FASHION

MERCHANDISING
 Fashion Industry- Levels of
Merchandising
• Retail Organization Merchandising

• Buying Agency Merchandising

• Export House Merchandising

 What is Merchandising?
IN RETAIL ORGANISATION-
 Merchandising is a specialized management
function within the fashion industry. It is the
business that moves the world fashion from
designers showroom to retail sales floor and into
the hands of consumers.

 It is the internal planning that takes place within a

retail organization in order ensure adequate amount
of merchandise are on hand to be sold at prices
that the consumers are willing to pay to ensure a
profitable operation.
 Marketing Vs Merchandising

Marketing function
Focuses on broadly defining a company’s market and
characteristics. It pinpoints new opportunities for growth
through self analysis and market research and promotes
company’s image and products.

Merchandising function
is more specific concerning itself with the development,
execution and delivery of the product line with its close
ties with the market it serves. Merchandising is not only
able to adjust to market variations rapidly but is capable
of actually anticipating and helping to create market
changes.
 Merchandiser
Merchandiser is a person who get converted
inspiration into design , use technology to
conceptualize and address the planning ,
production, promotion and distribution of
products in the fashion industry to meet the
consumer needs and demands
Merchandising - involves 6 rights
• Right Merchandise
Right Merchandise
Retailers must fill their shelves with the
merchandise that customer wants.

Right Place
The location of the merchandise is of prime
importance since it decides the accessibility.

Right Time
Much merchandise is seasonal in nature
and must be on hand when it is most needed.
Right Quantity
A profitable balance between volume of sales and amount
of inventory is the desired goal.

Right Price
Merchandiser must arrive at a price that is high enough to give
the store profit and yet low enough to meet the competition and
customers expectations.

Right Promotion
Right balance between the investment and
the appeal created for the customers
 THE CARDINAL SIN OF
FASHION MERCHANDISING IS
TO BE OUT OF TREND
MAIN PRINCIPLES AND DYNAMICS
OF FASHION
 The constant in fashion is change
 Changes in fashion are gradual and
evolutionary rather than revolutionary.
 Fashion is cyclical
 Customers make fashion
 Acceptance level of fashion vary
 Fashion depends on place and reflects
lifestyle
 INTERPRETING
CONSUMER DEMAND
Elements of Customer Demand

TARGET MARKET

BUYING MOTIVATIONS
 Identifying Target Market

Demographic

Market Psychographic
Behavioral
Segmentation

Geographic
 Demographic Segmentation
Mainly grouped on the basis of:-
• Population
• Age
• Income
• Sex
• Occupation
• Education
 Geographic Segmentation
Mainly grouped on the basis of:-
• Cities
• States
• Regions
Climate plays an important role
 Psychographic Segmentation
Grouped on the basis of the lifestyle-
– Social activities
– Interests
– leisure pursuits
– needs and wants

People having similar lifestyles can make

up a target market group.
 Behavioral Segmentation
Grouped on the basis of opinion on
specific products or services-

• Rating of usage of products & services.

Help in improving the service/product and

make it different from others.
DETERMINIG WHY CUSTOMERS
BUY
BUYING MOTIVATIONS

RATIONAL MOTIVATIONS EMOTIONAL MOTIVATIONS

•Durability •Imitation
•Dependability •Emulation
•Comfort •Prestige
•Economy of Operation •Pride of Appearance
•Price •Distinctiveness
 FASHION PURCHASES
SPECIFIC SELECTION FACTORS
 Silhouette- Degree to which an item is considered
moderate or extreme in form in relation to the currently
popular shape or form of such products.

 Decoration or trim- Presence or absence of all types of

ornamentation

 Material/Fabric-Quality of fabric

 Surface interest- Texture, Hand feel

 Color-Actual hues used

 Workmanship- construction, stitching, finishing

 Size- Preciseness of Fit

 Sensory factors- Touch, Taste, Smell, etc.

 Ease and cost of care

 Brand- Identity of manufacturer or distributor of an item

 Utility- Extent of usefulness and service

 Appropriateness-Degree of suitability and acceptability

 Price- Value placed by individual customer

 FASHION RETAIL
ORGANISATIONS
Organizational Structure &
Responsibility
 Organizational structure includes the clear
understanding of the authority and
responsibility for each job to be done.

