Jay Diamond, Professor Emeritus Department of Marketing, Retailing, Fashion Nassau Community College PEARSON Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo
Intraductimv 1 The Retail Playing Field 7 Bricks-and-Mortar Operations 8 General Stores 8 Limited-Line Stores 9 Chain Organizations 9 Department Stores 9 Supermarkets 10 Discount Operations 11 Off-Price Stores 11 Manufacturer-Owned Retail Outlets 12 Warehouse Clubs 12 Category Killers 13 Designer Flagships 13'Boutiques 14 Kiosks 14 Resale Shops 14 Flea Markets 14 Off-Site Retailers 15'Catalogs 15 Online Retailing 15 American Retailers with Overseas Presence 18 The Top 20 American Retailers 18, ~i Retail Trends 19 New Concepts for Established Retailers 19 Expansion Through Acquisition 20 Closing of Poor Performing Units 20 Going Green 20 Increase in Private Label Merchandise 21 Town Center Development 21 Reduction in Newspaper Advertising 21 Multiculturalism Targeting 21 Emphasis on Mobile Phone Selling 22 Multichannel Synchronization 22 Use of Celebrities to Design Private Collections 22 Increase in E-Commerce Spending 22 Store Brands will Get Stronger 22 Language of the Trade 23 Summary of Key Points 23 Review Questions 24 Case Problem 1 24 Case Problem 2 25 The Buyer's Role 27 TheBuyer'sRole 28 The Scope of the Buyer's Job 28 The Type of Retail Operation 29 Merchandise Classification 29 Company Size 29 Duties and Responsibilities of Buyers 29 Merchandise Pricing 30 3 Buying Product Development 30 Extensive Travel 31 Interfacing with Advertising, Promotion, and Visual Merchandising Departments 32 Communicating with Managers and Sales Staffs 32 Store Visits 32 Telephone 32 Fax 32 E-mail 33 Instant Messages 33 In-House Video 33 Department Management 33 Schedule Setting 33 Personal Qualifications, Qualities, and Abilities for A Buying Career 34 Education 34 Analytical Excellence 35 Ability to Articulate 35 Product Knowledge 35 Objectivity 36 Knowledge of Resources 36 Forecasting 36 Dedication 37 Appearance 37 Buyer Interaction with Management 37 Merchandising 37 Advertising 38 Visual Merchandising 38 Special Events 38 Store and Department Management 38 Human Resources 39 Evaluation of Buyers 39 Sales Volume 39 Inventory Levels 39 Margin Profits 39 Career Opportunities for Buyers 39 Language of the Trade 41 Summary of Key Points 41 Review Questions 42 Case Problem 1 42 Case Problem 2 43 Practices for the Different Retail Classifications I 45 Product Evaluation for the Different Retail Classifications 46 Buying for Traditional Retail Organizations 47 Department Stores 47 Chain Organizations 49 Single-Unit Independents 49 Buying for Value-Oriented Retailers 50 Discounters 50 Off-Price Merchants 51 Buying for Off-Site Retail Operations 52 Catalogs 53 Catalog Companies 53 Online Outlets 54 Home Buying Networks 55 Language of the Trade 56 Summary of Key Points 56 Review Questions 56 Case Problem 1 57 Case Problem 2 57
4 The Market Specialists and How They Service Retailers I 59 Necessity for Market Specialist Representation 60 Proximity to the Wholesale Markets 61 Communications Regarding Changes in the Marketplace 61 Notification about Best-Seller Items 61 Assessment of Economic Conditions 62 Resident Buying Offices 63 The Private Office 63 The Independent Office 63 Selection of a Resident Buying Office 66 Client Rosters 66 Services Offered 67 Cost of Membership 67 Services of Resident Buying Offices 67 Buying Merchandise 67 Cancelling Orders 68 Finding New Resources 69 Recommending Hot Items 69 Following Up Orders 69 Group Buying 70 Handling Complaints and Adjustments 70 Assisting during Market Week 70 Planning Promotional Activities 71 Providing Global Market Information 71 Developing Private-Label Products 72 Researching 72 Other Advisory Services 72 Fashion Reporting Services 73 Fashion Consulting Services 73 Retail Reporting Agencies 73 Fashion Forecasters 74 Nonfashion Services 75 Trade Publications 75 Consumer Magazines 75 Trade Associations 75 Language of the Trade 76 Summary of Key Points 76 Review Questions 