16 Merchandise Buying Unit 2.03 Chapter

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. In Summary Retail orders are placed several months before they are needed Apparel marts enable fashion manufacturers and buyers to meet in one convenient location Foreign markets offer retail buyers a wide variety of lower-priced goods continued

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. In Summary Helpful buying resources, such as resident buying offices, act as advisers and sources of information for retailers Buyers must think like their customers when they go to market Merchandise purchase orders are negotiated for price, delivery date, and various other conditions

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Objectives Summarize the activities of market weeks and trade shows. List domestic fashion market centers and apparel marts. State factors involved in buying foreign goods. continued

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Objectives Describe the market resources available for buyers. Summarize strategies of market trips and merchandise selection. Explain the process of writing orders.

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Buying Merchandise Retail buyers place their main orders for merchandise from three to six months before the goods are needed in the store Buying at the wholesale level for resale at the retail level is called procurement Market centers are concentrated geographic areas where goods are bought and sold at wholesale prices

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Industry Facts Market weeks are scheduled periods of time during which producers introduce new lines – Market weeks are held in each market center – This is the best way for buyers to see a large number of vendors in a short time Retailers say they “go to market,” referring to visiting a market center or mart

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Market Weeks During market weeks, producers exhibit their new lines with as much flair as possible – Keeping buyers comfortable and interested so they will write orders is the primary goal Most apparel producers have websites to show their collections to retail buyers – Some designers and manufacturers produce CDs or DVDs of their lines

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Advantages for Retail Buyers When and how often buyers visit the market varies Besides the main purpose of buying goods, there are other reasons for retail buyers to attend market weeks – gaining a sense of the market – seeing entire lines of vendors’ latest merchandise – discovering new sources of lines – meeting with manufacturers continued

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Advantages for Retail Buyers Additional reason to attend market weeks: – getting special terms and purchases – gaining promotion or selling help from manufacturers – networking with other buyers – getting ideas for merchandise displays – attending educational seminars, meetings, and other planned events

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Advantages for Vendors Apparel producers also benefit from market weeks – They can show their latest merchandise effectively and efficiently to the greatest number of retail buyers – Additionally, vendors learn about retailers’ needs Manufacturers can train their new sales representatives during market weeks

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Trade Shows Trade shows are periodic exhibits scheduled throughout the year in various trading centers The shows usually – last 2 to 4 days – cover areas of fashion that might otherwise be lost at major market weeks – draw U.S. buyers in one region of the country or who deal in one specific type of product

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Apparel Marts Apparel marts enable manufacturers and buyers to meet in one convenient location – Marts are often arranged by fashion category Some major apparel marts stay open all year – Many manufacturers have permanent showrooms – The marts also rent out temporary spaces Regional marts save retailers the time and expense of buying trips to New York City continued

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Apparel Marts Market weeks cover spring apparel, summer goods, fall items, winter/holiday lines, and resort markets – Only authorized manufacturers and buyers are admitted to market week The mart’s fashion director may contact firms about having some of their items in a combined show

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Fashion Insights New York City—the U.S. fashion capital— has more merchandise selection than any other fashion market – There is no permanent apparel mart, just thousands of showrooms in the garment district Los Angeles and San Francisco are major apparel design and market centers for innovative and trendsetting fashions continued

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Domestic Fashion Markets In Los Angeles – the California Market Center is the most established mart – the New Mart in the fashion district has contemporary, young-designer fashions The Dallas apparel market is known for sportswear, moderately priced lines, and “western wear” continued

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Domestic Fashion Markets Chicago is not a major apparel production center, but is an important wholesale market – Buyers from small and medium-sized Midwestern stores can source completely from vendors in the Chicago Market Center Miami is known for reasonably priced childrenswear and “sunshine sportswear” – The Miami International Merchandise Mart has apparel and giftware showrooms open all year continued

