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Buying for Different Types of Stores

Richard Clodfelter

Source: Retail Buying. From Basics to Fashion, 6th Edition, 2018, Fairchild Books Library

Book chapter + STUDIO

buying,different types of products,buying,at different retail formats,Almost all the duties that are described in the last chapter are performed by a buyer at any type of retail store—no matter what products are sold. As you start to plan your career in retail buying, one of your first decisions should be to determine the types of merchandise that would interest you the most. Are you more interested insoft lines,soft lines orhard lines,hard lines? Soft lines are typically the apparel and accessor

Forecasting

Richard Clodfelter

Source: Retail Buying. From Basics to Fashion, 6th Edition, 2018, Fairchild Books Library

Book chapter + STUDIO

forecast,scope of,Buyers typically develop forecasts to answer questions such as these:

Preparing Buying Plans

Richard Clodfelter

Source: Retail Buying. From Basics to Fashion, 6th Edition, 2018, Fairchild Books Library

Book chapter + STUDIO

merchandising management,Integrally related to planning is the necessity to control merchandising decisions. You must check your plans periodically to ensure they are being followed and are achieving the desired results. Your success as a buyer will be measured by how well you plan and control the amount of money spent formerchandise plan,merchandise to yield the desired sales and profit.

Controlling Inventories

Richard Clodfelter

Source: Retail Buying. From Basics to Fashion, 6th Edition, 2018, Fairchild Books Library

Book chapter + STUDIO

shrinkage,perpetual control system,inventory control systems,After deciding on the merchandise assortment that is to be carried, inventory control systems must be established. These controls involve the maintenance of stock levels in relation to changing consumer demand. The type of inventory control system used by a retailer will vary by type and size of the business and the kind and amount of information required. Inventory control for a department, such as hardware with thousands of different

Pricing the Merchandise

Richard Clodfelter

Source: Retail Buying. From Basics to Fashion, 6th Edition, 2018, Fairchild Books Library

Book chapter + STUDIO

retail prices adjustments to,determining markup percentage,markup,cost of goods sold,Retail price includes (1) the cost of merchandise, plus (2) an additional amount known as markup. Markup must be large enough to cover the operating expenses of the retail organization while providing a profit.

Step 3: Develop Buying Plan

Karen M. Videtic and Cynthia W. Steele

Source: Perry’s Department Store. A Buying Simulation, 4th Edition, 2015, Fairchild Books Library

Book chapter + STUDIO

Last Year Sales × (1 + Planned %) = Planned Sales

Step 7: Negotiate Profitability

Karen M. Videtic and Cynthia W. Steele

Source: Perry’s Department Store. A Buying Simulation, 4th Edition, 2015, Fairchild Books Library

Book chapter + STUDIO

The most important part of the negotiation process is preparation. The first step in negotiating is to gather all relevant information and analyze the situation. For a retail buyer, this means you must learn as much as possible about the vendor’s perspective (imagine yourself as the vendor’s sales representative in order to gain that person’s insight) and identify the related business issues, as well as your own departmental issues. Some of the information you might collect would include an asses

Step 8: Examine the Income Statement

Karen M. Videtic and Cynthia W. Steele

Source: Perry’s Department Store. A Buying Simulation, 4th Edition, 2015, Fairchild Books Library

Book chapter + STUDIO

As you progress into management, your focus will broaden to incorporate your store’s income statement. This document provides you with a view of the company’s financial health. It has become a pivotal decision-making tool and the mirror of the ultimate success or failure of you and your store. Buyers use the data to compare their departments’ performance with other similar operations.

