Buyer & Merchandiser Some Calculations

A fashion buyer needs to be versatile and flexible as the buying schedule may include sitting behind a desk one day writing reports and communicating by phone or email, traveling to identify forthcoming trends.

Liaising with suppliers:-

Buyers liaise with garment suppliers on a regular, often daily, basis. A buyer may spend more time speaking to a representative from one of the company’s manufacturers, probably from the design or sales department, than to another buyer from the same office. It is important therefore to establish strong working relationships with suppliers as a mutually supportive approach will be beneficial to both parties.

Negotiation:-

One of the major aspects of the buyer’s role in dealing with suppliers is to negotiate prices and delivery dates, garment manufacturer’s sales executive, or occasionally the senior designer, submits a ‘cost price’ for a garment, which has been based on the result of a costing process in the factory This may take place in a face-to-face discussion, or in writing. The buyer calculates how much the garment needs to be sold for in the store to achieve the retailer’s ‘mark-up’, which is the difference between the manufacturer’s cost price and the selling price. The cost price is usually multiplied by around 2.5 to calculate the retail selling price for a retailer of branded goods, or three times the cost price for an own label retailer, including Value Added Tax (VAT) in appear from these mark-ups that retailers make a great deal of profit, but their slice of the selling price has to be substantial in order to cover overheads such as store rents, utility bills, shop assistants’ wages and head office costs, including the buyer’s salary, and  it is hoped some net profit for the company.

Buyers should be able to estimate from past experience how much the consumer will expect to pay for a particular garment, and therefore can calculate the optimum cost price which they would be prepared to pay. Initially the supplier approaches the price from a different angle from that of the buyer, working on how much the garment will cost the supplier to produce. An experienced salesperson working for a manufacturer is also able to anticipate how much the buyer expects to pay. The buyer obviously wants to pay as little as possible for the product whereas the salesperson wants to sell it for as much as possible, since both are aiming to make profits for their respective companies. The buyer and salesperson both need to be realistic, however, and use their judgment as to which prices are reasonable. If the buyer cannot achieve the retailer’s target margin the buying manager will probably need to give permission for the garment to be purchased at this price, otherwise the style may be dropped from the range.

A good merchandising should start with some correct things as:-

·        Correct Product

·        Correct Price

·        Correct Place

·        Correct Assortment/Mix

·        Correct Time

·        Correct Quantity

·        Correct Quality

Now, the question is how to do so much correct things perfectly. First step is to analyze the correct merchandise hierarchy. It is nothing but the grouping at different levels. It gives the fair idea about the store’s stock mix. Then, a small visit to stores to check out real stock situation because many a time your software won’t reveal the reality, though it is very difficult to do every time and too if the chain of stores are too big. A close coordination with the buying & merchandising team is very important. The advertising/communication team should also be very important before proceeding into a big buying deal & merchandising plan.

Now I specifically discuss about the OTB (Open-to-Buy) plan. 

Some of the most important aspects of OTB plan are:

Sales Forecast- A sales plan should be there before hand on weekly basis for the entire year. It helps in to react to the variations in sales where one could reschedule deliveries & alter the order accordingly.

Forward Cover- It is the cover maintained on the basis of stock turn. Say if the stock turn is four times a year then the stock holding will be taken equal to three months stock cover.

Stock required- If it is first month then stock required will be sum of forecast sales of 2nd, 3^rd & 4^th month by taking forward cover of 3 months.

Opening Stock- It is an estimate for first month & onwards the closing stock of previous month will be the opening stock of the current month.

Intake requirement- It is the difference between required stock & opening stock.

On order- Stock for which the purchase order already raised but due for delivery.

Open to receive- It is the difference between stock on order & intake requirement.

Closing stock- It is calculated by opening stock subtract sales & add on-order & open-to-receive.

There are some methods through which one could get control on its inventory plan in absence of  ERP software or technology:

Basic Stock Method: Basic Stock Method will be arrived by deducting average monthly sales for the period from the average stock for that period.

Now, average monthly sales for the period by number of months considered in the period. And, average stock for the period could be arrived by division of total planned sales for the period by estimated stock turn rate for the period. Opening stock is arrived by adding planned monthly sales and Basic stock.

Percentage Variation Method: If the stock turns ratio will be more than 6 times and more than percentage variation Method may be used. Where opening stock will be arrived from multiplying average stock for the period with planned sales for the months divided by average monthly sales and then divided it by two.

Now, if you need to plan it weekly than first you have to calculate number of weeks to be stocked it will be arrived by dividing by number in weeks in the period by stock turn rate. Then, average weekly sales must be calculated by dividing estimated total sales for the period by the number of weeks in the period. Now, opening stock will be arrived by multiplying average weekly sales with number of weeks to be stocked.

Sales Ratio Method: Another method is sales ratio method whose first you have to calculate the stock sales ratio which will be arrived by dividing value of stock by actual sales the opening stock will arrive by multiplying stock sales ratio with planned sales.

Rural Retail Market in India: A new avenue.

India is also said to be a nation of shopkeepers. India has one of the highest densities of retail shops with over 12 million outlets and approximate 90 per person.  The population of India now stands at 1.21 Billion where as the rural share is around 70% of it with more than 5 Lac villages.

The rural population has also caught the eye of retailers looking for new area to explore. The TATA’s & ITC are set to storms the rural areas of the country as they realize the huge potential of the virgin rural market. ITC launched the first rural mall in the name of “Chaupal Sagar” offering diverse mix of products range from FMCG to electronics, automobile to provide farmer’s with one-stop destination to their need. Godrej and DCM Shriram consolidated are also launching one-stop shop for farmers & their communities. Godrej Agrovet is planning to set-up chain of stores in the name of “Aadhar Stores”. DCM Shriram planning to set up rural/semi-urban utility mart in the name of “Hariyali Kisaan Bazaar” chain of stores.

