Buying function of a chain store – merchandising

In chain store the buying function may be centralized or decentralized geographically depending on the retail organization. The buyer for a chain store may have a fair amount of say in term the buying price simply because the numbers are much larger than those of an independent retailer. As a chain store exists across regions and at times nations, the buyer would also have to keep the specific regional preferences in mind.

The merchandise to be carried by a retailer largely determines the responsibilities of the merchandiser. The buying for basic merchandiser is fairly different form buying fashion merchandise. Basics are those products or items which the retailer will always keep in stock. This is primarily because these products are always in demand and the sales variance is minimal from year to year. Examples of basic would be items like white shirts in clothing or items like pulses, oil, etc. Fashion products on the other hand, are products which may sell very well in one season or year and may not have very high sales initially and the demand also dies down soon.

A merchandiser who is handling fashion products will need to spend more time in the market looking for products which will suit the needs of the store’s consumers. He will also need to be aware of the fashion forecasts and the trends in the international markets. On the other hand, merchandising for a discount store requires finding the merchandise at the right price. Here, it may not be necessary that the product is unique, it needs to be price competitive.

The organization structure that the retail organization adopts also affects the merchandising function. Some organizations may demarcate the role of the buyer and the role of a merchandiser separately, while in a smaller organization, one person may carry out all the duties.

While the above mentioned factors do affect the function of merchandising, it is necessary to consider not only inter organizational factors, but also intra organizational factors that affect this function. A retailer is more like a consumer in what he buys, and more like a producer in how he buys his merchandiser.

The function of merchandise buying in a retail organization is and function of inter and intra organizational factors. Primary among the inter organization factors are the merchandise requirements. The inter-organizational factors are retailer size, retailer type, retailer location and management mentality. Type of merchandise product positioning, regulatory constraints and type of decision are the factors that the Sheth model terms as Intra organizational factors. Both the factors together determine the merchandise requirements of the retailer.

The choice calculus and supplier accessibility are constructs that capture the retailer’s decision rules. The suppliers that the retailer would consider in a given buying situation are determined on the basis of the combination of the competitive structure, the corporate image of the supplier and the marketing effort that the supplier is willing to undertake for a retailer.

The decision on the supplier eventually selected for a range of products then becomes a function of the supplier and the product choice available. This product captures the supplier / product choice that would be the outcome of a rational and formal decision making process given the merchandise requirements and the accessible suppliers. The actual and the ideal supplier choice do not always correspond as there are some intervening factors: the business climate, business negotiations, market disturbance and company’s financial position. These factors are separated from other determinants because their influence on buying decisions cannot be anticipated or modeled.