Page 21 - DMGT554_RETAIL_BUYING

Retail Buying

Notes 1.2 Evaluation of Buyers

Buying is the lifeblood of the retail operation. Without the proper merchandise, retailers wouldn’t
turn the profits needed to make the business prosper and ultimately expand. Because of this,
most buyers are paid excellent salaries, with some earning more than executives in other fields.
In order to make certain that the buyers are performing as expected, they are regularly evaluated
by their superiors, the divisional and general merchandise managers.
Specifically, evaluation is based on one or more of three criteria. They are sales figures, inventory
levels, and margin results.

1.2.1 Sales

Sales volume is expected to increase according to reasonable goals that have been established by
the merchandise managers. They are figured not only in terms of dollars, but also in units sold.
Most major retailers evaluate effectiveness by sales per square foot.

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Caution Each department must generate a specific preestablished annual dollar amount
according to the square footage allocated.

1.2.2 Inventory Levels

A careful inspection of inventory figures will reveal indicators of buyer effectiveness such as
stock turnover (the number of times in a period the average amount of inventory on hand is
sold), how much merchandise has been left in the inventory past the expected selling period,
and how much has been carried from one season to the next.
1.2.3 Margin Results

Such factors as initial markup (the difference between original cost and what the merchandise
has been marked to sell for), the maintained markup (the actual selling prices after discounts
have been taken to move slow sellers), and the department’s profit are just some of the margin
considerations on which buyers are judged.
Those who successfully achieve the goals that have been established for them usually have the
opportunity for promotion to the level of divisional manager, and in some cases, the highest
position on the merchandising team—general merchandise manager.
Self Assessment

State whether the following statements are true or false:
12. Sales volume is expected to decrease according to reasonable goals that have been
established by the merchandise managers.

13. Each department must generate a specific preestablished annual dollar amount according
to the square footage allocated.
14. The lowest position on the merchandising team is general merchandise manager.

15. A careful inspection of inventory figures will reveal indicators of buyer effectiveness.

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