Organizational system differs with the difference

in type of merchandise, size of retail firm, and
target customer.
Various Fashion Retail Businesses

Three basic Formats-

• The Small Single- Unit Store
• The Departmentalized Store
• The Chain Store

The Specialty Store, Discount Store are also few of the other formats
 Major Divisions & Responsibilities
• Merchandising division- buying, merchandise planning and
control, selling, fashion coordination

• Sales and promotion division- advertising, visual

merchandising, special events, publicity and public relations

• Finance and control division- credit, account payable, and

inventory control.

• Operational division- maintenance of facilities, stores and

merchandise protection, personnel, customer service and
receiving and marking of merchandise.
o Personnel and Branch Store Division may function separately if the
store operations are very large.
 Stock holders

Board of Directors

President

STAFF STAFF
Legal counsel research department
Vice President and General Manager Other advisory services

Merchandising Sales Promotion Finance and Operating Division Personnel Division Branch stores
division Division Control Division Store Personnel Director Executive in charge
GMM Sales Promotion Treasurer & Superintendent of branches
Manager Controller

-BUYING OFFICES -ADVERTISING -ACCOUNTING OFFICE -ADJUSTMENTS -EMPLOYMENT OFFICE -Audit

-COMPARISON BUREAU DEPARTMENT -a/c payable -ARCHITECT’S OFFICE -interviewing -credit
-DIVISIONAL MANAGERS -artists -cash office -CUSTOMER SERVICE -placement -store planning
-department managers -copywriters -general a/cing -sales people -termination -maintenance
-assistant buyers -direct mail -inventory taking -service desk -HOUSE ORGAN -receiving
-sales people -layout -insurance & taxes -telephone & mail orders -PERSONNEL BUDGETS -transfer of merchandise
-FASHION -radio & television -payroll office -bridal registry -PERSONNEL TESTING -employment training
COORDINATORS -DISPLAY DEPT. -sales audit -DELIVERY -RECORDS & REVIEWS -merchandising
-HOME PLANNING -Interior displays -statistical -ELEVATORS -budgets & records -sales planning
BUREAU -sign room -CREDIT OFFICE -MAIL DIVISION -job analysis -advertising
-MERCHANDISE -window displays -billing customers -MAINTENANCE -rating & reviews -displays
PLANNING & CONTROL -exterior displays -cashiers in office -PACKING & PICK UP -TRAINING -special events
-MERCHANDISE -PUBLIC RELATIONS -charge a/cs -PRINTING -induction & system -liaison with main store
RESEARCH -news releases -charge authorization -PURCHASING DEPT. -on the job
-public fashion shows -credit interviewers -RECEIVING & MARKING -WELFARE & HEALTH
-special events -defered payments -RESTAURANTS
-use of auditoria -CREDIT UNION -STORE PROTECTION
-EXPENSE CONTROL -TRAFFIC DEPT.
-LAYAWAY OFFICE -WAREHOUSE
-MERCHANDISE STATISTICS -WORKROMS
The Merchandising Division
Soft Line
General Merchandise Manager (GMM)

Hard Line
Divisional Merchandise Manager (DMM)

Merchandise Managers (MM)

Buyers

Assistant Buyers

Trainees
 Qualities of a Fashion Buyer
• Dedication • Product Knowledge
• Enthusiasm • Decision-making skill
• Awareness • Mathematical ability
• Stamina • Communication skills
• Foresight • Negotiation skills
• Creativity • Managerial skills
Work Area of a Fashion Buyer
• Liaising with suppliers (immediate vendor)
• Liaising with internal departments
Buying Colleagues
Quality Control/Tech Design

Buyer
Finance Fabric technology

Marketing/PR Retail Sales people

 THE BUYER’S JOB

• Planning
• Buying
• Selling
 Planning
• Based on 2 factors
-How much the store expects to sell?
-How much inventory is needed to achieve that sales goal?

• The buyer must plans stocks so that the store image is

reflected in the merchandise.

• Preparation of 6 months buying plan with knowledge of fashion

trends, market conditions, economic factors, other records of
the past seasons.

• Flexibility is the most important factor to be kept in mind.

• Includes provision for constant adjustment to actual results.

 Buying
• Adequately stocking the department’s price lines and
securing the best possible mark ups on all purchases.

• Supervising the physical inventory or stock counts to

verify the accuracy of stock records.

• Establishing and maintaining effective buying

relationships with vendors.
 Selling

• Communication and promotional activities.