76 Case Problem 1 77 Case Problem 2 77 SECTION 2 5 Consumer Analysis 83 Consumer Assessment 84 Summary of Key Points 99 Review Questions 100 Case Problem 1 100 Case Problem 2 101 The Research Tools 84 Demographic Analysis 87 Social Classes 91 Family Life Cycle 93 Consumer Behavior 96 Buying Motives 97 Maslow's Hierarchy of Needs 98 Language of the Trade 99 6 Multiculturalism: Assessing the Product Needs of America's Major Ethnicities 103 7 What 8 How Demographics 105 Population 106 Buying Power 106 Percent Change in Market Share 108 Growth Potential for Major Products Purchased by Ethnic Minorities 110 African Americans 110 Hispanics 111* Asian Americans 113 Multicultural Merchandising and Operational Approaches 115 Reaching Ethnic Groups through Advertising 115 The Buyer's Role in Attracting Major Ethnic Consumer Markets 118 Language of the Trade 119 Summary of Key Points 119 Review Questions 119 Case Problem 1 120 Case Problem 2 121 To Buy 123 l Merchandising Policies 124 Price Points 125 Merchandise Quality 125 Product Exclusivity 125 Variety 126 Timing of Introduction of Goods 126 Assortment 126 Price Policy 126 Internal Sources of Buyer Information 127 Past Sales 127 Input from the Merchandise Manager 132 Input from the Sales Associates and Department Managers 133 Language of the Trade 134 Summary of Key Points 134 Review Questions 134 Case Problem 1 135 Case Problem 2 135 Much to Buy 137 The Six-Month Merchandise Plan 138 Model Stock Development 141 Staple Merchandise 142 Fashion Merchandise 143 The Buying Plan 148 Open-to-Buy 148 vi
9 Merchandise Automatic Stock Replenishment 152 Fashion Merchandise Replenishment 152 Language of the Trade 153 Summary of Key Points 153 Review Questions 154 -Case Problem 1 154 Case Problem 2 155 Case Problem 3 155 Sourcing and Timing the Purchase I 157 Evaluation Aids 166 Selecting the Best Merchandise Resources 158 High-Tech Innovation 158 Vendor Relationships 159 Vendor Characteristics 160 The Bottom Line 166 Periodically Evaluating Resources 166 Establishing Vendor Relationships i 67 Classification of Resources 168 Manufacturers" 168 Manufacturers' Representatives 169 Service Wholesalers 169 Limited-Function Wholesalers 170 Rack Jobbers 170 Timing the Purchase 171 Traditional Retailers 171 Off-Price Retailers./172 Language of the Trade 173 Summary of Key Points 173 Review Questions 174 Case Problem 1 174 Case Problem 2 175 SECTION 3 "Makings tfi& 10 Purchasing in the Domestic Marketplace 181 Catalog Purchasing 192 Purchasing on the Internet Purchasing in the Wholesale Market 182 Planning for the Visit 183 The Domestic Marketplaces 185 The Market Visit 186 Purchasing at the Retailer's Premises 191 Working the Line with the Vendor 191 193 Language of the Trade 193 Summary of Key Points 193 Review Questions 194 Case Problem 1 194 Case Problem 2 195 11 Foreign Market Purchasing 197 The Federal Government's Role in Importing Merchandise 199 Trade Agreements that Affect Merchandise Sourcing 199 Reasons for Purchasing Foreign Merchandise 202 Lower Cost 202 Quality 203 Greater Profit 203 Prestige 204 Unavailability of Merchandise in the United States 204 Problems Related to the Acquisition of Foreign Merchandise 204 Delivery 205 Quality Variations 205 Reorders 205 Early Selection of Colors 206 Size Discrepancy 206 Money Allocation 206 Time Involved 207 Capital Risk 207 Actual Cost Determination 207 Cost of Promotion 208 Political Unrest 208 Global Disfavor 209 Methods Used in the Purchase of Foreign Goods 209 Visit to the Foreign Market 209 Commissionaires Foreign Resident Buyers 211 "Importers 211 "Import Fairs 212 Private Foreign Buying Offices 212 The Overseas Markets 212 The Foreign Fashion Capitals 213 Import Buyer Qualifications 216 Language 217 Computational Skills 217 Comprehension of Trade Terms 218 Planning the Trip Abroad 218 Letters of Credit 219 Itinerary Planning 219 Hotel Arrangements 219* Agent Contacts 220 Language of the Trade 221 Summary of Key Points 221 Review Questions 222 Case Problem 1 222 Case Problem 2 223 Case Problem 3 223 12 The Importance of Business Etiquette when Purchasing in Global Markets 225 Social and Cultural Awareness 226 Political Neutrality 226 Mastering of Cross-Cultural Skills 227 Proper Dress 228 Avoidance of Linguistic Faux Pas 229 Gift Giving 229
