2. Session 2: Retail buying
The buying task
Buying objectives
Retail buying decisions
Organization of retail buying
Conclusion

3. Introduction
The role of the buyer can be very rewarding but it involves highly complex and demanding tasks.
When buyers are making P selections they look for items that can deliver 'value' to the customer.
To meet customers' needs, buyers consider new consumer trends, consumer purchasing patterns, changes in fashion & tastes & new P & brands entering marketplace.
Develop right mix of P to suit a range of consumer tastes & purchasing occasions.

4. The buying task
Retail buyer need to buy exactly right amount of P for customers needs & to ensure that all P are sold so there are no items left on shelves.
Managing buying & merchandising for seasonal & special events can be particularly demanding for seasonal events depending on P sector & season.

5. Retailing is a distributive trade which provides employment for individuals with a wide range of skills.
Some Government bodies help build relationships between industry and education providers to help attract young people into retail distribution trades.

6. Challenges for retail buyers
Buyer is responsible for managing P a retailer sells
They work from centrally located offices at the company's headquarters.
He is responsible for selecting the right P as well as negotiating with suppliers.
Negotiations involve procuring & sourcing P for the business & negotiating for very large quantities of G
Pressure is on buyer to get right volume of purchases
So P are brought into business in sufficient quantities to meet consumer D & be available at the right time

7. Buyer's negotiations have to ensure deals with suppliers enable retailer to sell P at a suitable level of profit.
They are concerned with logistical question of how P get to store to put on display ready for customers.
The larger the retail organization, the more complex the buying and logistical tasks become.
A large retailer has specialist buying teams, rather than individuals, who are supported by logistics or distribution operations within organization

8. Buying objectives Buying is critical to success of marketing planning
P/S are core part of marketing mix which generates sales & as a result the process of retail buying needs to meet certain objectives.
To succeed buyers have to ensure several guiding principles of buying are met.
Competitive positioning is based on the consumer's perception of what a brand means to them personally.
Retailers focus on consumers' perceptions in order to differentiate themselves from other retailers selling similar P

9. Buyers & merchandisers aim to achieve the following guiding objectives & ensure retailer has fulfilled the following criteria:
Right product
Right time
Right quantity
Right place
Right price

10. The right product
Retailers need to be sure that the selected P ranges deliver the right level of value the customers are looking for & with the brand positioning of the business.

11. The right time Different P are needed & wanted at different times
Retailers must manage their stock so that P offer reflects requirements of customers at any particular time.
For ex, a newspaper retailer must make sure that latest edition of a newspaper is available as the shelf-life of a daily newspaper is only a few hours.
P such as Easter eggs & sun cream have seasonal sales patterns, whilst main P such as bread, milk, tea & coffee have a more constant demand pattern.
Shelf-life, seasonality & fashion are key factors in the time aspect of retail buying, referred to as 'stock control'

12. The right quantity
 Buyers must manage quantities of P brought in to ensure the customers' demands are met.
Shoppers can easily become dissatisfied when the items they want to buy are out of stock.
However, it is equally important for buyer to get right balance between availability of stock & overstocked. Excess stock ties up financial capital, uses storage
Too much stock means price reductions to sell items quickly to make space for new season's ranges. Getting balance between amount purchased & amount sold wrong means a reduction in profits for retailer

13. The right place 
Earge retail organizations such as Co-operative, Tesco are not only selling ranges of P on a wide geographical spread (local, national & international)
They also sell P in a variety of retail formats, e.g., hypermarkets, superstores & convenience stores
Each has its own characteristics in terms of size, location and target customer profile.
Each of store formats is aimed at specific customer segments & at satisfying specific needs

14. key point is that P ranges sold in each outlet are selected by buying team based on variables affecting potential sales, customer D & environmental forces (such as changes in sales tax)
Place where G are sold can have a significant effect on the range of merchandise on offer.
Think about how tourist gift shops adapt their ranges to suit very specific buying requirements.

15. The right price
Retail buyer will negotiate 'right' price for P from suppliers & will consider role of the P in terms of its contribution to profitability of retail business.
Negotiations are informed by a retailer's corporate & marketing objectives, e.g., market penetration, sales & profits.
Retailer may be happy with a small profit margin, (on a frequently purchased item), but expect a higher level of profit from a (less-frequently purchased P).