• Determining the selling features of the

merchandise for promotion purposes and the
timing of these promotions.
What is the difference
between Buyer &
Merchandiser ?
 The buyer’s role in USA includes the administrative and
financial input part also besides core buying responsibility.

 In USA buying is often a subdivision of the merchandising

team, whereas in many companies in UK, Buying is perceived
as central role and merchandising as parallel department to
buying.

 Job Details for both these profiles are different with

different organizations and are quite overlapping but all fashion
buyers are responsible for overseeing the development of
range of products aimed at a specific type of customer and
price bracket.
BUYING PATTERNS
 CENTRAL BUYING
The centralization of all buying activities from a
central headquarters with the authority and
responsibility for the selection and purchase of
merchandise limited to buyers of particular
merchandise categories
Three Forms of Central Buying
• The central merchandise plan
• The warehouse and requisition plan
• The price agreement plan
 The central merchandise plan

• Central buying assumes complete authority for

buying the assortment of goods, pricing,
warehousing and distribution to the many
stores.
• Central make their purchases and have the
merchandise delivered to the warehouse.
Buyer has an opportunity to check the goods to
be sure they have been shipped as ordered.
 The central merchandise plan
ADVANTAGES-
• It provides a steady flow of merchandise provides for
specialists in each merchandise category.
• Goods are inspected before delivery.
• It allows better stock control.

DISADVANTAGES-
• Adjustment to local conditions is difficult
• Cooperation may be lacking
• An enthusiastic selling force may be lacking
The warehouse and requisition plan
• The central buyer arranges for the initial
assortment and has the merchandise shipped
to the individual stores. Used for staple goods.

• The store manager is provided a list of the

stock that is inventoried in the warehouse
where the central buyer will see it is properly
filled.

• The store manager has the responsibility for

ordering enough merchandise to carry the store
through the buying season.
 The warehouse and requisition plan
ADVANTAGES-
• Gives the store manger some responsibility in
merchandise selection.
• Reorders or fill-ins are usually filled promptly.

DISADVANTAGES-
• There is little control over the composition of the
merchandise selection.
• Poor warehouse control may lead to an imbalance in
store inventory.
 The price agreement plan
• Central buyer working with vendors and manufacturers will
agree on the retail price, color, size, style and assortment of
staple types of merchandise as well as the terms of shipping.

• The merchandise is illustrated and described adequately in

catalog to be given to store manager.

• The central buyer is responsible for prearranging the minimum

amount of goods to be purchased by the entire chain, keeping
the store catalog up to date, adding new items, canceling old
items.

• The store manager has complete authority for the composition

of the stock and orders can be placed directly with the vendors
concerned.
 The price agreement plan
ADVANTAGES-
• It develops a feeling of responsibility on the part
of the store manager.
• Reduces the expense of warehouse and the
necessity of keeping detailed records of each
unit.

DISADVANTAGES-
• Problems arise with tardy deliveries and with
high transportation cost.
 THE PLANNING &
CONTROL FUNCTIONS

THE DOLLAR MERCHANDISE

PLAN
 Objectives

1.To satisfy the needs and wants of

customer
2.To earn profit
 Planning for the profit
Major goals of planning in retail merchandising are:
1. to maintain an inventory enough meet the anticipated
customer demand.
2. to time the delivery of purchase so that merchandise is
available for sale for customer demand.
3. to keep purchases in line with the store’s ability to pay for
them.
4. to have funds available for the purchase of new goods
when needed.

Dollar merchandise plan: it is the specific budget that the buyer

uses to project both, sales goals and the amount of stock that is
required to achieve the goals.
 Earning a profit
• Net sales are all of the sales that have been made minus ‘customer returns
and allowances’.

• Cost of goods sold is the amount the buyer has paid for the merchandise
that the store has held for that same time period.

• Gross margin is the margin of dollars between what the merchandise cost
and what it was sold for.

• Expenses is the amount of money spent to run the business. It includes

salaries, advertising, rent, heat and light.

• Profit-the amount of money that is left over after all of the merchandise that
is offered for sale has been sold and all of the expenses of running the
business have been paid.
 Earning a profit
$ %
Net sales – cost of 70,000 100
goods sold – 42,000 – 60
40
= gross margin - 28,000
expenses - 24,000 –34.3

= profit 4,000 5.7

‘Net sales – cost of goods sold = gross margin’

‘Gross margin – expenses = profit’
 Use of retail figures
Majority of departments and stores operate under the
accounting system known as retail method of inventory.

