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Study Guide

[RMG 400] - Midterm Exam Guide - Everything you need to know! (15 pages long)


Department
Retail Management
Course Code
RMG 400
Professor
Janice Rudkowski
Study Guide
Midterm

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Ryerson
RMG 400
MIDTERM EXAM
STUDY GUIDE

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Key Points
The goal is to meet customer needs
The performance of buyer is based on sales volume (how much product is being purchased)
Buying different types of products
Soft lines refer to apparel/accessory product categories and home furnishings
- Can be broken down into Men’s, Women’s, Children’s, etc.
- Can be broken down further, e.g. men’s jeans and men’s dress pants
Hard lines refer to hardware, sporting goods, appliances, furniture, toys, and outdoor stuff
Fashion refers to products that are popular only seasonally
- Fashion might also refer to special editions of basic items, like a particular
Barbie, which would generally be a basic
Basics refer to products that customers purchase year in and out
- They expect the store to have these items at all times
Basics are easier to forecast as their sales are consistent, whereas fashions enter and leave the
market quickly
- As a result, fashion buyers are paid more because they have to be better
Buying in different retail formats
Department Stores
Sell all kinds of merchandise
Has been the dominant force in the retail market, but recently has come under threat from other
retail formats like specialized department stores who eliminate low-profit goods
- Department store sales as a percentage of total retail sales has declined recently
- 3.8% in 2000 to 2.1% in 2010
Discount Department Stores
Emphasize one stop shopping, recognizable brands at low prices with few salespeople
- Walmart, Target, Kmart
Outlet Stores
Resource for retailers to sell slow-moving and out of date merchandise
- Buyers for these stores will sometimes offer merchandise that isn’t available at the
traditional retailer, so they have to coordinate with other buyers to make sure they aren’t
buying the same thing
Outlets can be used as test markets for new goods
- Polo, Bose, Eddie Bauer, Tommy Hilfiger
Specialty Stores
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One for almost every product category
- Toys R Us, Home Depot, Staples, and left-handed stores
They have broader assortments of a narrow field of goods
Supermarkets
First to develop a superstore concept
Other retailers have added food items to their assortment to snag a bit of their profits, so
markets have broadened their own assortments to level the playing field
Buying for Chain Stores
Chain Stores are two or more stores under single ownership, usually with a single headquarter
to coordinate the buying of merchandise for all stores in the chain
- Buyers can spend more time in the market, their forecasts are more reliable
because centralized data allows them to more accurately predict consumer
trends, they eventually become specialists since they’re working with only a few
products, expenses are reduced, merchandise costs are lower because the chain
has more buying power meaning it’s in a better market position
Some standardize product assortments to control logistics (makes it easier to coordinate)
- Stores then don’t require individual buyers, but then only a few at HQ
- Also gives the chain store mass buying power, thus market influence
Some chains are general, others specialized
In chain stores, buyers are not usually involved with selling since it enables them to devote most
of their time to acquiring product and market knowledge; they become product specialists
- Because of this separation, they have to keep in contact with sellers to ensure
that sales volume is satisfactory, since that’s normally how they’re evaluated
Centralized Buying is when the buying is coordinated solely from HQ
Types: Central Merchandising Plan means a central office represents a group of stores
with complete control over the selection and buying of merchandise
- JCPenney, Sears, Old Navy, Gap
- Means the individual store needs may not be met, and managers have no
control over the merchandise entering their store, causing adversity
Warehouse Requisition Plan runs through regional distribution centers to serve in
a given area; the buyer at HQ determines the assortment of merchandise, the
managers of each store can requisition the assortment the he/she wishes
- Managers can pick from what the buyers offer, and a warehouse in the
area delivers the approved items
- Must have a sufficient number of stores in one area to be cost-effective
- Reduces inventory, freeing space for sales, and shipping distance
- Not usually effective for fashion items
Price Agreement Plans: buyers select the merchandise assortment and the
vendors from which each store will purchase from that assortment
- Buyers have to make agreements with different vendors
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