The function of buying for different types of organizations

The function of buying and merchandising varies from organization to organization. The role of the buyer and merchandiser would vary. Similarly, the levels within the hierarchy would also vary. Many a time, the job of a buyer is likened to that of product manager in a consumer company. Just as in a consumer goods company a product manager develops the annual marketing plan for a particular consumer product with an eye toward achieving the business objective, the buyer performs the same function for the merchandise line that he or she is responsible for. Targets need to be achieved in term of sales and profit goals. Strategies need to be developed keeping in mind the specific customer profile to the merchandise. The buyer needs to monitor and maintain gross margin plans by controlling markups, markdowns, shortages, turnover and stock levels.

Larger retailers provide mores sophisticated merchandise information systems that allow quick and efficient responses to changes in the market. They also have established planning processes for seasonal planning, forecasting and assortment planning.

To start with, buying and merchandising may be centralized function or may be a decentralized activity. Central buying occurs when all buying activities are performed from the central headquarters. Buyers in such an organization have the authority and responsibility for selection of merchandise for all the stores. Decentralized buying occurs when individual stores are responsible for the buying function for their particular store.

Buying for a Single / Independent Store:

As in every endeavor no matter what the size the most fundamental activities are buying of merchandise and reselling it to the end consumers. In small independent stores one person is typically the owner and manager. He is responsible for all the business operations of the store, including all the buying and merchandising duties. It is hence, necessary that he must have a thorough understanding of the buying process. As the owner has direct access to the end consumers, he would have a better understanding of their needs and wants and the function of buying would be as per the requirements.

Typically, if the role of a buyer has been created in such an organization it would involve:

1) Coordinating the purchasing for various products required by the store
2) Writing orders.
3) Handling special orders as and they arise
4) Making decisions regarding merchandise returns
5) Remerchandising the store
6) Taking decisions with respect to the pricing of the product.
7) Planning and coordinating various promotional activities and events and in-store presentation of the merchandise
8) Customer contract

It is wrong to believe that all independence retailers are small. As the independent store grows the owner may not be able to handle all the duties efficiently. Continued growth may encourage departmentalization.

Buying for a Chain store or a Chain of Department Stores:

As the operation of a chain store is typically larger than that of an independent store the buyer in such an organization needs to be a specialist. Merchandising in chain stores is characterized by:

1) Central Buying Plans
2) Central Merchandising Plan

A retail chain operates in more than one region. The store therefore, has to serve the needs of a diverse consumer market. The needs and wants may be different. The buyer therefore, needs to be aware of these peculiarities in the market before he progresses with the buying of merchandise. It is also necessary that the buyer completely understands the type of products that are needed by the market that the retailer is catering to. As the retailer is catering to a diverse market, the estimate of sales needs to be as close to accurate as possible. If this does not happen, it will result in over buying or under buying, both of which affect the profitability of the product and therefore the retailer.

Buying for Non-Store Retailers – viz, Catalogues, Direct Mail, Home Shopping, Internet Retailing etc.:

The process of buying and merchandising for non-store retailer will vary from that of a store retailer. The mail order buyer needs to plan well in advance, as the production of the catalogue takes a long time. In addition the large variety of merchandise needs a fair amount of market amount work. Buyers for a e-mail venture need to have clear understanding of the type of products that consumers would, but on the net. Very often, in direct marketing or in e-mail ventures it is the uniqueness of the product and a competitive price, which make the difference Thus, the nature of the organization is an important factor affecting the function of merchandising.