Thus, from the above story it is very clear that the rural market is no longer a non-player in retail game. It is now accounting for over one-third of the market for most durable & non-durable products. Even manufacturers are developing new products with the rural consumer in mind besides using village oriented marketing strategies for brand awareness. If the Shchin Tendulkar wowing village boys with a soft drink, shows that rural market is no longer of hypothetical empirical value but is well researched one as top company honchos know where to put their money & how. But, to capitalize on the opportunity a player need to be aggressive in it’s outlook and build scale quickly. 

Cooperative Retail Store - A Brief Story.

Cooperatives are defined by the International Cooperative Alliance's Statement on the Cooperative Identity as autonomous associations of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through jointly owned and democratically controlled enterprises. A cooperative is a business organization owned and operated by a group of individuals for their mutual benefit.A cooperative may also be defined as a business owned and controlled equally by the people who use its services or by the people who work there.

Cooperation dates back as far as human beings have been organizing for mutual benefit. Tribes were organised as cooperative structures, allocating jobs and resources among each other, only trading with the external communities.In 1761, the Fenwick Weavers' Society was formed in Fenwick, East Ayrshire, Scotland to sell discounted oatmeal to local workers. In 1810, Welsh social reformer Robert Owen, from Newtown in mid-Wales, and his partners purchased New Lanark mill from Owen's father-in-law David Dale and proceeded to introduce better labour standards including discounted retail shops where profits were passed on to his employees. The Rochdale Society of Equitable Pioneers, founded in 1844, is usually considered the first successful cooperative enterprise, used as a model for modern co-ops, following the 'Rochdale Principles'. A group of 28 weavers and other artisans in Rochdale, England set up the society to open their own store selling food items they could not otherwise afford. Within ten years there were over 1,000 cooperative societies in the United Kingdom.

A retailers' cooperative is an organization which employs economies of scale on behalf of its members to get discounts from manufacturers and to pool marketing. It is common for locally owned grocery stores, hardware stores and pharmacies. In this case the members of the cooperative are businesses rather than individuals.

A consumers' cooperative is a business owned by its customers. Employees can also generally become members. Members vote on major decisions and elect the board of directors from amongst their own number. The first of these was set up in 1844 in the North-West of England by 28 weavers who wanted to sell food at a lower price than the local shops.

The consumer co-operative structure in the India has four tiers, with the National Co-operative Consumers Federation of India Ltd. (NCCF) at the national level. Thirty State Co-operative Consumers Organisations are affiliated to the NCCF. At the Central/Wholesale level, there are 800 Consumer Co-operative Stores. At the primary level, there are 21,903 primary stores. In the rural areas, there are about 44,418 village level Primary Agricultural Credit Societies and Marketing Societies undertaking the distribution of consumer goods along with their normal business. In the urban and semi-urban areas, the consumer co-operative societies are operating about 37,226 retail outlets to meet the requirements of the consumers. The NCCF, besides undertaking distribution of consumer articles, also has a Consultancy and Promotional Cell for strengthening consumer co-operative societies engaged in the retailing activities. The NCCF with its Head Office at New Delhi, has 34 branches/sub-branches located in various parts of the country. 

Types Of Customer - In Detail Final Part

Ill-mannered Type:

He should be endured rather than cured. Very often he appear to be rude although he does not intend it. Use tact do not fell down.

Snob Type:

This class of customer who think themselves far superior to others and is a very easy type to deal with. The strongest buying motive is vanity. They are undoubtedly annoying but should not be taken seriously. Constantly show him your grace and by tactfully take him to the haven and close the sale.

Guileful Type:

He admit the truth of what salesman has told & flatters the salesman but does not purchase. Only way is to find out the real reason of not buying & by making ease with him try to show him the utility of the article.

Favored Treatment Type: 

This type of customer always want special facility, discount, free gifts, offers etc. This type should be tactfully told as every customer is same in front of the eye of the sales person so whatever is offered to similar type of customer will be given but extra is out of policy.

Something for Nothing Type:

This type of customer you only see at the time of heavy discount offers. They sometime buy even the article they really not required just because they get a good bargain. Easy to handle just show them that it is the cheapest they ever get they will buy.

Untruthful Type:

This type believes that salesmen are easy to deceive. This type tends to blackmail salesperson by it's competitors by showing him that if he do not give the bargained price he will lose the sale. At this point salesmen must have good knowledge about the competitor's product & it's price.

Sarcastic Type:

Salesmen should maintain poise as they tend to be annoying, argument should be avoided & remark should be ignored. Focus on sale should be important.

Impatient Type:

This type of customer want immediate attention. Best way is to give them immediate attention as they do not bargain and do not take too much time to decide.



 Visual Merchandising: Windows and In-Store Displays for Retail

Types Of Customer - In Detail Part-2

Suspicious Type:

The suspicious type is one who doubt everything that he hears. He think that the salesman is devising trap for him. The best way to convince this type of customer by supplying proof and support sale by using guarantees & warranties as unique selling preposition (USP).

Undecided & Careful Type:

This type of customers having very high involvement in purchase. It might happened when the customer either not getting exact same article he require or might be it is too expensive on his budget. The best way is to convince him about the feature and the utility and how he will be benefited from the product. The extra feature might help him to convince upon spending the extra cost from his budget. Patience is very much required to handle this kind because this type of customer take a lot of time before purchase.

Procrastinating Type:  

This type are those who does not want to make up the mind or cannot make up his mind. The best way is fear factor should be added to sales talk.

Impulsive Type:

This type of customers are in high gear. They take quick decision. Quick & brief explanation about the product is the best option without wasting his time and treat him as he like it.