In this system, all transactions affecting the store’s inventory,

such as sales, purchases, markdowns, transfers, and return-to-
vendor, are recorded at their retail prices.
 PERIOD OF PLAN
The period plan may vary for a month to an
year. The usual planning is of six months.

– The Spring Season- Feb.- July

– The Fall Season- August- January
Procedures for Preparing the plan
The store’s accounting department supplies the buyer with a planning
form several months in advance of the start of the actual buying season

On it are figures of the same department’s merchandising operations

during the same season last year.

These goals are established by the store management, not by the

departmental buyers

The buyers then using the planning form and his knowledge of market
conditions, trends, and demand cycles, prepare figures on anticipated
sales, stocks, markdowns, and purchases for his department for the
upcoming season.
The plan made by the buyer is then reviewed by his divisional
merchandise manager.

The merchandise manager then consolidates all the plans

made by the buyers of the same division into a divisional plan
and submits it to the general merchandise manager.

All the plans are reviewed by both, the store’s controller and
the general manager or president.

when approved, departmental plans are combined into a

master plan for the whole store.
 Steps of dollar merchandise
planning
1.PLANNING SALES:
• The buyer makes a realistic estimate of prospective sales
during the upcoming season.
• Reviews past sales figures, examine external internal factors
that may effect sales, study general fashion trends that may
influence the department’s sales.
• These estimated plans are then broken down into sales goals
for each of the months.

(Ability to work with % is helpful tool, it is easier to understand the increase of

4.95% in sales than an increase from $ 24,200 to$ 25,400)
2. PLANNING STOCK

To estimate the amount of stock that will be needed to support the planned
monthly sales .

In order to support planned sales, a Beginning of Month (BOM) has to be

estimated.

Considerations influencing the planning of BOM stocks :

There must be adequate opening assortment on hand in sufficient quantity

to meet anticipated consumer demand until stock replacements for
goods sold can be secured.

The planning must be such that the desired seasonal stock turnover may
be realized , markdowns minimized, and a steady flow of new,
interesting merchandise assured throughout the month.
Variations in monthly stock goals

In planning monthly stock goals stocks should be bought to

a peak just prior to the time when sales are expected to
reach their peak

By peaking stocks before consumer demand reaches its

crest the buyer will be able to present maximum assortments
in needed styles, sizes and colors when the public is in the
mood to buy.

Similarly BOM stock plans should be reduced as a selling

season approaches its close or demand decreases.

MARKDOWNS can be used as tool of reducing inventory

as the season ends.
 Stock-sales relationships
Stores are guided by two stock-sales relationships:

1. Monthly stock sales ratio

The monthly stock-sales ratio uses the no. of months that would be
required to dispose of a BOM inventory at the planned rate of sales for the
month.It also directly relates stock requirements to the planned sales.
Stock-sales ratio = $ BOM stock / $ Planned Sales for month

10. Rate of stock turnover

Refers to the no. of times that an average stock of merchandise has been
turned into sales in any given period .

Stock turnover = $ net sales / $ average inventory

(In general the rate of stock turnover is higher in women’s apparel than in men’s
clothing or home furnishings. It is also higher in departments featuring lower
price ranges than in those featuring higher price ranges. )
 What is Average Inventory
How to calculate average inventory for
February to July Season,

BOM stocks of February till July + EOM

Stock of July / 7 =Average Inventory
3. PLANNING MARKDOWNS
 Markdowns are usually planned as a percentage of each season’s
planned sales.

 They may then be allotted to individual months, according to the

buyer’s estimates of when and to what extent the monthly
markdowns are going to be needed to sell the goods.

 The chief factors to be considered in establishing seasonal markdown

goals are:
the past experience of the store or department
comparative figures of similar stores
amount of the old stock on hand at the beginning of a new season

Markdown % is the amount of dollar markdowns taken during a

given period expressed as % of the net sales

Markdown % = $ markdown / $ net sales

4. PLANNING PURCHASES

Planned purchases means the amount of money buyer can

spend on merchandise during a given period without
exceeding the value of the inventory planned to be on hand
at the end of that period.
In most of the large stores ,purchases are planned on
monthly basis.

