Page 55 - DMGT554_RETAIL_BUYING
P. 55
Retail Buying
Notes 4.2 Making the Purchase
If the merchandise is the same except for price, how can the off-pricers sell for less? Is it magic?
Or is it a different approach to the acquisition of the goods? Of course, the latter suggestion is the
answer.
Most want to be first in bringing the goods to their customers, and therefore pay the most for the
merchandise. It is similar to the purchase of an automobile. At the beginning of the new model
year, prices for the cars are usually at their highest. When sales start to soften, prices often begin
to fall and incentives are offered to dispose of inventory. Those willing to wait generally are
afforded the bargain prices.
The concept is the same for the off-price operation. Wait as long as you can to buy and the prices
are apt to fall. In this way, the off-pricer is able to sell for less.
The factors that play an important part in the buyer’s role as an off-price purchaser include
timing of the purchase, assortment, special handling, label removal, transportation, and terms
of payment.
Some of these considerations are the same as when goods are bought for the traditional operations
that charge their customers full price, with others falling exclusively in the off-price category.
4.2.1 Timing
Being willing to wait a little longer gives the edge to the retailer who deals in “bargain” prices.
The traditional store generally purchases early so that the customers will be able to shop prior
to the season for which the merchandise has been made.
Example: Stores that stock inventories geared to the college-bound shopper must have
fall merchandise in their inventories as early as June to give these customers time to assemble
the wardrobes that they will take with them to school.
Fashion-forward merchants such as Bloomingdale’s, Macy’s, Saks Fifth Avenue, Marshall Field,
and Dayton Hudson base their reputations on being the first in their trading areas to introduce
the new collections. While this approach gives the shopper the privilege of buying early, it
results in the highest prices for merchandise.
The off-price retailer’s philosophy is quite different. His or her approach to purchasing is always
opportunistic. That is, when the opportunity arises for a purchase of desirable merchandise at
rock-bottom prices, the deal is consummated. While it would please the off-price retailers to be
able to purchase early, price is what they offer their clientele. To do so, they play a wait-and-see
game. They don’t plan for market week, a time when the traditional buyers visit the wholesale
market to see the new collections. The off-pricers wait until the new lines have been shipped to
the stores before they set out to make their deals. By playing the game by this set of rules, they
can visit the same vendors as the department store and traditional specialty chain buyers, only
it’s to see what these vendors have on hand and must unload to make room for next season’s
goods. In fashion merchandising, where seasons are short and often unpredictable, manufacturers
and designers are often hungry for business.
The traditional retailer has had the chance to test the merchandise and reorder hot items. Profitable
seasons are made on hot items, which make up for the markdowns attributed to poor sellers. In
today’s fashion world, however, reorders are becoming less and less popular, except in very few
cases, with merchants looking for new merchandise all the time. Except for these few winners,
50 LOVELY PROFESSIONAL UNIVERSITY