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Unit 11: Wholesale Purchasing and Negotiation with Vendors

Notes
with historical noise in beverage sales, and statistical confidence was not high enough to
drive a management decision.
However, the results were more complex than they initially appeared. The APT software
was next used to perform customisable time-period analysis, producing clear findings.
This time-series view revealed that the installation caused initial consumer disruption,
and this disruption had disguised a long term trend far larger than the lift that had initially
been observed. The initial disruption was followed by a spike in sales as consumers
restocked, and, after three months sales, reached a stable plateau. On one hand, the grocer
was disappointed that the feature was causing sales disruption – but, on the other hand,
the long-term impact of the program was much better than previously thought.
Although the sales impact was moderate, it masked a much larger shift in purchasing
patterns. Automatic drilldown analysis using APT’s software revealed that consumers
were moving beverage purchases toward more premium choices. As a result of this shift,
improved gross margin rate meant that the program was more profitable than sales
analysis alone would suggest.

Next, the APT software was used to evaluate the four aisle configurations. All four variants
resulted in initial sales disruption; the “Gold” option drove significantly higher sales,
followed closely by the “Silver” option. The “Gold” option was, however, the most
expensive, and from an ROI perspective, “Silver” was therefore more profitable.

The software also quickly analyzed a wide range of store characteristics to identify those
most correlated with superior store performance. This store-based segmentation analysis
showed that the program worked particularly well in stores with trade areas serving a
younger demographic.
The Results
The results presented an opportunity to move forward with the Aisle Redesign while also
improving execution. As a result of APT analysis, the “Silver” design was targeted for
primary rollout, additional signage was recommended to reduce initial consumer
confusion, and stores in younger trade areas were prioritized for early rollout. The
optimized rollout generated millions of dollars in incremental profit.

Questions
1. Analyze the case and explain the problem while buying.
2. How can these problems is avoided by the company?

Source: http://www.predictivetechnologies.com/en/index.cfm/solutions/restaurants/business-issues/
menu-innovation/menu-innovation-case-study

11.7 Summary

 Wholesale purchasing generally entails the purchase of large amounts of products to be
resold to one or more retailers.
 Traditionally, wholesale buyers purchased an inventory of a good or commodity for
resale and acted as middlemen between the manufacturer and the retailer.

 Wholesale buyers can also purchase and resell items directly on online auction sites.
 Retailers can often find products to sell in their stores by searching online, joining buying
groups, using library resources and attending trade shows or buyers’ markets.

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