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MFM - I

Subject : Fashion Merchandising


Case Study : Treadwells - The buyers decision

Submitted To:

Ms. Nethravathi T S

Submitted By:
MFM/14/40 Disha Sood
MFM/14/19 Shivani Ambikapathy
MFM/14/30 Shivam Taneja
MFM/14/188 Srishti Raut

Table Of Content

Introduction

Case Study

Case Summary

Question

Conclusion

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Bibliography

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Introduction
The factors that a buyer must keep in mind can be broadly divided into external and Internal
Factors. The external factors mainly being :
Economic Conditions: The fluctuations in the money markets and the interest rates have a major
impact on the buying strategies.
Regulatory Changes: Any changes in the corporate laws, rules and regulations will also
influence how, when and what the organizations buy.For e.g.: Labour laws & Patent Laws.
Political Environment: A change of the government or policy has a direct impact on the
economic scenario, and this ultimately translates into a shift in the buying patterns as well.
Social Environment: Societies and cultures are ever evolving, and every business has to change
its practices and procedures to meet up with the societal changes. For instance with the rise in the
number of animal lovers, pure leather suppliers have seen a slump in their business. The clothing
and footwear manufacturers have shifted to artificial leather suppliers. This points out how the
social environment can affect the buying patterns of organizations.
Competition: Todays business is all about beating competition and staying ahead. So when an
organization's competitors in the Apparel industry move on to a newer technology or style, or if
they get to enjoy a competitive edge because of their suppliers, it's very likely for the organization
to change its trends too and thus its buying pattern will change accordingly.
The external environment is the first of the four major factors that influence organizational
behavior as shown in this diagram which you can click on to enlarge.
Internal Factors
Organization's Goals and Objectives: The goals and objectives of an organization are major
determinants as to how and what the organization will purchase. The conflict within the Apparel
industry majorly lies between providing the consumer with Quality or Quantity.
Organizational Structure: The internal setup and how authority and responsibility flow through
it, plays an important role in the purchasing.
Other factors such as :
Policies and Procedures , Technological Levels , Manpower Skills

Situational Factors
Time Factor: As fashion is ever changing and the vitality of the market demand being extremely
high, a merchandiser needs to keep in mid the time factor vis a vis - lead-time, delivery time, etc.
Availability: Some buying decisions can wait while others cannot, thus if the supplier cannot
make available the exact product by the desired date, the buyers may shift to a new supplier or to
a more readily available alternative.
Special Offers: Special offers being given by a supplier may also be one of the situational factors
affecting the buying decision.

Case Study
Treadwells: The Buyers decision
Treadwells Department Store is a traditional department store that was founded in 1898 by Oliver
Treadwell in the American Southwest. Treadwells has symbolised the spirit of the Southwest for
nearly a century, Maintaining exclusive merchandise related to the region as well as providing
moderate to better apparel, accessories and home furnishings for the entire family. The regional
department store retailer has 18 branch stores located at the major cities in Colorado, New Mexico,
Utah and Arizona. Treadwells has its buying offices and distribution centre in Phoenix, Arizona and
sends merchandise to all of its branches from the central distribution center. James Treadwells
Stephenson, the great grandson of the founder, is the current chief executive officer. He is very
concerned about maintaining the image of the company as well as the profitability of the firm.
Recently, tiffany Brentwood has been promoted to the position of buyer of womens sleepwear and
loungewear after successfully managing the intimate apparel and childrens department at the Santa
Fe branch for 4yrs. She also held the position of assistant buyer for childrens sleepwear and
accessories for almost 1 year. Her long-term professional goals include becoming a divisional
merchandise manager and store manager.
After her interview with CEO Stephenson, Tiffany realised the importance of the company
philosophy to enhance images of the southwest yet maintain profitability. She has sought unique
merchandise that will reinforce the Southwestern image for Treadwells. She found a resource for a
group of pajamas, nightshirts and tunics with matching leggings. The merchandise features
Southwestern motifs and would perfectly with the goals of the firm to offer such merchandise. She
believes that this style is not a passing fad in this part of the country and it should be a staple item in
her department.
The merchandise featured tasteful interpretations of traditional Native American blanket designs.
The garments were made from 100% cotton knit and produced in fashionable colours. Tiffany was
confident that this merchandise would be popular with Treadwells target customer.
Upon further investigation, Tiffany discovered that similar styles and colour of merchandise were
available from two different resources, Southwest Specialities, a vendor in Los Angeles or JC
enterprises, a local Phoenix vendor.
Southwest Specialities requires a minimum order of $5000 at cost, offers terms of 3/10, net 30 and
does not provide transportation costs. Transportation cost may be estimated approximately $2.50
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per dozen garments. There is a rumour however, that there may be a trucking strike a Southwest
Specialities is willing to participate in a cooperative advertising program. This Los Angeles firm
assures Tiffany that merchandise will be in stock and available for reorder.
The local vendor does not have a minimum purchase and will deliver the merchandise for free. JC
enterprise also offers terms3/10, net30. This firm is not willing to share in the costs of a cooperative
advertising, since it is a small company. JC Enterprise guarantees immediate delivery. The firm
needs a 48hr delivery notice.
Tiffany decides to bring the merchandise into the stores. She calculates he r initial order, which is
shown in the table below. Tiffany prepares a financial analysis of the purchase, also taking into
consideration the discounts and shipping costs that would be applied to her orders to determine
which vendor might be the best to purchase from. She studies her analysis, and then takes it along
with the pros and cons about each vendor, to her divisional merchandise manager. Because tiffany is
new as a buyer, she does not feel confident about making the decision on her own and wants some
feedback from her divisional manager.