Appropriate Business Etiquette in Offshore Markets 229 China 230 France 232 Japan 233 India 235 Australia 236 Germany 237 Mexico 238 United Kingdom 239 Indonesia 240 Language of the Trade 241 Summary of Key Points 241 Review Questions 242 Case Problem 1 243 Case Problem 2 243 13 Wholesale Purchasing on the Internet I 245 14 Advantages and Disadvantages Wholesale Product Acquisition on the Internet 246 Manufacturers 247 Designers 248 Contractors 249 Wholesalers 249 Manufacturer's Representatives 250 Resident Buying. Offices 252 Merchandise Brokers 254 of Online Purchasing for Retail Buyers 255 Advantages 255 Disadvantages 256 Advertising and the Web 256 Language of the Trade 257 Summary of Key Points 257 Review Questions 257 -«. Case Problem 1 258 Case Problem 2 259 Negotiating the Purchase and Writing the Order I 261 Consignment Buying 269 Writing the Order 271 Following Up the Order 272 Establishing Future Vendor Relationships 272 Language of the Trade 273 Summary of Key Points 273 Review Questions 274 Case Problem 1 274 Case Problem 2 275 Negotiating the Purchase 262 Cash Discounts 263 Anticipation 263 Trade Discounts 264 Quantity Discounts 265 Seasonal Discounts 266 Advertising Allowances 267 Postdating 267 Transportation Costs 267 How to Negotiate 270 SECTION 4 15 Merchandise Pricing 281 Policies 293 Pricing Policies 282 Departmental Pricing 282 Overall Store Pricing 282 Pricing for the Small Retailer 282 Merchandising Mathematics 283 Markup 283 Markdowns 288 Stock Turnover 291 Factors That Affect Pricing Store Image 293 Services 294 Convenience 294 Competition 294 Private Labels 294 Merchandise Characteristics 294 Promotional Costs 294 Leaders and Loss Leaders 295 Discount Operations 295 Price Points 295 Price Point Selection 295 Advantages of Price Points 295 Language of the Trade 296 Summary of Key Points 297 Review Questions 297 Case Problem 1 298 Case Problem 2 299 16 The Development of Private-Label Programs 301 Manufactures' Brands and Labels 303 Private Brands and Labels 304 Determining Customer Attitudes 305 Meeting the Competitive Challenge 306 Determining the Breadth and Depth of Private-Label Involvement 306 Enjoying the Advantages of the Private Brand and Label 308 Program Development 309 Direct Purchasing 310* Resident Buying Office Acquisitions 310 Company-Owned Production 311 The Buyer's Role in Product Development 311 Introduction of a Private-Label Program 312 The Labeling Factor 313 Language of the Trade 315 Summary of Key Points 315 Review Questions 316 Case Problem 1 316 Case Problem 2 317 viii
17 Disseminating Product Information 18 to Retail Personnel I 319 The Need for the Dissemination of Product Information 320 Communication Techniques Used by Buyers to Reach Retailers 321 Recipients of Product Information 324 Store Visits 321 Telephone 322 Fax 322 E-mail 323 Bulletin Boards 323 Closed-Circuit TV 324 Store Managers 325 Department Managers 325 Sales Associates 326 Visual Merchandisers 326 Advertising Managers 327 Off-Site Representatives 327 Types of Product Information Needed for Dissemination 327 Fashion Merchandise 328 Nonfashion Merchandise 329 Language of the Trade 331 Summary of Key Points 331 Review Questions 332 Case Problem 1 332 *'' '. Case Problem 2 333 The Buyer's Role in Planning Advertising, Special Events, and Visual Merchandising 335 The Promotional Budget 336 Advertising 337 Advertising Classifications 337 Cooperative Advertising 338 Indirect Advertising 339 Selection of Merchandise for Advertisements 340 Buyer Participation in the Advertising Process 340 Visual Merchandising 344 Special Events 345 Promotional Events 346 Institutional Events 347 Language of the Trade 348 Summary of Key Points 349 Review Questions 349 Case Problem 1 350 Case Problem 2 350 ix