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Unit 2: Buying for Traditional Retail Organizations

Notes

Notes It should be noted that the number of divisions varies from company to company
and generally ranges from four to seven.
An overview of the various divisions of the five-function plan spells out their specific roles in
the operation.
 Merchandising: The division that is considered to be the lifeblood of the retail organization
is merchandising. In it, the General Merchandise Manager (GMM), the Divisional Merchandise
Managers (DMMs), and the buyers and their assistant buyers are responsible for making
certain that the appropriate merchandise is purchased for the store and that it will satisfy
the needs of the customers.
 General Merchandise Manager: At the helm of the merchandising division is the general
merchandise manager. He or she serves as a policy maker and operating officer along
with the others in the company who head their divisions. This is an extremely important
role in a retail company, regarded by many to be the most important after the company’s
Chief Executive Officer. The duties and responsibilities of the GMM are discussed below:

 Developing an overall merchandise budget: After the analysis of past sales for the entire
operation, and considering any economic factors that might increase or decrease
future sales, a merchandise budget is established.

 Establishing the store’s merchandise direction with top management: Retailers generally
proceed from year to year with a merchandise direction and philosophy that they
used in the past, in terms of product lines, quality, and price points. Of course, this
direction is not engraved in stone and must be examined each year to see if changes
are warranted. If the venture continues to be profitable, and the established goals
are achieved, major changes are not necessary. However, if business and economic
indicators tell of different consumer needs that might be successfully addressed by
the organization, then merchandise changes might be in order. It might be the
expansion of a bedding department to include designer labels that were once reserved
for apparel or the inclusion of more value-oriented lines of merchandise to attract
the shoppers who are seeking more for their money. Whatever the case, it is the
GMM who must be aware of any potential merchandise changes and must alert the
others in top management positions about them.
 Determining the budgetary allocations for divisional merchandise managers: The overall
merchandise budget must be divided among the DMMs. This is based on past sales
for each division, potential for curtailment or expansion of each division, and any
outside indicators that might require merchandise adjustments.

 Carrying out top management’s merchandising policies: Although the GMM is the chief of
the merchandising division, policies that apply to this segment of the organization
are not his or hers alone. Merchandising policies come from a meeting of the minds
of those in top management, of which the GMM is a member, and sometimes from
the company’s board of directors. Whatever the case, when the ultimate
merchandising decisions are made, it is the GMM who must carry them out.

 Meeting with the merchandising team: Regular meetings must be on the agenda with
the divisional merchandise managers, buyers, fashion directors (if this is a fashion
retailer), and anyone else who can help make the division a more productive one. Of
course, impromptu meetings must always take place as occasions arise.

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