Planning Sales And Inventory

John Donnellan

Source: Merchandise Buying and Management, 4th Edition, 2014, Fairchild Books Library

Book chapter

Plans are categorized by the time period that they cover. A long-range plan covers a three-to five-year period or longer. Developed by top management, long-range plans have significant impact on an organization and include strategies for expansion, market position, and major capital expenditures. A short-term plan covers periods shorter than a year. Developed by lower-level managers, short-term plans are narrower in scope than long-range plans. Schedules and budgets are two common forms of short-

How to Measure, Size, and Grade

Jaeil Lee and Camille Steen

Source: Technical Sourcebook for Designers, 2014, Fairchild Books Library

Book chapter + STUDIO

After studying this chapter, you will be able to:

Basic Math Concepts

Linda M. Cushman

Source: A Practical Approach to Merchandising Mathematics Revised First Edition, 2011, Fairchild Books Library

Book chapter + STUDIO

Decimal form is the form used in monetary expressions. Decimals can be used to indicate fractions of dollars. For example, if Paul has $1.75, Paul would have 1 dollar plus 75 one-hundredths of a dollar.

Factors Affecting Profit

Linda M. Cushman

Source: A Practical Approach to Merchandising Mathematics Revised First Edition, 2011, Fairchild Books Library

Book chapter + STUDIO

The profit and loss (P&L) statement is a summary of the income and expenses of a business. Frequently called an income statement, this document generally contains a wealth of information that is often expressed in both dollars and percentages. The dollar format allows us to determine the actual income, expenses, and profitability of the business, while the percentage format is useful for year-to year comparisons, business-to business comparisons, and industry comparisons.

Cost of Merchandise and Terms of Sale

Linda M. Cushman

Source: A Practical Approach to Merchandising Mathematics Revised First Edition, 2011, Fairchild Books Library

Book chapter + STUDIO

A discount represents a percentage reduction in the billed cost of merchandise offered by the vendor to a buyer. The discounts offered can vary greatly by industry, vendor, type of merchandise, and negotiating power and skill of the buyer. The buyer must try to negotiate the best possible discounts to reduce the cost of merchandise sold.

Reductions

Linda M. Cushman

Source: A Practical Approach to Merchandising Mathematics Revised First Edition, 2011, Fairchild Books Library

Book chapter + STUDIO

Markdowns are the most common type of repricing. Markdowns are a reduction in the retail price of an item or group of items. They can be temporary (e.g., a 25% back-to-school special on tennis shoes), in which the price adjusts back to the original retail price after a specified period of time, or they can be permanent (e.g., an “every day low pricing” strategy results in a permanent markdown to a lower retail price).

Calculating Basic Markup

Linda M. Cushman

Source: A Practical Approach to Merchandising Mathematics Revised First Edition, 2011, Fairchild Books Library

Book chapter + STUDIO

As you learned in the previous chapters, retailers must not only pay for the merchandise they wish to resale, but they have to cover the expenses of running the business (e.g., salaries, utilities, rent, etc.). A successful retailer will also need to earn a profit in addition to the cost of merchandise sold and expenses. The additional dollars needed to cover the planned expenses and earn a profit are known as markup dollars.

Markup and Pricing Strategy

Linda M. Cushman

Source: A Practical Approach to Merchandising Mathematics Revised First Edition, 2011, Fairchild Books Library

Book chapter + STUDIO

The markup originally placed on merchandise when it arrives at the store is known as the initial markup. Initial markup can also be described as the difference between the original retail price of an item (or group of items) and the billed cost of the item (or group of items). This difference must be large enough to cover any expenses for the retailer, any reductions in inventory value that might be incurred (e.g., special sale prices, shortages including theft, and necessary alterations), plus a

Valuation of Retail Inventory

Linda M. Cushman

Source: A Practical Approach to Merchandising Mathematics Revised First Edition, 2011, Fairchild Books Library

Book chapter + STUDIO

The first step in calculating the book inventory figure at retail is to determine the opening amount of inventory on hand. A physical inventory count, usually completed at the beginning and end of each accounting period, will act as the opening book inventory. It is important to note that the beginning book inventory for a new accounting period can also be the closing physical inventory for the previous accounting period. For example, the physical inventory counted on July 31 would then become th

Six-Month Plans

Linda M. Cushman

Source: A Practical Approach to Merchandising Mathematics Revised First Edition, 2011, Fairchild Books Library

