In contrast, a department store faces hard competition as an end market participant, because it must purchase the exact products customers will want to buy later. This requires a great deal of expertise in advance planning and judgment on the part of buying personnel. Consequently, merchandise buyers are recognized as higher in status within the organization than salespeople.
Buying can be categorized into two general areas: industrial buying and retail buying. Industrial buying involves the purchase of supplies, raw materials, and equipment to sustain a business's manufacturing or transformation process. For example, film manufacturers must buy the chemicals necessary to produce film. Retail buying is the purchase of goods for subsequent retail sale where no manufacturing or transformation of the purchased goods takes place (e.g., purchase of clothing for resale by a department store). Industrial buyers are generally referred to as purchasing agents; retail buyers simply as buyers. We shall discuss retail buyers first.
RETAIL BUYERS
Buyers for retail companies are responsible for buying the merchandise sold in retail outlets. Anything one sees in a store is there because a buyer decided to buy it. In a food retail outlet most products for sale are bought on a regular basis; usually the same things are reordered as stocks are depleted. In this respect retail food buyers are similar to purchasing agents. In large department stores, which sell many different types of merchandise, what is sold changes frequently, especially fashion merchandise. Purchasing items for a department store is a complicated, demanding, and exciting job.
The primary aim of a buyer is to purchase products that will satisfy customers and make profits for the store. To accomplish this, buyers must stay closely in touch with store customers and what they are buying as well as with the merchandise itself. Buyer activities can be divided into three main areas: analysis, acquisition, and merchandise sales.
As a buyer, you would spend much time analyzing sales reports. Sales reports are compiled from all retail outlets; they show how well merchandise is selling. By studying these reports, you can determine what is selling and what is not, and then look for explanations. Buyers use sales reports and other data to determine buying trends. Demand estimates are also made regarding how much of what items should be bought. Trend analysis and demand estimation are especially important when planning future seasons. Often you will have to buy merchandise months in advance, and these analyses must be used in the decision-making process.
Buyers also analyze their merchandise in comparison with the competition. This involves checking competitive stores' merchandise on site and studying their advertising and promotion. Buyers who work for department stores that are not fashion leaders often determine what merchandise to purchase based on what the trend-setting stores have in stock at present.
Analysis must be performed of information related to past purchases, present purchases, and projected future purchases. A large part of this information comes in the form of numerical data, with little or no text. You must be able to translate these numbers into ideas useful in decision making. You can also gather information through first-hand experience on the selling floor. By seeing how merchandise is displayed and sold, you can gain insight into its success or failure. In summary, you must look to many sources for information useful in analysis, and not expect it necessarily to be presented in coherent, comprehensible, and usable formats.
Analysis supports your primary function-to buy merchandise for retail sale. To do this, you must be intimately familiar with the merchandise-how much it should cost, how much it can sell for, and what determines quality. You must also know the vendors selling it. It takes time to get to know vendors, and you as an assistant buyer would spend time early in your career with an experienced buyer meeting and establishing contacts with the trade. Good working relationships with vendors can help you get favorable terms in price, payment schedule, and delivery time when you make purchases.
To meet vendors and find out what is available in the marketplace, buyers often attend trade shows related to the products they buy. They also read trade newspapers and magazines on a regular basis. Visiting showrooms is another way of seeing what products a vendor has and assessing quality versus price.
You would usually go to the source of merchandise when buying. This can mean traveling to wherever a manufacturer is located; trips to Europe and the Orient are common for fashion buyers. How often and when you travel depends on what type of merchandise you seek. Products that are seasonal, such as fashion products, demand that you travel to the sources at the time when the merchandise is being made. Summer fashions are usually bought in the fall, fall-winter fashions in the spring. It is harder to predict travel times for buyers of non-seasonal products.
Before merchandise is bought from suppliers, you must decide what prices are appropriate for retail sale. Pricing decisions take into consideration previous sales trends, quality of merchandise, and the competitive situation. You must also follow corporate guidelines in determining prices. When making a pricing decision, you must think of the profit margin at the first selling price and at percentage markdowns if the merchandise does not sell quickly. You must find the price that will balance customer acceptance with desired profits.
Buyers in most retail organizations work with personnel from other departments, such as store operations, inventory control, wholesale trackers, and quality control to make sure merchandise reaches retail outlets properly. It is important for you to know what is happening to merchandise you have bought, so that you can analyze sales results. You need to work with all outlets of a store to make sure that sufficient stock is available where it is needed.
You may be involved in determining display and stock requirements for merchandise you have bought. It is in your interest that the merchandise be attractively displayed so that customer interest will be high. Depending on position and corporate policy, you may also be involved in the recommendation, execution, and approval of advertising and promotions in support of merchandise.
PURCHASING AGENTS
The role of the purchasing agent is to identify the best possible suppliers to provide the products the firm needs. Hence, purchasing agents and industrial salespeople are on opposite sides of a transaction. The activities and responsibilities of purchasing agents are quite similar to those of buyers. However, as a purchasing agent, you would (1) purchase a wider variety of goods, leaving you less opportunity to specialize in a product area; (2) tend to spend more of your time on the phone or alone analyzing product features or literature, and less time traveling or interacting with suppliers; (3) often make repeat orders for the same supplies where product price and quality are comparable among suppliers-which makes delivery, billing, and service more salient purchasing factors; (4) have little seasonality in your purchases unless your firm's product lines are highly seasonal; and (5) make purchases to replace inventory based on economic order quantities rather than estimated market demand. Since purchasing agents are not buying goods for resale, they are buffered from market activity. Their work activities are more predictable than buyers, although not necessarily less complex or less interesting.
Required Skills and Educational Background
To succeed in retail buying you must be willing to work hard. Stamina, both physical and mental, is necessary for the long hours and travel associated with a buying career. You must be self-motivated and willing to stick with projects until completion. This necessitates carefully establishing goals and priorities without close supervision. Working well with people is also required, as you depend on others' cooperation to get the job done. Management skills are necessary in order to move up the buying career ladder, as your responsibilities will expand to include management of a number of assistant or associate buyers.
Computational ability is also crucial. Analysis is performed on data, and you must feel comfortable sifting through it all. Being able to organize a great deal of detail and then act is necessary.
The educational backgrounds of buyers vary. The most important quality retail employers look for in a buyer is an interest in retailing. This can be demonstrated through previous retail experience and education. People with a retailing degree or a marketing or business degree with a concentration in retailing are usually given first consideration. Some large organizations recruit MBAs into training programs, usually with a higher starting salary than recruits with a bachelor's degree.
Buyer training programs tend to be formal in nature, especially in large department stores. The training program can last up to two years, typically consisting of classroom instruction and rotation through the store's departments. You are given exposure to selling-floor operations and become acquainted with store layout, style, and selling philosophy. In the beginning stages of a buyer's career, buying-area exposure is useful. Ideally, as a buyer, you should be able to buy anything a store sells. Moves between departments occur at senior levels, so you should be flexible enough in knowledge, experience, and temperament to be able to accept such new assignments.
