Page 61 - DMGT554_RETAIL_BUYING

Retail Buying

Notes With their continued dedication to this type of buying, Doneger and Price Point Buying
have made discount purchasing available to retailers who have neither the resources nor
the time to conduct this type of buying on their own, and to others who need regular
market information.

Source: http://wps.pearsoncustom.com/wps/media/objects/3515/3599405/MCH150_OL_04.pdf

4.5 Concessions to Vendors

In order to gain access to merchandise produced by leading designers and manufacturers,
off-price merchants must be willing to make certain concessions as a condition of the purchase.
These include the locations of the retail outlets, the manner in which the merchandise will be
promoted, and the unconditional purchase of the goods.
4.5.1 Location of the Retail Outlets

In order to make certain that their regular customers are not harmed by those who sell off-price,
the vendors generally sell their “distressed” inventories to companies whose locations are far
away from the traditional malls and downtown central districts. By staying with this practice,
both types of merchants are satisfied. The traditional stores that purchase early in the season are
able to maintain their regular markups and not be fearful of a nearby competitor who sells for
less.
The off-price merchants usually locate themselves in power centers where other “bargain”
merchants locate themselves, in neighborhood clusters, or in freestanding stores. As a result, the
traditional retailer’s clientele will not be in the same vicinity as the off-price outlets when
looking to make purchases. Many of those off-price merchants who have a great deal of clout
have small shopping centers that bear their names.

Example: Loehmann’s outlets generally locate themselves in Loehmann’s Plazas all
across the country.

Task Explain the term ‘Power Center’.

4.5.2 Promotional Considerations

The lifeblood of most retailers is advertising, special events, and visual merchandising. These
endeavors bring shoppers to the stores and hopefully turn them into purchasers.
For example, without advertising, the crowds would more than likely diminish. The names of
key manufacturers and designers are highlighted in the retailer’s promotions so that their
“marquee labels” will attract attention. Many shoppers seek well-known merchandise, since
these “signatures” generally guarantee something special.
Many vendors are willing, in fact, to participate in these traditional retailer’s promotions. By
offering cooperative incentives in which they share equally in the cost of advertising with the
retailer, they are often rewarded with more business.
Off-price merchants on the other hand forgo any promotional dollars from vendors. They are
chiefly concerned with price. In fact, they are often bound by the vendors’ demand not to
advertise the “famous labels.” The vast majority of off-price merchants wishing to announce
that they have such goods at greatly reduced prices usually restrict their ads to such generalities

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