Book chapter + STUDIO

The process of completing a six-month merchandise plan begins with planning net sales for the time period. (See 1 on the Six-Month Merchandise Plan Example on your student CD.) The process includes estimating total sales for the six-month period and allocating the total sales by month for each of the six months. The estimate of total sales as well as the expected sales for each month is influenced by a variety of factors including:

Purchase Performance and Profitability

Linda M. Cushman

Source: A Practical Approach to Merchandising Mathematics Revised First Edition, 2011, Fairchild Books Library

Book chapter + STUDIO

The dollar amount of open-to-buy (OTB) can be calculated by subtracting the merchandise already in stock from the total amount of merchandise needed to fulfill the inventory levels in the six-month plan:

The Concepts and Mathematics of Merchandise Pricing

Jay Diamond and Sheri Litt

Source: Retailing in the Twenty-First Century, 2nd Edition, 2009, Fairchild Books Library

Book chapter

Once the merchandise has been purchased, it is necessary for each item to be priced at an amount that will hopefully bring a profit to the company. It begins with the concept of markup, which is the difference between the amount that is paid for the goods by the merchant and the price for which they will be sold to the consumer. It is essential that all of the company's expenses be carefully considered so that the markup will be sufficient to render a profit.

Individual Markups

Richard Clodfelter

Source: Making Buying Decisions. Using the Computer as a Tool, 3rd Edition, 2003, Fairchild Books Library

Book chapter

The goal of every retail store is to make a profit; however, achieving profits requires the careful planning and control of all business activities. Well-planned merchandising activities will be crucial to any retail business earning a profit—the right merchandise must be purchased and offered at a price customers are willing to pay. One of the most important tasks facing retailers is establishing retail prices. That price must reflect market conditions and cover the store’s operating expenses wh

Initial Markup

Richard Clodfelter

Source: Making Buying Decisions. Using the Computer as a Tool, 3rd Edition, 2003, Fairchild Books Library

Book chapter

To appropriately price merchandise, retailers must carefully plan their initial markup percentages. The first markup placed on merchandise is the initial markup. In other words, initial markup is the difference between the cost of the merchandise and the original retail price. As illustrated in Figure 3.1, initial markup must cover a store’s operating expenses and planned profit as well as any reductions that may occur. The initial markup percentage is based on estimated figures or predictions; t

Cumulative Markup

Richard Clodfelter

Source: Making Buying Decisions. Using the Computer as a Tool, 3rd Edition, 2003, Fairchild Books Library

Book chapter

As you have already learned, markup can be calculated for individual items; however, retailers more commonly report markups for a product category, a department, or an entire store for an extended period of time. In these situations, markup is referred to as cumulative markup. Cumulative markup is the markup achieved on all merchandise available for sale in a given period. Using cumulative markup is also more useful when comparing merchandising performance with established goals, past sales recor

Markdowns and Markdown Cancellations

Richard Clodfelter

Source: Making Buying Decisions. Using the Computer as a Tool, 3rd Edition, 2003, Fairchild Books Library

Book chapter

The same markup is usually not achieved on all items within a product category during a selling season. Many times, the retail prices of items sold near the end of the season have to be reduced. In other words, a markdown has occurred. Because markdowns reduce the planned markup, anticipated profits are also reduced; therefore, mark-downs must be carefully controlled. Athough markdowns reduce profits, they are a fact of life in retailing. Moreover, most retailers use mark-downs as a promotional t

Maintained Markup

Richard Clodfelter

Source: Making Buying Decisions. Using the Computer as a Tool, 3rd Edition, 2003, Fairchild Books Library

Book chapter

The markup that is actually realized after the merchandise is sold is the maintained markup. Initial markup is related to the markup placed on merchandise when it first enters the store; maintained markup is concerned with the markup the store actually makes when the merchandise is sold. Because maintained markup is a measure of the actual amount of money obtained after the merchandise has been sold, it is a truer barometer of a department or store’s profitability. Initial markup is only what the

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