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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
To understand the components of retail buying policy

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 manufacturers 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:


2.1

Table

Buy Class
Stages
Recognition of
retail customer
need
Write specification
of product to
satisfy need
Search for supplier
to produce
specified product
Select supplier

New task

Modified re-buy

Straight re-buy

Yes

No

No

Yes

Maybe

No

Yes

Maybe

No

Yes

Maybe

No

Specify order

Yes

Yes

Yes

Evaluate
performance of
product and
supplier

Yes

Yes

Yes

Adapted from: Davies (1993:66)

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 customers
purchasing; anticipating future needs through
research and analysis (pull rather than push
approach)
Brings management of demand close to
management of supply

CENTRALISED RETAIL BUYING


ORGANISATIONS (Figure 2.5)

Buying
&M

Marketing

= Flow of products
= Flow of information

Logistics

CENTRAL HEAD OFFICE

Stores
Finance

Property

Non-Store
Operations

Human
Resource
Management
International
Operations

International

Distribution
Centre

Call Centre

Suppliers
Customers

Stores

CENTRALISED DECISION MAKING:


ADVANTAGES

&

Buying power
Buyers become
specialists
Aggregated sales
data for better
forecasting
Control
Consistency
Store personnel free

DISADVANTAGES

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

BUYING ORGANISATION ROLES:


The Buying Assistant
Buyers assistant / buying
administrative assistant / buyers 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

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

RETAIL ROLE

influencer

buyer, assistant buyer or


category manager

merchandise director

merchandise manager or
assistant buyer

buyer
decider
gatekeeper

customer, represented by sales


personnel or market research
technologists, designers,
product developers etc.

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

Buying Organization Formats and Process


Level of Formality
The Attributes and
Functions of
Buying
Organizations

Degree of
Centralization
Organizational
Breadth
Personnel Resources
Functions Performed
Staffing

Formal
Informal
Centralized
Decentralized
General
Specialized
Internal
External
Resident Buying Office
Cooperative buying
Merchandising
Buying
Buyer(buying only)
Sales manager
Buyer(merchandising)

Ch.14 Developing Merchandise Plans


Devising Merchandise Plans
Considerations in
Devising Merchandise

Innovativeness

Plans
Assortment

Forecasts

Merchandise
Plan
Allocation

Brands

Timing

Supply base
A narrow supply base
A broad supply base

How many
suppliers

Advantages

Few Suppliers

High spend per


supplier
Lower admin costs
More manageable
supply chain
More conducive to
partnership

High dependence
High stock out risk
Hard to replace if
service fails

Low dependence
Low stock out risk
Easier to replace if
service fails

Low spend per


supplier
Higher admin costs
Less manageable
supply chain
Less conducive to
partnership

Many Suppliers

Disadvantages