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Unit 3: Buying for Discount Operations

Market Specialists Notes

In every wholesale industry, there are specialists whose task it is to locate merchandise from
vendors that will satisfy the needs of potential clients.

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Caution These companies are divided into two groups: the resident buying office and the
merchandise broker.

Their general roles are somewhat similar in that each is in business to bring together buyers and
sellers.
 Resident Buying Offices: Market specialists called Resident Buying Offices (RBOs) often
serve the fashion apparel and accessories markets. They are generally separate
organizations that have as their members’ retailers that operate fashion-oriented
companies. Their major function is to locate vendors with desirable merchandise that will
satisfy the product needs of those they represent. Their ability to bring together sellers
and buyers makes them important to both parties. The vendor is able to locate potential
customers who might otherwise be difficult to find. The buyer has the advantage of
locating quality merchandise without having to scour the globe, a costly and
time-consuming venture. When both parties are satisfied, the result is a perfect
“merchandising” marriage. Resident buying offices charge their retail clients a fee for
their services.

 Merchandise Brokers: Another type of business that brings together vendors and retailers
for the purposes of merchandise procurement is the merchandise broker. Their role is
similar to the RBO except that the merchandise offerings are not restricted to fashion
apparel and accessories, and the fee for the service is paid by the vendor. Often, products
of this nature are for closeouts that the vendor wishes to dispose of in a timely manner.

3.2.3 Timing of the Purchase

As is the case with purchasing planning for every retail classification, be it the traditional
retailer, the off-site operation, or a value-oriented operation, the timing of the purchase is vital
to the success of the company. When to bring the products into the brick-and-mortar outlets or
catalogs is a very important factor to consider. If it is earlier than the shopper is willing to buy,
then monies will be required to pay the invoices long before sales are made. If the goods arrive
too late, potential sales will be lost.
Unlike the traditional buyer who has timing requirements generally early in the season as
dictated by the industry in which it operates, the discounter must deal with different purchasing
timetables according to the types of goods that will be incorporated in the inventory. For its
regular product purchases, it buys the same as its traditional counterparts, whenever the season
opens. For the discounter’s own brands, the planning and purchasing must also coincide with
the preestablished dates set by the leading vendors in the wholesale markets. For manufacturer’s
closeouts, which are often included in the merchandise mix, the timing is of an opportunistic
nature, or whenever the “bargains” become available.

Notes The discount buyers wear “different hats” in terms of purchase timing, and are
almost always in the wholesale marketplaces to make certain the goods are available and
deliverable when they need them.

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