What is Buying and Merchandising?
Buying and merchandising is a core business function of an enterprise immersed in the retail selling of products to consumers. It means the whole idea revolves around the product perspective. As business functions buying and merchandising sit in the much bigger framework, which is known as the supply chain, broadly speaking it is the collaboration of different companies with the primary aim of getting the right product to the customer like you and me who wants the latest trend and technology.
Buying and merchandising closely tie into that supply chain and that’s because there is a whole spectrum of participants who operate like a hub consisting of stakeholders like manufacturers, suppliers, logistic companies, etc. They all contribute to the working of the retail ecosystem. Fundamentally the supply chain is there to bridge the gap of the supply sitting at one end of the chain which is the manufacturer’s end to the demand at the receiving end which is the consumer end. But with all the collaboration and effort going on how can we ensure that the right product reaches the right customer at the right place and time.
Also, it is a big challenge to ensure that the right merchandise is sold at the correct price to satisfy the market and help the retail enterprise to prosper and make a profit. And that’s where we human being come into the picture. Therefore, there is a perspective that states that just the people which allow buying and merchandising work.
Buying and merchandising involve lots of activities that support the enterprise to function, and it provides us to answer many questions such as what are the steps needed to order goods from suppliers? How can our inventory be planned?
How can we predict future sales? And so on and so forth.
Within buying and merchandising process there are lots of processes which come under action like planning product development to planning buying cycle, processes for stock management, processes for sale forecast and many more. Process perspective in B&M is massive as there are several things to cover during the whole supply chain cycle and to make actionable, we need system in other word the appropriate technology.
Product Perspective
The first thing that needs to be known is that the product has a lifecycle. At a very high level, it has 4 phases, which firstly consist of the design phase. Before this design phase, there is a need for product which comes from market analysis and customer survey. During the design phase product specifications are decided in which designers finalize the suitable fabric, trims and artwork techniques for that design and then conceptual design takes place.
The second phase of the product lifecycle is the manufacturing phase that’s where all the instructions are sent to a manufacturing facility where the product gets manufactured. Here it is very important to understand the manufacturing capabilities at your disposal. By manufacturing capabilities, I mean to say the knowledge of what production facility exists, where they are located, methods of the production to achieve the final product. In addition to that the manufacturing capabilities is also related to the time it takes to undergo production, which is known as production lead time.
In the production phase quality of the product is also being maintained as per the standard. Once the final product is made it goes to the final consumer which is the operation phase of the product lifecycle. In this stage you and I as a consumer make the fullest utilisation of the product. Then comes the final stage of the product lifecycle, which is the Disposal stage, where the product life cycle comes to an end. Further, the utilisation of the product doesn’t remain the same.
Before the disposal stage, it is very important that how the product behaves after it is introduced to the market. The product when first launched and people increasingly became aware of the product in the market. It goes into continuous growth when consumers start actively buying it and for the company that is the crucial stage where they get the return of interest (ROI) and make a profit. Then the product reaches to the maturity stage where it doesn’t see too much growth but continues to sell and generate revenue for the business. After this the product has to see the decline stage where no more demand of product in the market is seen.
People Perspective
The next thing that we will try to understand now that generic speaking the kinds of responsibility that are held by different individuals that are occupied by various level of the structure. Let’s start with the higher level of individuals who are the directors of the buying and merchandising. They are responsible for leading the financials and business strategies of the retail business setting the high-level direction and planning instructions to achieve N numbers of important key performance indicators and these KPIs will challenge the hole division in all sources of way for example to become more efficient and productive, improve communication across team, bring more money to the business etc.
Buyers are responsible for the planning and selection of product ranges which are commercial. The product range is basically the array of products deemed buyable by the company where we know that these products will fulfill the market demand, so these certainly include our continuity items and the items that constitute new lines. The buyer has also a part to play on product development, planning for stocks, trading and so on. Other bits and pieces that the buyer is responsible for are making sure delivery targets are reached and this ties into the ‘Critical path’ idea. One thing to also bear in mind that the process of buying and merchandising from the timing perspective, is a concurrent activity meaning there are loads of activities running parallel to each other. It’s basically, a very complex clockwork. This means that as buyer and also merchandiser are likely to be involved in planning for 2 or 3 seasons at a time for example the current season, the next season and next to next. So, you’ll be looking at planning over anything between say the next 6 to 18 months.
The buying and merchandising team also fill out competitive shopping reports, basically details regarding the critical evaluation of other retailers out there who are competitors. You’d want to keep track of the information because after all you want to stay competitive and make a profit.
Some skills that a buyer should have are as follows:
- Negotiation Skills
- Networking Skills
- Eye for Detail
- Analytical Acumen
- Product Understanding
- Managing the Supply Chain Mix
- Project Management
Process Perspective
The process perspective is imperative when explaining what a huge field like buying and merchandising in retail is. It is basically related to the business processes essential for the company to function at the strategic, tactical, and operational levels for decision making.
The smooth running of the business processes that drive the buying and merchandising business functions is monitored through reports. These reports capture and display statistical and analytical information. In retail you find reports for a whole raft of things, for instance-
- Monday Trading
- Sales and Orders
- Weekend sales & Orders
- Stock by channel
- Stock targets
- Good, better, best Roll Up
- Intake Roll Up
- Forecasting
- Option Roll Up & several others.
Apparel brands and companies use these reports in different ways, but this is the base of all.
Apart from these perspectives, there are a few more important perspectives on Buying and Merchandising which we have discussed in the next article:
Apparel Buying and Merchandising in a Nutshell (Part-II)
Related post: Challenges Faced by Apparel Manufacturers in Implementing Sustainability
About the Author:
Sweta Singh has done B.Tech from GCETTS in Apparel Production and Management and completed postgraduate in fashion technology from NIFT, New Delhi, India. She is currently into Fashion Retail in Buying and Merchandising, taking care of the product from the development stage to sales monitoring. She is passionate about fashion technologies and new trends in the apparel industry.