Page 187 - DMGT554_RETAIL_BUYING

Retail Buying

Notes 12.2.1 Corporate Design

If a retailer is own-label active, then establishing a department to manage the corporate brand
is essential. This is particularly important in packaged goods retailing, where the graphical
representation on the outside of the product is what sells the items. The use of logos, corporate
style and colours are all of concerned here, and a retailer may issue a corporate design manual
or guidelines to ensure that all own-label suppliers conform to the same graphical standard.
People, who work on new packaging designs, whether outside design agencies or internal
design studios, will also use these instructions. Computer-aided design, internationally
standardized colour systems and internet communications have helped retailers to achieve
consistency in corporate design, preventing the need for reworking of original artwork, whilst
offering fast and flexible design options for consideration.

12.2.2 Logistics

In grocery and fast moving consumer goods, the logistics department play a key role in any
buying decision. Factors that have led to the incorporation of logistics into product management
include: the need for special transportation and warehousing operations; short shelf lives in
some product areas; the need to be very efficient in logistical operations to achieve profitability
on low margin products; and the growing importance of product availability as part of a high
customer service provision.
A logistics manager would be able to highlight implications of placing orders that might not be
apparent to the buyer.

Example: A buyer might be offered a price reduction on a product, providing a large
quantity is ordered.
The logistics manager would be able to advise on any additional storage, handling or
transportation costs incurred by accepting a larger than normal delivery. Such costs could
outweigh any price reduction given by the supplier.

12.2.3 Buying Committees

The extent to which buyers or category managers have authority to place orders on behalf of
their organizations varies from one retailer to another. In some retail businesses, buyers must
have orders over a certain value sanctioned by their operational superior. In others, buyers have
the autonomy to run the department as they see fit, which allows a more entrepreneurial
approach to be taken; however, buyers or product managers ultimately stand or fall according
to the performance of their department or category in terms of sales and profit. A balanced
approach can be maintained through the use of a buying committee, where both the product
itself and the buying plans proposed for that product are scrutinized by a panel of experts within
the organization. They can also have a direct bearing on the involvement of buying committee
members in the process.

Notes In a new-task situation, many product management personnel will be involved
either directly or indirectly, whereas straight re-buys may well be carried out by one
member of the team. Sometimes referred to as the ‘initiator’, the user is the person who
directly uses the product item.

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