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Organization for retail buying
Traditional retailers:Department and specialty store
Chain organizationIndependent retailers
Organization in department and specialty stores
Department store Census dept.- “a retailer carrying a
general line of apparel, home furnishings and house wares, employing more than 50 people.”
“Stores” magazine – includes multi-department soft goods stores with a fashion orientation and full markup policy
Specialty stores retail stores that cater to the needs
of a narrowly defined group of consumers, with a single or limited number of merchandise categories.
Departmentalization What separates department and
specialty stores Departmentalization
organizing different activities and functions into departments with individuals assigned to each department to oversee various activities and functions.
Enables store management to locate and eliminate weaknesses in various departments as well as to make improvements.
Methods used for Departmentalization
Functional departmentalization Product line departmentalization Geographic Departmentalization Combination departmentalization
Functional departmentalization
Activities of a similar nature a grouped together in the same department
Paul Mazur’s four function organization
Manager
Assistant manager
Publicity And
Public Relations
Store management
Merchandise management
Finance And
Control
Functions performed in department and specialty stores
Human resources Advertising and public relations Finance and control Operations Merchandising Branch stores
Human resources Policies and procedures
Recruitment Hiring Training Termination Compensation
Unions and government regulations Buyer’s interaction
On- the job training Learning opportunities Develop working relationships with all members of
the department
Advertising and public relations
Advertising - “persuasive tools” that attract customer to buy.
Various advertising media Different types of display Promotional techniques Buyer interaction- specials, new
merchandise
Public relations – store’s image in the community
Accounting and Control“Checks and
balances” Tasks include
Accounting Credit management Financial analysis Merchandise control systems Budgeting
Control department Manages store computer systems
Buyer’s interaction Adhere to budgets Use reports to make informed buying decisions
Store operations
Functions Store maintenance Security Delivery Receiving
Marking Conditions of stockrooms and warehouse
General housekeeping
Merchandising department
Responsibilities Buying activity Selection Planning of merchandise Inventory control Sales planning Stock-keeping records
Product line departmentalization
Organizing a business enterprise according to the various classifications and kinds of merchandise that it sells.
Product line departmentalization
Store manager
Men’s outerwear manager
Ladies’ outerwear manager
Lingerie manager Appliance manager
Geographic departmentalization
Vice president
Store managerLocation A
Store manager Location B
Store managerLocation C
Store managerLocation D
Combination
Vice president
Advertising and public relations
Merchandise manager
Human resource manager
Store operations
Manager Store A Manager Store B
Men’s outerwear manager
Ladies’ Outerwear manager
Accounting and control
Organization of a small firm Owner/manager
Buying Advertising and
display Sales credit and
collections Finances Operations Control hiring and firing
Merchandising personnel
Buying and selling Advertising and
display Comparison shopping Inventory control
Store operations store maintenance Delivery Stock control Clerical Budget adjustment Complaints.
Organization of a chain store
Centralization Centralized buying
Central merchandise plan Warehouse and requisition plan Price agreement plan
Central Merchandise plan central buying authority assumes complete
responsibility for buying the assortment of goods, pricing, warehousing, and distribution to individual stores
Manufacturer’s lots Warehousing Buyer can check goods If a firm does not have a warehouse, goods may
be shipped directly to the individual stores.
Central merchandise plan (continued)
Advantages Steady flow of merchandise Advanced planning by each unit eliminated More accurate forecasting Specialists in each merchandise category Goods are inspected by buyers Better stock control and attention on selling
Disadvantages Adjustments to local conditions. Cooperation An enthusiastic sales force
Automatic open-to-buy
A predetermined portion of funds is allotted to the central buyers after the month’s purchases have been planned, with the balance allotted to the store manager
Warehouse and requisition plan
Buyers purchases the initial stock assortment and has the merchandise shipped to individual stores.
Store managers can then check inventoried merchandise and reorder in the necessary quantities.
Warehouse requisition plan Advantages
Store responsibility in merchandise selection. The store manager assured of receiving the
requested items. Reorders or fill-ins are usually filled quickly. Economic advantage obtained by buying in large
quantities Disadvantages
Control over the composition of the merchandise selection
Poor warehouse control may cause imbalance in store inventory
Price agreement plan Central buyer working with vendors and
manufacturers agree on the retail price, color, size, style and assortment of staple types of merchandise as well as the terms of shipping.
Merchandise is illustrated/described in a catalog, on a video or CD, or on a website.
Price agreement plan Advantages
It develops a feeling of responsibility on the part of the store manager
It reduces the expense of a warehouse It reduces the necessity of keeping
detailed records of each unit Disadvantages
More tardy deliveries Higher transportation costs
Viewpoints
“At [Wal-Mart’s] size today, there’s all sorts of pressure to regiment and standardize and operate as a centrally driven chain, where everything is decided on high and passed down to the stores. In a system like that, there’s absolutely no room for creativity, no place for the Maverick merchant that I was in the early days at Ben Franklin, no call for the entrepreneur or the promoter.”
(Walton 1992: 218) [A] manager of 20 Nordstrom stores in southern California describes the
Nordstrom style: “Many times I’ve seen Mr. Jim [Nordstrom, co-chairman] get up and say: ‘This is your own business. Do your own thing. Don’t listen to us in Seattle. Listen to your customer. We give you permission to take care of your customer’.”
(Lubove 1995: 45) [Bernie] Marcus [co-founder of Home Depot] gives regional and store
managers a great deal of autonomy so they can make buying decisions. (Discount Store News 1995: 29)
Bed Bath & Beyond has remained true to three founding principles: minimal advertising (except for new store introductions), very little warehouse space and store autonomy. Each store is decentralized and managers are given a great deal of freedom in all facets of merchandising.
(Wilson 1993: 23)