The planned purchase includes

Planned EOM stock
+ planned sales
+ planned markdowns = total needs for the month .

Planned purchase = total needs for the month - BOM stock

SUPPLEMENTAL ELEMENTS RELATING
TO DOLLAR MERCHANDISING
PLANNING

Many retail stores , particularly large departmentalized

stores , expand budgeting procedures beyond the four
basic elements .
Important elements are as follows:
•initial markup
•gross margins
•cash discounts earned as percentages of purchase
on sales
•rate of stock turnover
•shortage reserves
•operating expenses
Markup:
Markup is the difference between the cost price and the retail price of the
merchandise.

Retail markup % = $ retail - $ cost / $ retail

The dollar difference between the delivered cost of the merchandise

and the retail price placed on it when it is first brought into stock is
called initial markup. Retail stores plan initial markup percentages to
ensure that the income derived from sales will be adequate to cover :

• all expenses incurred in the operation of the business

• anticipated reductions in the retail value of the inventory , such as

mark downs , stock shortages, and employee discounts

• a reasonable margin of profit for the store

The planned markup should be aimed at achieving the goal figure indicated
on the dollar merchandise plan; no less or no higher.
Gross margin:

Gross margin represents the amount of money left from

sales income after deducting the total cost of
merchandise sold during that given period. It also indicates
the amount of money available to pay all operating
expenses and taxes with a reasonable profit left over.

GROSS MARGIN = NET SALES - NET COST OF

MERCHANDISE SOLD

$Gross Margin / Net Sales = %Gross Margin

Cash discounts:
Cash discounts are the percentages or premiums allowed
by manufacturers off their invoices if payment of the
invoice is made within a certain specific period of time.
Such discounts are allowed to encourage to the prompt
payments of the invoices. It is an additional income for a
store . Cash discounts increase gross margin, because
they reduce the actual cost of merchandise purchases.

Terms of sale:
The combination of allowable discounts on purchases and
the time allowed for taking such discounts is referred to
as terms of sales.
Stock shortages:

Stock shortages or overages represent the dollar difference

between the book inventory ( the value of inventory on
hand as indicated by the stores accounting records) and the
physical inventory ( the value determined by taking a
physical count ).

When the book inventory is greater than the physical

inventory there is said to be stock shortage.

When the physical inventory is greater than the book

inventory there is said to be stock overage.
THE BUYING CYCLE
 What is Buying cycle?

The key events and process in which the

fashion buyer is involved in order to buy a
garment range.
Fashion Industry traditionally splits the year into two
main seasons,

Spring/Summer- February- July

Autumn/Winter- August – January

The competitive and constantly changing fashion

business requires a more frequent introduction to
merchandise, resulting in most stores introducing new
ranges many times in between these two main
seasons. The occurrence and the names of sub
seasons vary from company to company.
Seasons Approximate Durations (with overlaps)
Spring Transition Mid Jan-End Feb 6 Weeks
Spring Beg Feb - End Mar 8 Weeks
Spring promo Beg Apr- Mid Apr 2 Weeks
Summer 1 Mid Apr-End May 6 Weeks
Summer 2 Mid May to Mid July 8 Weeks
Summer Sale Mid July to Beg Aug 2 Weeks
Autumn Transition Mid July to End Aug 6 Weeks
Autumn Beg Aug -End Sept 8 Weeks
Winter 1 Beg Oct -Mid Nov 6 Weeks
Winter Festive/Holiday Mid Oct-Mid Nov 3 Weeks
Winter 2 /Christmas Mid Nov-Beg Jan 6 Weeks
Winter Sale Beg Jan - Mid Jan 2 Weeks

Four distinct and two promotional season within each half of

annual retailing Period
• PHASES- Various ranges introduced within
the season.

• TRANSITIONALS- Ranges which bridge the

gap between one season and the next
season.
 The Buying Cycle
Review of current Season’s sales

Budget Planning

Comparative Shopping

Directional Shopping

Sourcing for product development

The Buying Cycle (Contd…)
Range planning

Garment samples sourcing for range

Pre Selection of garment samples

Price negotiation with suppliers

Final Range Selection

The Buying Cycle (Contd…)
Placing orders for ranges

Pre production sampling & approvals

Bulk garment manufacturing

Delivery of products to the retailer

Purchase by customer

Review of current season’s sales

Comparative Shopping-
 Often referred as comp. shop

 Undertaken at the beginning of each season and

continues with once a month visit

 Byers & Designers are involved

 Starts with the looking at current merchandise in the

stores of competitors which sell comparable ranges

 Report will be produced with few sketches & information

grid

 Analysis of missing important trends in own range

Directional Shopping-
 Term used for trips to gain inspiration for design concepts

 Trips depend upon the buyer’s product range & travel budget

 Buyer may visit designer RTW ranges to mass market ranges

 Makes note on key shapes, details, colors and fabric for ref.