Style

Quantity

South West
Specialities
Price per dozen

Pyjamas

JC Enterprises
Price per dozen

12

$174

$180

$150

$155

Tunics

20

$117

$120

Leggings

15

$117

$120

Nightshirts

Questions
1.

For which vendor should Tiffany recommend purchasing? Why?

2.

What is the difference in the total cost of the merchandise from the two different vendors?

Case Summary
This case study talks about Tiffany Brentwood who has been recently promoted as a buyer for
womens sleepwear and loungewear for the Treadwells Department Store. After her interview
Tiffany realises the importance of the company philosophy to enhance images of Southwest yet
maintain profitability. As a new buyer she has found new merchandise which perfectly fit the goals
of the firm, features a tasteful interpretation of traditional Native American blanket designs and she
believes that the styles wont be a passing fad. The merchandise she found are from two different
sources i.e. Southwest Specialities which is a vendor from L.A. and J.C Enterprises a local vendor.
The two Different resources offer different terms and offers which are:
1.

Southwest specialities-

Requires a minimum order of $5000

Offers terms of 3/10, net 30

No transportation cost (approx 2.50 per dozen)

Rumours of a truck strike

Cooperative advertising offered

Assurance of stock and reorder.

2.

J.C. Enterprise

No minimum purchase

No transportation cost

Offers terms of 3/10, net 30

No cooperative advertisement

No immediate delivery, 48hrs prior notice

Now, Tiffany has to order the new merchandise from any of these two. She does not know which
one out of the two would work best for her after considering all the costs. She needs the help of her
divisional manager.

Question
Which vendor should Tiffany recommend purchasing? Why ?
Before Tiffany recommends any of the vendors to the Divisional Manager, she needs to carefully
survey the various factors that work in her favour, and prove to be beneficial and profitable for
Treadwells. For this we must first calculate the cost that will be incurred while buying from each of
the vendors.
Table 1.1:

South West Specialities


Style

Quantity

Pyjamas

Price per
dozen

JC Enterprises

Cost

Quantity

Price per
dozen

Cost

12

$174

$2088

12

$180

$2,160.00

$150

$900.00

$155

$930.00

Tunics

20

$117

$2,340.00

20

$120

$2,400.00

Leggings

15

$117

$1,755.00

15

$120

$1,800.00

Nightshirts

Total

$7083

$7,290.00

Transportation
cost

$2.5

Total Quantity

53

Total
Transportation
Costs

$132.50

Advertising Cost

$ 50*

Net cost

$7265.5

$100
$7390

* As Southwest mentioned that they will initiate co-operative Advertising, we have assumed the
investment cost to be $100. Therefore, the difference as Southwest will bear half the cost, while JC
shall bear the total amount.
The difference between the two vendors cost is : $124.5

Along with the above mentioned costs that will be incurred, there are certain other internal &
external factors that need to be taken into consideration by Tiffany :
Table 1.2
South West Specialities

JC Enterprises

Location

Los Angeles

Local Vendor

Minimum Purchase

$5000*

Nil

Transportation Costs

Approx. $2.50 per dozen

Free Transportation
(with 48 hr lead time)

Advertising

Cooperative advertising
program

None

3/10 net 30*

3/10 net 30*

Discount & Allowances

So who should Tiffany finally recommend ?


Despite the cost incurred by Treadwells will be higher if they go with JC Enterprises, it proves to
be a profitable deal as they reduce their risk taking factor by a great extent, as they have a assured
transportation with no costs involved. As JC happens to be a local vendor, communication and coordination with them becomes easier. Taking into account all the pros and cons weighed in the
above table, amongst the 2 vendors - Southwest Enterprises and J.C. Enterprises, it would make
sense for Tiffany to choose the latter - J.C. Enterprises. The main two facts that makes them stand
out is that they do not require a minimum purchase of merchandise unlike Southwest Enterprises
($5000) and that theyre a local vendor based out of Phoenix, Arizona. This makes logistical
collaborations and reaction time simpler and faster for both the parties (J.C Enterprises and
Treadwells).
Also, since Tiffany has only been recently promoted, it would work in her favour if she put off
taking risks till she grasps all aspects of her position at Treadwells. Here, Southwest Specialties
would be a risky option due to the transportation issues along with the minimum purchase order
although they are willing to participate in a co-operative advertising program.
The world has become smaller, there are more resources from which to select merchandise from
and change occurs more rapidly. The very nature of merchandising and buying has altered. Such
factors as mentioned above play a very important role on the consequent operations and the end
product in itself. Hence it is very important to choose a vendor carefully.
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Conclusion
This case highlights the fact , that vendors must not be chosen on the cost fact alone , but
multiple factors come into play. With the Fashion industry, it gets even further complicated as its
high volatility in demand, ever changing trends and short product cycles prove to be major obstacles
in a Merchandisers job completion.

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Bibliography

Concepts & Cases in Retail & Merchandise Management by Nancy J Rabolt & Nancy K Miller

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