Buying Overview

Retailers need to understand their customer base in order to execute an effective buying strategy. In order to do this well, three things need to happen:

  • Analysis of demand
  • Planning for that demand
  • Acquisition of merchandise

Executing these three tasks helps to set the foundation for your merchandising: having the right product at the right place at the right time, while also ensuring that the product is bought at the right price, sold at the right price, and is available in the right amount to satisfy consumer demand.

Buying Plan and Strategy

All merchandise planning starts with analysis. The person in charge of buying in your organization must have a comprehensive view of the consumer’s desires – often assisted by trade publications and sales associate feedback – and access to prior sales data. Once this information is gathered, the buyer can develop a sales forecast and create the buying strategy accordingly.

To develop a sales forecast, the buyer must:

  1. Review past sales
    1. Look for trends and patterns in sales figures
    2. Past sales data for a given period will provide an indication of sales data for the current year, for that period
  2. Analyze changes in economic conditions
    1. Economic conditions are directly linked to consumer spending
  3. Analyze changes in sales potential
  4. Analyze changes in marketing strategy, both for the retail organization and its competition
  5. Create the sales forecast by using all of this data to project sales figures and determine demand for products and categories

The retail buyer then must develop a process that considers the following:

  • Creating buying policies
    • For example, every order must be received with a Purchase Order when possible
  • Budgeting
    • Use prior sales data to forecast demand for upcoming sales periods
    • Consider factors like seasonal demand, economic condition, and recent trends
  • Planning model stocks
  • Contacting and negotiating with vendors
  • Planning promotions

 

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