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Retail buying

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  • 1. Structure uniqueness of Textile Complicated stock keeping units (SKU) estimation Strong effect of Fashion Domination of textile supplier and retail buyers over manufacturers Difference of product ordering procedure
  • 2. But the Biggest challenge is to“ Integrate qualitative data andtheory to quantitative demandforecasting ”This most of the time leads to Intuition basedDecision .
  • 3.  To reduce possible Fatal-loss from an uncertain demand prediction retail buyers use :-1)Quick response (QR) system2)Electronic Data Interchange (EDI)3)Point of sale (POS) system4)Management Information System (MIS) Implementation of these helps in1)Effective order-reorder schedule2)Inventory cost management3)Faster sourcing strategy4)Improvement of Assortment planning
  • 4. RETAIL BUYINGPROCESS ROLE OF RETAIL BUYER  Planning policies  Buying in  Budgeting  Planning model stock  Contacting Vendors  Planning Promotions
  • 5. RETAIL BUYING PROCESSMerchandise planning Assortment planning Actual buying & rearrangement
  • 6. RETAIL BUYING PROCESS Merchandise Planning For realistic Merchandise planning retail buyer must consider:-1)Target market demand2)Local retail competition3)Physical expansion needed in the store4)Planned promotional efforts5)Trend analysis6)Seasonal consumer demand7)Economic condition
  • 7. RETAIL BUYING PROCESS Merchandise Planning Merchandise planning may require fashion forecast , sales forecast . Objective of Fashion Forecast in merchandise planning:-1)Studying market condition consumer buying behavior.2)Evaluating up to date fashion trend information.3)Noting street fashion of target consumer.
  • 8. RETAIL BUYING PROCESS Merchandise Planning Objective of sales forecast in merchandise planning :-1)Trend analysis2)Effective order in term of quantitydecisions of specific style ,colors, size.3)To develop efficient and effectiveinventory control plan.
  • 9. RETAIL BUYING PROCESS Merchandise Planning Two approach used for sales forecast:-1)Top-down2)Bottom-up 4 Steps of top-down forecasting process :- 1 • Planning sales goal 2 • Planning stock level for company & each store 3 • Planning assortment plan 4 • Making a sales forecast report
  • 10. RETAIL BUYING PROCESS Merchandise Planning  3 steps of Bottom-up forecasting process:- • Determining sales potential for individual item 1 • Planning total sales & stock level by adding 2 • Making a sales forecast report 4• If item proportion in assortment plan is positively correlated BOTTOM-UP approach is used .• If item proportion in assortment plan is negatively correlated TOP-DOWN approach is used.
  • 11. RETAIL BUYING PROCESS Assortment Planning UNIT PLAN DOLLAR PLANUNIT PLAN:- It most often refer to qualitative decision DOLLAR PLAN :- It is quantitative result of assortment planning
  • 12. RETAIL BUYING PROCESS Actual buying and rearrangement plan with vendors Retail buyer looks for new product. Vendor evaluation on following criteria :-1)Quality of goods2)Good delivery3)Product fashion-ability4)Fair price5)Styling6)Reputation7)Selling history8)Steady source of supply.
  • 13. RETAIL BUYING PROCESS Organizational Buying BehaviorOrganizational Buying Behavior involves three aspects • Psychological world of individuals involved 1 • Rapid & joint buying decision making 2 • Conflicts and its resolution among decision 3 makers.
  • 14. RETAIL BUYING PROCESS Assortment - planning process
  • 15. RETAIL BUYING PROCESS Assortment planning process 1.PROBLEM RECOGNITION  It is perceived gap or discrepancy between current state and desired state of company /store.  Two Major problem with which this step begins :- 1) Change in desired state for a store . 2) Change in current store assortment .
  • 16. RETAIL BUYING PROCESS Assortment planning process 2.Information Search Internal source of Information :- Store records , merchandise plan reports , sales people opinion. External Source of Information :-a)Customer panelb)Consumer magazine & trade publicationc)Vendor opiniond)Trade associationse)competitorsf)Fashion forecast magazine .g) Reporting bureaus.
  • 17. RETAIL BUYING PROCESSq Assortment planning process 3.Product Evaluation(a)  Qualitative Evaluation :-  Important aspect in evaluation is desired solution to a problem, establishing criteria of evaluation.  Fiorito`s product specific criteriaKang found in her :-  Quality research that retail buyers and their  Color target customer have similar variance  Position on the fashion cycle of criteria importance and product specific  Styling perceived risk  Distinctiveness
  • 18. RETAIL BUYING PROCESS Assortment planning process 3.Product Evaluation(b) Quantitative Evaluation :-Its component are following :- Initial markup for period Planned net sales Planned BOM(Beginning of month) Planned ending inventory (EOM) Planned reduction Planned purchases at retail.
  • 19. RETAIL BUYING PROCESS Assortment planning process 4.Forecasting product selection and sales. Forecasting Style Selection Forecasting Color Selection Forecasting Size SelectionForecasting methods for Assortment -planning :- 1. Decomposition 2. Product life cycle analysis 3. Exponential Smoothing 4. Regression Analysis 5. Jury of Executives. 6. Fashion Diffusion Curve Analysis
  • 20. RETAIL BUYING PROCESS Assortment planning process 4.Forecasting product selection and sales. Decomposition :- It is a sales forecast which split total sales forecast for individual forecast of each product line and SKU level by importance rating. Regression Analysis :- It is a forecast that estimate relationship between sales and external variables. Exponential Smoothing :- It is a weighted moving average of past sales with considering irregular component. Jury of executive opinion :- It is a sales forecast based on cross section of a smaller expert group .
  • 21. RETAIL BUYING PROCESS Assortment planning process 5. Rules for Product Selection1. Compensatory Rule :-It includes calculation of an importance weight and attribute rating for each attribute & then arrive at total product satisfaction score by adding them.2. Lexicographic Rule :- It requires to rank the attributesaccording to importance & then select brand that is superioron most important attribute.3. Conjunctive Rule :- Minimum standard is set for eachattribute and then fast and simple elimination is used forselection of best alternatives.