FM 2.02
Understand the preparation of fashion merchandise buying plans.
ROLE OF RETAIL BUYERS IN THE FASHION INDUSTRY
• Responsible for selecting and purchasing goods for their
companies.
• Could be a specific department or classification
• Could be for an entire retail store
• ALWAYS consider company image and watch activities of
competitors.
• Must make a profit for the company when the goods are sold.
• Estimate future demand for merchandise for the target clientele
of their stores, catalogs, websites, etc.
• Determine the quantities and timing for various styles, colors,
sizes, prices, and fashion emphasis.
ROLE OF RETAIL BUYERS IN THE FASHION
INDUSTRY (CONT)
• Follow company policy as to breadth and depth of stock while
trying to make the highest possible profit.
• Notice changes in people’s living patterns, preferences, and tastes.
Correctly “reading” customers’ tastes involves skill and practice.
• Recognize what people want, when they will want it, and what
they will be willing to pay for it.
• Predict quantities the market can absorb.
• Accurately forecast what merchandise will appeal to their
customers
DIFFERENCE BETWEEN INTERNAL AND EXTERNAL
INFORMATION USED FOR MERCHANDISE
PLANNING
• Internal information can be found within a retail company
• Internal examples:
• Past sales records
• Customer feedback to salespeople
• Want slips
• Consumer polls
• Company merchandising bureaus
DIFFERENCE BETWEEN INTERNAL AND EXTERNAL
INFORMATION USED FOR MERCHANDISE
PLANNING
• External information can be found outside the retail company
• External examples:
• Vendors
• Trade information (publications, shows, industry statistics)
• Comparison shoppers
• Resident buying officers/consulting services
• Fashion forecasters
FINANCIAL AND MERCHANDISE ASSORTMENT
INFLUENCE FASHION BUYING PLANS
• Buyers plan balanced proportions of styles, colors, sizes, and
price points.
• A fashion assortment lists each item by SKU number,
including size, price, and color.
• An assortment plan for a store with branches indicates what
specific items are allotted to each branch store.
• The goal is a balanced assortment (an ideal stock situation)
which has sufficient items to meet demand with breadth and
depth to satisfy all customers.
FINANCIAL AND MERCHANDISE ASSORTMENT INFLUENCE
FASHION BUYING PLANS
• Merchandise assortment plans
• Basic stock plan
• Proposed purchase list composed of commodity goods, such as blue
jeans, underwear, and men’s dress shirts.
• These are basic items with consistent demand, dependable, and
quite predictable.
• Model stock plan
• Mostly fashion merchandise.
• Includes items that have strong customer appeal for a limited time.
• Always changing as fashion rise and then fall out of favor.
• Demand is harder to predict.
• Deals with unpredictability and higher risk.
• More likely the goods will have to be lowered in price to clear the
inventory
FINANCIAL AND MERCHANDISE ASSORTMENT
INFLUENCE FASHION BUYING PLANS
• Financial assortment plans
• Dollar merchandise plan
• Estimated dollar amount for planned, stock, sales, and profit for the department for a
six month period
• Two periods are February – July and August – January.
• Based on analysis of last year’s plan and results.
• Stock –to-Sales ratio
• Shows dollar sales volume in relation to the dollar value of average inventory
• Determines stock needed at the beginning of each month based on past sales figures of
how fast the particular items of a department or category sell.
• Related to stock turnover.
• Indicates an average figure for a certain time span.
• Is a figure for a specific point in time.
• Guides to help estimate the amount of stock required in relation to sales.
FINANCIAL AND MERCHANDISE ASSORTMENT
INFLUENCE FASHION BUYING PLANS
• Open to buy
• Dollar or merchandise unit amount buyers are permitted
to order for their stores or departments for a specified
time period
• Controlled device, calculated weekly or monthly.
• Purpose is to maintain the proper mix and level of goods.
• Available OTB is what can be spent or number of items
that can be purchased at the current time.
• Present inventory and goods on order are deducted from
the original allocation of planned purchases to arrive at
the amount.
TYPES OF MERCHANDISE RESOURCE
USED IN SELECTING VENDORS
• Manufacturers
• Wholesalers
• Websites
• Catalogs (paper or video)
• Importers
SELECTING MERCHANDISE
RESOURCES
• Wholesalers purchase large quantities of goods from
manufacturers, store the goods, and sell small
quantities to retailers
• They are used mostly for convenience goods
• Websites and catalogs are used to source goods,
usually basic items
• Sales catalogs contain item photos or drawings
and sometimes fabric swatches
• “Video catalogs” may be sent on CDs
IMPORTERS
• Importers’ merchandise is produced overseas,
usually in countries with low wage rates
• The goods are sold through showrooms in the
American market
• Foreign producers sometimes have agents in this
country that take orders
• Mass merchandise retailers buy a great amount of
foreign goods from overseas manufacturers
EVALUATING VENDOR ATTRIBUTES
• A vendor’s merchandise must be suited to the
retailer’s customer group, price, quality, fit, and
fashion level
• Business policies must be compatible
• Vendor services might include training of
salespeople and promotional assistance
• To maximize vendor services, the concept of floorready merchandise (FRM) is often specified
VENDOR SERVICES
• FRM means that items shipped to the store are ready
to go directly onto the selling floor without additional
preparation
• Turnaround time for orders is an important
consideration
• Buyers keep files on vendors used through the
years with contact information and notes on
performance
SELECTING SPECIFIC RESOURCES
• Buyers should establish a well-selected group of
vendors while being alert for new sources
• Key resources or preferred vendor lists are
developed for each category of goods
• Classification resources are vendors that specialize
in certain products
• A company must consider the number of resources
needed to achieve its goals
SELECTING SPECIFIC RESOURCES
• Buyers should regularly determine if their vendors are
keeping pace with ever-changing customer buying
patterns
• A new, efficient method is “e-sourcing” through
global online networks to which vendors and retail
buyers subscribe
• Buyers can send e-mail requests to many
manufacturers of specific types of goods