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Domestic Fashion Markets In Atlanta – AmericasMart serves major markets for home furnishings, floor coverings, apparel, and giftware – Buyers from surrounding southeastern states source better apparel and sportswear lines at the Atlanta Apparel Mart Other fashion markets exist throughout the country to serve stores in surrounding states

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Buying Foreign Goods Foreign market centers are the buying areas outside the United States The simplest way to source internationally is to buy from an import agent based in the U.S. Many American retailers directly import through commissionaires, independent buying agents in foreign countries who know the customs, laws, and production capabilities continued

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Buying Foreign Goods Commissionaires also know the tariff and quota schedules of the United States – They are paid on a percentage commission basis of the first cost – First cost is the wholesale price for goods in a foreign country of origin, exclusive of shipping costs and duties Some large retailers maintain their own buying offices in major international cities

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Resident Buying Offices Resident buying offices (RBOs) are service businesses that employ buyers who daily scout fashion markets to provide their client retailers with advance market information and buying help – RBOs help all types of retailers compete in the marketplace continued

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Resident Buying Offices Group buying, with the orders of many retailers combined, can offer lower prices Although RBOs work for retailers, they also perform an unpaid service for manufacturers – They bring producers’ merchandise to the attention of buyers when the items meet particular retailers’ needs and standards

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Other Buying Resources Merchandise brokers work on a commission basis – They are paid by producers when retail buying is arranged for that vendor’s goods Reporting/consulting services collect, tabulate, and report information on product lines and/or merchandising activities – They charge fees for their reports continued

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Other Buying Resources Manufacturers’ traveling sales reps sometimes visit buyers in their offices to sell their lines – Buyers feel they have more control in their own environment Category captains are trusted suppliers of specific categories of goods to retailers – Each supplier selected as a category captain has very close contact with the retailer

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Market Trip Strategies To get the most out of a market trip in the least amount of time, the buyer must think like a customer and be well prepared Since most retailers use the services of an RBO, a copy of the buying plan should go to that office RBOs often hold seminars or fashion shows for visiting buyers to familiarize them with trends

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Visits to Vendors Visits to vendors are organized according to merchandise classifications and price lines Major purchases will usually be spread among key vendors – These are the most reliable vendors that provide the most profitable goods to the store The RBO will probably recommend some new resources to visit continued

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Visits to Vendors Viewings of collections occur in showrooms Vendors hope that buyers will place orders before they leave their showrooms – With new advances in technology, computer design systems are being made available in showrooms to customize designs – An even more revolutionary method uses virtual reality to show apparel lines

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Making Merchandise Decisions After visiting showrooms and making decisions, an experienced buyer may leave paper – That is the industry term for writing completed orders with vendors When all orders are ready to be placed, they are compared with the retailer’s buying plan continued

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Making Merchandise Decisions Negotiations between buyers and vendors are necessary for agreement on – terms of sale, or conditions governing a sale as set forth by the seller – delivery schedules and services included Bargaining on price may be done in foreign buying or in some domestic situations

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Writing the Orders A purchase order (PO) is a written contract authorizing the manufacturer to deliver certain goods at specific prices and times The completion date is the specified date when the goods are needed by the retailer The term “as ready” means the manufacturer promises to ship orders when they are completed, rather than by an exact date

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Types of Orders There are several different types of orders that buyers place – Regular orders are stock orders for line merchandise specifying style numbers, quantities, delivery dates, sizes, and colors – Advance orders list the same specifics as regular orders, but have a longer lead time before the delivery date continued

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Types of Orders Reorders are additional orders of the same merchandise as ordered previously Back orders are orders that have not been filled within the time specified due to a stockout An open order to the manufacturer does not detail styles or colors Special orders are placed to satisfy individual customer requests continued

Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc. Types of Orders Blanket orders are promises to buy from favored vendors over a period of time Approval buying is an arrangement in which merchandise is shipped to the retailer for inspection before the final purchase decision is made An invoice is a detailed list of goods shipped or services rendered showing the money due