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Unit 1: The Buyer's Role




              Department Stores: Department stores are either of the full-line designation, in that they  Notes
               carry a wide assortment of hard goods and soft goods, and occasionally prepared and
               gourmet  foods, or  the specialized  entries that  restrict their  offerings  to  one  or two
               merchandise types, such as apparel and accessories. The former group includes companies
               like Macy’s, Dillard’s, and Belk, and the latter, Neiman Marcus and Nordstrom.
              Flagship: In the vast majority of these companies, the buyer operates from the store’s
               main retail facility, known as the flagship, and is responsible for purchases for that unit as
               well as the branches. Others, however, operate from centralized locations, similar to those
               utilized by  chains. At  one time, the sales staff was  the buyer’s responsibility, but  as
               organizations expanded, this management function was generally removed as a day-to-
               day activity. Today, with catalogs and Internet Web sites becoming important to these
               retailers, some buyers are called on to make purchases for these outlets as well as for the
               stores.

              Single-unit Independents: Although the trend has been and continues to be big business in
               retailing,  there are still entrepreneurs who wish to operate their own stores. Many of
               them are extremely successful since they are able to offer their clientele both specialized
               merchandise and personalized services. Most important in this classification are specialty
               stores that feature just one item such as shoes, jewelry, or apparel, and boutiques that
               generally sell limited quantities of higher-priced ladies apparel  and accessories,  and
               sometimes custom-made items. The owner usually has the buying responsibility, although
               in these independent ventures, as they grow in size, other professional buyers may be
               used.
              Franchised Operations and Licensed Stores: Before you can actually understand the role of
               the buyer in a franchised operation, it is necessary to become familiar with the franchising
               concept. As defined by the Small Business Administration, “A franchise contract is a legal
               agreement to conduct a given business in accordance with prescribed operating methods, financing
               systems, territorial domains, and commission fees.”
               There are two major parties in a franchising arrangement, the franchiser and the franchisee.
               The former is the party who has come up with the concept. He or she has developed a
               product, idea, or formula that is generally retail-oriented. After a few units have become
               successful retail operations, expansion could take place, as in the case of traditional chain
               organizations in which all of the stores are centrally owned and managed. In franchising,
               the franchiser chooses to go the expansion route by allowing individuals to open stores in
               specific locations. For a startup fee, and other monetary requirements, the franchisees, or
               owners of theses individual units, are given the right to operate their own businesses. Of
               course, as the earlier definition indicates, the franchisees must follow specific rules and
               regulations that have been set forth by the franchisers. The vast majority of franchises are
               food-oriented and bear such famous names as McDonald’s, Wendy’s, and Burger King.
               There are, however,  many others that retail  wearing apparel,  accessories, and  home
               furnishings.

              Licensing: Similar to franchising is licensing. The significant difference is that in franchising
               there is  a startup fee for the privilege of becoming a member of a franchise family. In
               licensing, there  typically isn’t  a  startup  fee.  One  of the  most  well-known  licensed
               arrangements is Benetton—the largest retail licenser in the world, with more than  500
               units in the United States alone. Another is Ralph Lauren. As with the franchise arrangement,
               licensees  are  required to  follow the merchandising philosophies  established  by the
               licensers.

               The buyer’s role in both franchising and licensing is quite different from that in any of the
               other retailing formats. The merchandise sold in  the stores is either produced by the




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