Page 65 - DMGT554_RETAIL_BUYING

Retail Buying

Notes
merchant in town. Management held several meetings to determine a solution to combat
shrinking sales. Three suggestions for coping with the situation were made.
Mr. Birmingham, the General Merchandise Manager, suggested a plan to upgrade service
to an even higher level and to ignore the price competition. He believed that the customer
who shops at Clayton’s is only a “fringe” shopper at Langtree’s, whose business is not
important. He felt that new, upgraded services such as personal shopping and VIP charge
cards for preferred customers, and a new gourmet dining room would keep the better
customers.

Mr. Austin, the store’s Fashion Director, felt that a new promotional strategy to extol the
“fashion first” approach at Langtree’s would help retain its share of the market. By
promoting fashion clinics, trunk shows with designer appearances, special storewide
fashion themes, and other events, Langtree’s would separate its operation from Clayton’s.
The third plan, the work of Mr. Laughton, was a radical approach to the problem. “If you
can’t fight them, join them.” He was suggesting a total change in philosophy, one that
would transform Langtree’s into an off-price company. He said that their location would
be perfect to attract scores of bargain-hunting shoppers.
At present, the situation hasn’t been resolved and pressure to make a change has mounted.
Questions

1. Which, if any, of the three proposals seems to be the right solution? Defend your
answer with knowledgeable reasoning.
2. Could you suggest another plan that might help Langtree’s retain its profitable
position?
Source: http://wps.pearsoncustom.com/wps/media/objects/3515/3599405/MCH150_OL_04.pdf

4.9 Summary

 The off-pricer’s philosophy is to buy opportunistically.
 Although off-price retailers sell for less, their achieved markups are basically the same as
their traditional retail counterparts.

 In order to protect their reputations, some vendors require label removal when the
merchandise is sold off-price.
 With the tremendous increase in the availability of off-price merchandise, some market
specialists such as Price Point Buying are making their offerings known and available via
the Internet.
 In order to avail themselves of the closeouts, most off-price merchants locate their stores
far away from the traditional retailers so that they won’t antagonize them and hinder
their chances for such goods.

 Generally, promotion of off-price merchandise is done without the mention of the labels
being offered.

 Many traditional retailers are mixing off-price purchases with their regular inventories to
bolster their profit margins.
 New outlets for off-price merchandise are popping up on the Internet to appeal to
individuals who have little time to shop in stores.

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