REVIEW

15 KEY TERMS FILL IN BLANKS WITH BANK MERCHANDISE PLAN - A BASIC BUDGETING TOOL THAT ASSISTS THE RETAILER OR BUYER IN MEETING DEPARTMENT OR CLASSIFICATION GOALS. SEASONAL MERCHANDISE - SELLS WELL AT CERTAIN TIMES, OR SEASONS, OF THE YEAR FASHION MERCHANDISE - SELLS WELL FOR SEVERAL SEASONS, BUT NOT YEAR AFTER YEAR STAPLE MERCHANDISE - SELLS WELL OVER A LONG PERIOD OF TIME CONVENIENCE MERCHANDISE - MERCHANDISE BOUGHT WIHTOUT MUCH PLANNING OR THINKING

OPEN-TO-BUY - AMOUNT OF MONEY AVAILABLE TO PURCHASE MERCHANDISE AFTER OTHER PURCHASES HAVE BEEN SUBTRACTED. DATING TERMS -DEAL WITH THE DATE WHEN THE BILL FOR MERCHANDISE HAS TO BE PAID TO VENDOR. SHIPPING TERMS - REFER TO HOW MERCHANDISE WILL GET FROM THE MANUFACTURER TO THE STORE. VENDOR - A COMPANY FROM WHICH A BUYER PURCHASES MERCHANDISE. MARKDOWN - A REDUCTION IN THE ORIGINAL SELLING PRICE.

CENTRALIZED BUYING OCCURS WHEN ALL BUYING FOR THE CHAIN IS COMPLETED FROM ONE LOCATION. DECENTRALIZED BUYING MEANS THAT BUYING DECISIONS ARE MADE AT THE LOCAL STORE LEVEL. MARKUP IS THE TERM USED TO EXPRESS THE DIFFERENCE BETWEEN THE COST PRICE OF MERCHANDISE/SERVICES AND THE SELLING PRICE OF THE MERCHANDISE. MARKET SHARE IS ONE RETAILER’S PART OF THE TOTAL SALES OF MERCHANDISE AND SERVICES BY ALL RETAILERS IN THE SELLING AREA. PRICE IS THE AMOUNT OF MONEY RETAILER ASKS A CUSTOMER TO PAY FOR MERCHANDISE OR SERVICE.

MERCHANDISE LIFE CYCLE

INTRODUCTION – PRODUCT IS ESTABLISHED; PRICES DEPEND ON QUALITY AND MARKET SHARE; PLACEMENT IS LIMITED; PROMOTION IS USED TO EDUCATE CONSUMERS GROWTH – PRODUCT IS MAINTAINED BUT TWEAKED; PRICE IS MAINTAINED WITH IN DEMAND BUT LITTLE COMPETITION; PLACEMENT IS INCREASED; PROMOTION AIMED TO TARGET MATURITY – PRODUCT IS ENHANCED TO SET APART FROM COMPETITION; PRICE IS LOWER; PLACEMENT IS INTENSE AND INCENTIVES OFFERED; PROMOTION USED TO DIFFERENTIATE PRODUCT DECLINE - SALES DECREASE, PRODUCT IS EITHER MAINTAINED OR REJUVENTE, REDUCE COST BUT CONTINUE TO OFFER, DISCONTIUE AND LIQUIDATE

BUYER’S JOB 1. DETERMINING AVAILABLE MONEY DETERMINED BY THE MERCHANDISE PLAN 2. WHAT CUSTOMERS WANT 3. VENDOR SELECTION 4. NEGOTIATING TERMS AND DISCOUNTS 5. TIMING MERCHANDISE DELIVERIES

OPEN-TO-BUY EXAMPLE TOM IS RUNNING A BEACH SHOP. IN JUNE, PLANNED PURCHASES TOTAL $3,300. HE ORDERED MERCHANDISE THAT COSTS $1,400 AND RECEIVED A SHIPMENT OF GOGGLES WORTH $300. WHAT IS THE OPEN TO BUY FIGURE? 3,300 – (300+1,400) = 1,600

DATING DISCOUNTS 3/15, NET 60 3% DISCOUNT OF TOTAL BILL IF PAID WITHIN 15 DAYS OF SHIPMENT, OR PAY FULL BILL WITHIN 60 DAYS SAVES MONEY AT END OF YEAR!

FACTORS BUYERS CONSIDER WHEN NEGOTIATING SHIPPING TERMS HOW MERCHANIDSE WILL GET TO STORE WHO PAYS FOR THE SHIPPING ( MANUFACTURER OR BUYER); AND WHEN OWNERSHIP OF THE MERCHANDISE CHANGES HANDS.

3 FACTORS AFFECT SELLING PRICE 1. COMPETITION 2. SUPPLY AND DEMAND 3. CUSTOMER ACCEPTANCE

EXPLAIN SUPPLY AND DEMAND LAW STATES: SUPPLY LIMITED < HIGHER PRICES SUPPLY PLENTIFUL > LOWER PRICES DEMAND = QUANTITY CUSTOMERS WILL PURCHASE SUPPLY = QUANTITY OF MERCHANDISE THAT IS AVAILABLE FOR PURCHASE.

MARKDOWNS REASONS: ATTRACT NEW CUSTOMERS REDUCE INVENTORY - SELL MERCHANDISE NOT SELLING AS WELL AS EXPECTED GENERATE NEW SALES PART OF DOING BUSINESS PART OF THE MERCHANDISE PLAN ALLOWING FOR PRICE REDUCTIONS UNDER PLANNED REDUTIONS.

5 Way Retailers Sell Markdown Merchandise 1. SELL, OR JOB-OUT TO ANOTHER RETAILER SUCH AS T.J. MAXX 2. CONSOLIDATE AND SELL TO ANOTHER STORE UNDER SAME OWNERSHIP 3. USE INTERNET 4. DONATE AND USE AS TAX DEDUCTION 5. CARRY OVER INTO NEXT SEASON