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Retail Buying

Notes and expensive restaurants are among those with unique offerings and solid control over their
prices.
Most price-oriented strategies can be quickly copied. Thus, the reaction of competitors is
predictable when the leading firm is successful. This means a price strategy should be viewed
from both short run and long-run perspectives. If competitor becomes too intense, a price war
may erupt whereby various firms continually lower prices below regular amounts and
sometimes below their cost to lure consumers from competitors. Price wars are sometimes
difficult to end and can lead to low profits, losses, or even bankruptcy for some competitors.
This is especially so for Web retailers.

Self Assessment

Fill in the blanks:
11. ……………………… development is a time consuming and costly process.
12. A ……………………… approach can be maintained through the use of a buying committee.
13. ……………………… have often played the role of opinion leader and change agent in the
retail organization.
14. …………………… between vendors and their retailers is generally illegal if it lessens
competition.
15. ……………………… price-fix involves agreements between retailers that are in direct
competition with each other to have the same prices.



Case Study Service Merchandise “A Broad Range of Asset
Classes”

ervice Merchandise had been a leader in retail and direct response consumer goods
sales for a number of years. In fact at one time they were perceived as a threat to
Swhat was then the world’s largest retailer, Sears Roebuck and Company. Obviously,
times have changed dramatically.
The demise of Service Merchandise is a result primarily from the rise of the Internet and
the increasing availability of goods through a variety of media and retail outlets. In 2002,
the company went from Chapter 11 to a plan to liquidate the assets. Service Merchandise
had done an internal inventory and audit of their intangible assets prior to retaining a
team of professional intangible asset/intellectual property valuators. While an incidence
of bankruptcy, the main lessons we wish to illustrate here concern the large number of
diverse assets included in the case.
The principal task was to confirm the results of the internal inventory and analysis done
by Service Merchandise management. It was also important to identify other assets to be
added to that inventory and to analyze all of the intangible assets as to their value and
commercial marketability. The end goal, of course, was to derive maximum potential
liquidation value from the Service Merchandise family of intellectual property and
intangible assets. Onsite reviews and external research were performed and an investigative
audit was organized by asset grouping and ranking of relative value. The assets discovered
during the audit consisted of the Service Merchandise information technology assets,
trademarks, domain names, databases, and other assets.
Contd...

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