firms, involved. The retail
buyer must negotiate price, delivery dates, discounts, and shipping terms and return privileges.
All of these factors are significant because they affect both the firm’s profitability and cash flow.
Manufacturers, as well as retailers, have in recent years become increasingly aware of the cost of
carrying excess inventory. Likewise, both parties have also become more concerned with the
time value of money and its resulting effect on the firm’s cash flow. Because both parties to the
negotiation process are aware of these cost factors and are trying to shift these costs to the other
party, most negotiations do produce some conflict. However, successful negotiation is usually
accomplished when buyers realize that the vendors are really their partners in the upcoming
merchandising season. Both the buyer and vendor are seeking to satisfy the retailer’s customers
better than anybody else.
Therefore, buyers and vendors must resolve their conflicts and differences of opinion,
remembering that negotiation is two way street and a long-term profitable relationship is the
goal. After all, the vendor wants to develop a long-term relationship with the retailer as much
as the retailer does with its customers. What can be negotiated? There are many factors to be
negotiated (prices, freight, delivery dates, method of shipment and shipping costs, exclusively,

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