CHAPTER 2 THE ROLE OF RETAIL PRODUCT MANGAGERS

LEARNING OBJECTIVES To understand the basic stages in the retail product management process To appreciate the complexity of the RPM process, and the variations according to different buying situations To understand the structure and function of the retail buying organisation To become familiar with the roles played by retail buyers, merchandisers and category managers To understand the relationship between the buying organisation and other departments in a retailer To be familiar with the personal skills required

RETAIL BUYING ORGANISATIONS The entity within a retailer that buys in goods to sell to consumers Small retailer: buying carried out as one of a number of managerial tasks Large retailer  Centralised  Dedicated personnel  Buyers control large sums of money  Buyers interact with other people who are involved with RPM

THE RETAIL PRODUCT MANAGEMENT PROCESS: A TRADITIONAL VIEW

RPM PROCESS STAGE 1: RECOGNITION OF RETAIL CUSTOMER NEEDS Recognition of new product requirements Tracking existing customers’ requirements Information sources available:  internal sales data  trade publications  consumer publications, special interest mags.  suppliers  market research  competitor analysis

RPM PROCESS STAGE 2: WRITE SPECIFICATION OF PRODUCT TO SATISFY NEED Convert recognised need into product opportunity Blend a set of features to benefit customers Formal specification of product features and/or approval of prototype NB: This stage often starts the process, with a suggestion (sometime from supplier) followed by product market evaluation

RPM PROCESS STAGE 3: SEARCH FOR A SUPPLIER Find a supplier that is able to make and deliver product Assess different suppliers for suitability based on value (e.g. product quality, short lead time) for price NB There may be a restricted choice, especially if buyer wants a particular manufacturer’s brand

RPM PROCESS STAGES 4 and 5: SPECIFY ORDER, EVAULATE PERFORMANCE Stage 4: Specify Order  quantity detailed, e.g. by size, variety, colour  in terms of how, when and where delivered Stage 5: Evaluate Performance  of product e.g. sales, profits etc.  of supplier e.g. on time, delivery accuracy  includes qualitative measures e.g. customer feedback

COMPLEXITY OF BUYING TASKS: Table 2.1

LIMITATIONS OF TRADITIONAL BUYING PROCESS MODELS The use of the term ‘buying’ process: buying is often considered to be one of a number of tasks within RPM Product and market specifics often influence the way the process is carried out (e.g. seasonal vs staple products) Relationship between retailers and suppliers can influence buying process, e.g. length of time doing business Concentrate on operational rather than strategic parts of RPM

CONSUMER-LED RETAIL PRODUCT MANAGEMENT Aims to more closely link head office planning with retail outlet (e.g. store) activities Reacting and responding to customer’s purchasing; anticipating future needs through research and analysis (pull rather than push approach) Brings management of demand close to management of supply

TRADITIONAL BUYING ORGANISATION Insert Figure 2.2a

CONSUMER-LED BUYING ORGANISATION Insert figure 2.2b

CENTRAL HEAD OFFICE MarketingLogistics Human Resource Management International Operations Non-Store Operations Property Finance Buying & M Stores Suppliers Distribution Centre Call Centre International Customers = Flow of products = Flow of information CENTRALISED RETAIL BUYING ORGANISATIONS (Figure 2.5) Stores

CENTRALISED DECISION MAKING: ADVANTAGES & DISADVANTAGES Buying power Buyers become specialists Aggregated sales data for better forecasting EOS Control Consistency Store personnel free Conflict between head office and outlets Feedback channels may not be open Centralised buying may not be necessary if products are staple Regional preferences may not be well catered for

BUYING ORGANISATION ROLES: The Buying Director Represents all or, in a large retailer, a key part of the buying organisation. Not all but some buying directors will be part of main board of directors Lead, and set overall aims for, product management teams Involved in strategic planning decisions such as  changing major suppliers, introduction or deletion of product categories, major promotional campaigns, adoption of systems and management approaches Corresponds with General Merchandise Manager or VP

BUYING ORGANISATION ROLES: The Merchandise Manager Oversee a division of the retailer or a number of departments Ensures co-ordination and consistency across departments May carry director status in a large organisation They may be supported by ‘buying controllers’ who oversee small numbers of inter-related departments

BUYING ORGANISATION ROLES: The Buyer Traditionally the figurehead of a product department May have shared responsibility with a merchandiser Concerned with qualitative side of buying  awareness of consumer trends,  knowledge of product features,  knowledge of supply market Price negotiation Work with marketing team on promotions

BUYING ORGANISATION ROLES: The Merchandiser Concerned with quantitative side of buying  estimating sales  planning deliveries  distributing products to stores Responsible for financial management of department  sales analysis  budget planning  profit margin analysis  implementation of price reductions NB Merchandiser is a term used for a number of different roles within retailers, e.g. visual merchandiser

BUYING ORGANISATION ROLES: The Category Manager Combined buying and merchandising role used in consumer-led product management Leads a cross-functional team (category team) Involved in the performance of a group of products from product idea and introduction through production, supply, store distribution, promotion, sales and after sales More common in grocery / FMCG retailing

BUYING ORGANISATION ROLES: The Assistant (buyer or merchandiser) In large retailers, buyers, merchandisers and category managers all have at least one assistant Assistants play a key role in buying process, supporting their team leader on operational tasks. Training to be full buyer / merchandiser May take responsibility for part of the range

Buyer’s assistant / buying administrative assistant / buyer’s clerk More junior role than ‘assistant buyer’ Administrative support and routine duties Allocator is a similar junior role on the merchandising side  allocates stock to outlets Graduate entry level BUYING ORGANISATION ROLES: The Buying Assistant

ADDITIONAL BUYING DECISION MAKERS Technologists Quality Controllers Product Developers Corporate Designers Logistics managers

THE BUYING COMMITTEE A group of people from different parts of the retail buying organisation who meet to discuss and sanction buying plans Combines experience, expertise and different points of view Decisions are sanctioned and therefore supported by whole organisation rather than individuals Time consuming and consensus may be difficult to achieve - buying opportunities lost

THE RETAIL ‘DMU’ THEORETICAL ROLE  user  influencer  buyer  decider  gatekeeper RETAIL ROLE  customer, represented by sales personnel or market research  technologists, designers, product developers etc.  buyer, assistant buyer or category manager  merchandise director  merchandise manager or assistant buyer

DESIRABLE ATTRIBUTES IN RETAIL PRODUCT MANAGERS Analytical Good communicator Objective Product knowledge Degree

THE BUYING GROUP A buying organisation that acts on behalf of a group of independent retailers (may include franchisees) Provides product management expertise for those without own internal resources Combines orders to obtain better terms for retailers May provide other services such as market trend analysis, visual merchandising and marketing Examples: ‘symbol groups’ e.g. Spar or Londis, international buying group AMC, AIS