16. Different levels of profit will be determined by price retailer sets & cost price that retailer pays its suppliers
Overall profitability will be determined by rate of sales of whole P range & profit margins set within P range
For ex, some retailers sell at lower prices & use sales promotions to generate a fast turnover of G, whereas others look for relatively slower turnover of stock but higher value sales & profit margins.
Rate of sales is influenced by price level consumer is willing to pay, so setting of prices becomes another area of complex decision making for retail buyers

17. Retail buying decisions
 Buying decisions vary in complexity depending on size & type of operation of the retail business & the types of P on offer.
Some P (e.g., beans & washing powder) are always available & patterns of D are very stable whereas others are not (e.g., contemporary fashion & perishable seasonal goods)
buying situations can vary from a simple restocking task to an entirely new & complex task

18. Figure 2.1 Flow chart showing three different buying tasks involving different stages in the buying decision process.

19. In local store manager is buying a P that is regularly sold in store
In local store manager is buying a P that is regularly sold in store. We refer to this as a 'straight re-buy' as manager habitually buys a quantity of same G from same supplier.
Sweater buyer has other considerations & new suppliers may be sought to supply new P , so this is a 'new buying situation'. 
‘Modified re-buy' – It lies between these two extremes & requires changes to types of P & suppliers.

20. Organization of retail buying
Large retail organizations have complex buying tasks
Thus, employing large teams of people, each with quite specific tasks within the buying function.
Organization of the buying group is usually spread across various layers of management.

21. Centralization
 Multiple retailers with more than ten stores carry out buying operations through a central organization
Trend to centralize buying function has had impact on the evolution of retail industry by reforming buying function & making it more efficient.
Smaller retailers have been acquired by larger retailers & buying operations have been fused, leaving central buyers in control of larger volume of G with increased financial responsibility

22. Advantages: scale economies & augmented buying power & opportunity to employ P buying specialists.
Centralized buying allows P offer to be centrally coordinated, supporting the corporate retail brand.

23. Buying departments and teams
Retailers manage buying by dividing the total P range into smaller P specific subsections & then have teams responsible for managing specific P area.
To develop maximum efficiency within buying teams P ranges are divided up based on P characteristics, which enables teams to develop P K & buying expertise.

24. Some organizations, buying responsibility is allocated according to the turnover of department.
Dep handles same proportion of total buying budget
The larger the retailer, the more narrowly the buying areas will be defined because of the larger volumes of P & cash flowing through the organization.
In large retail organizations, buying decisions are rarely left to one individual, unlike independent retailers, where owner /manager is responsible for it

25. Buying team consist of people with ≠ roles
Buying function is broken into role concerned with 'right P & price' functions & stock control role concerned with other factors (time, quantity, place).
Those people work interdependently, towards same departmental goals.
Buying teams are supervised by senior managers (merchandise manager or buying director)

26. Buying committees
A highly complex buying decision such as introducing a new P line will have an impact on all areas of retail management.
Buyers have to consider supply side; merchandisers consider stock levels & space allocation for P; & store managers concern themselves with how P should be displayed & how it should be sold.
At the end the most important person is consumer.
Retailers need to have mechanism by which needs of people involved with Pare considered in buying decision making process.
By using a group of people to make buying decisions

27. These groups are referred to as buying committees representatives from all areas of retail business get together on a regular basis to consider P ranges
Advantages: committee is made up of people who together have a considerable wealth of P expertise, & whatever decision is made has backing of all members.
But, gathering committee takes time & the group may not be able to reach a consensus view, which may result in some buying opportunities being lost.

28. Decentralized buying
For most multiple retailers, buying decisions & operations are carried out within central buying organization.
However, it may be more efficient to carry out some buying on a regional basis, or even at store level.
Fresh produce such as meat is sometimes bought by regional buyers because of geographically fragmented nature of supply.
Likewise, it makes sense for regionally-specific P such as newspapers or heritage gifts to be managed by store
Areas are increasingly tailoring P assortment to suit regional preferences achieving differentiated P