Page 47 - DMGT554_RETAIL_BUYING

Retail Buying

Notes Self Assessment

Fill in the blanks:
4. Traditional retailer bases its merchandising philosophies on the ..................... when it prices
its goods.

5. The discounter operates on the concept of selling merchandise at a price ..................... than
the full markup.
6. ..................... involves the amount that is added to the wholesale cost of the merchandise to
arrive at the selling price or retail.
7. The..................... Act disallows price discrimination no matter what the size of the order.
8. The task of ..................... is to locate merchandise from vendors that will satisfy the needs of
potential clients.
9. Specialty companies are divided into two groups; the ..................... and the .....................



Caselet Walmart

almart was the first of the kind to recognize this opportunity and cash in on it;
it didn’t have much competition initially. Over a half of Wal-Mart’s stores
Wwere still located in towns with populations between 5,000 and 25,000, a higher
proportion than the rest of the industry. Its Rentals were lower compared to the industry
average providing better margins. Moreover, About one-third of Wal-Marts were located
in metropolitan areas or counties that weren’t served by any of Wal-Mart’s competitors. It
often commanded 10%-20% of total retail sales in locations where it was alone. It had the
philosophy of “everyday low prices”. Wal-Mart’s competitors cut 20%-30% on selected
items nearly every week. This entailed a lot of promotional/advertising cost for the same.
Wal-Mart saved this advertising/promotional cost by only running fewer promotions.
Also, 30% of Wal-Mart’s merchandise was customized to local needs. Managers had more
latitude in setting prices unlike other centrally priced chains.
Wal-Mart offered lowest price compared to competitors especially when competitors
were in the vicinity. Because of Computerized SKU (Stock Keeping Units), it filled out
stock areas with different merchandise. Also, because of Central Computer Linked to
those of vendors there was on time delivery of stocks.
Source: http://www.antiessays.com/free-essays/122509.html

3.3 Independent Discount Retailers

Although the greatest amount of customer awareness in terms of discount retailing is most
notably with the giants in the industry, there are a significant number of independent
entrepreneurs that also sell their goods at prices below the traditional retail. With their larger
counterparts able to offer a wealth of services to attract shoppers to their premises and off-site
ventures, the smaller merchant oftentimes must use the only tool he or she has to operate a
successful retail venture, price. With operating costs relatively low, sometimes calling only for
the owner and perhaps an employee or two to run the operation, reduced rentals in off-the-
beaten-path locations, and word of mouth as the only means of attracting customers, the ability

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