 Buyers usually have budget to buy samples which are referred as

bought samples

 Designers may share responsibility of directional shopping with

buyers.
 Pre selection
• Time after the Range planning stage at the Buyers’ end can
be in form of the Line review/Range review meeting.

• Garments samples featuring on the Range plan are

presented. Participants are the Design, Marketing,
Merchandising and QC teams.

• Range is reviewed vis a vis:

– Styling, Colors , Price and Delivery
– Sourcing strategy regarding product and Supplier
base.
 Period after Line/ Range review
• Finalization of the Styles , suppliers, prices for the Final
Range.
• Involves:
• Informing suppliers regarding the styles which
have been included in the final Range.
• Change in styles if any.
• Price re-negotiations
• Order Delivery dates re-negotiations.
• Styles dropped.
• Request for additional samples if required for the
final range review meeting by the buyer.
 Final Order Placement
After the Final Range Selection meeting, orders
are placed with the suppliers in form of sending
Purchase orders /Purchase sheets for each
individual items selected to be on the range.
These may be generated by the Merchandising
department or by a separate Purchase
department.
Critical path/Time and Action Calendar for
the buyer
The key activities and the timelines associated with them,
for processes like product development and production of
any item forms the critical path or the Time and Action
calendar.

By virtue of the T&A the various activities involved in

the Product development/Production processes and
the responsible party is fixed
 Critical paths for product development, production &
delivery (Time & Action Calendar)

Style no. Style Supplier & Lab dip/strike Trim approval Fitting
Description Country of Origin off approval Sample
approval

Size set Bulk fabric & Pre production Bulk Ex factory Due in
approval trim approval sample approval production warehouse
MANAGING MERCHANDISE
ASSORTMENT
 MERCHANDISE ASSORTMENT
•It refers to a collection of varied types of related merchandise
that are intended for the same general use.

• A merchandise assortment is usually grouped together in one

selling area of the store.

• Assortment plan is a compressive and detailed listing of all the

merchandise that will carry in stock during a given period,
classified by size, type, and price line.

•A balance assortment is in which types, quantities, and price

lines of merchandise in inventory closely match the demand of
your target customers.
 DEVELOPING TAILOR MADE
CLASSIFICATION SYSTEM
To evaluate the classification system according to the
department buyer and customer needs we discuss
below
• the purpose of classification,

• explanation for the setup classifications where there is

no existing system.

• Examining how the classifications of a fashion

department is unique.
PURPOSE OF CLASSIFICATION
CLASSIFICATION is :
An assortment of units or items of merchandise which are all
reasonably substitutable for each other REGARDLESS of
who made the item, the material which it is made, or the part
of the store in which it offered for sale.

REASONS FOR SUBDIVIDING MERCHANDISE INTO

CLASSIFICATION

– To precisely define the NATURE and extent of customer

demand so that merchandise is readily available to satisfy
that demand.
– It provides with a means of better PLANNING and
CONTROL of the merchandising operation.
ESTABLISHING CLASSIFICATIONS AND SUB-
CLASSIFICATIONS
• Begin the process of setting one up by listing every item at every price line
that is currently in stock and also those which were in stock during the
preceding 12 months.

• Next sort out the listed items by classification or end use.

• After one has established broad classifications on the basis of END USE
and non substitutability, one continues to set up sub classifications.
• For merchandise planning and control purposes, each classification and sub
classification is assigned a permanent identification code, usually a number.
The code of classification consists of a fixed range of consecutive
numbers. each sub classification is assigned a specific range of
numbers within the wider range assigned to the broad classification.

• All price lines within departments price range are represented in the
assortment plan
The best selling price lines are appropriately represented with the
widest variety of types, colours, materials and sizes.
Duplication of merchandise has been minimized, if not prevented.
“DOES THE SYSTEM REFLECT
THE WAY IN WHICH THE
CUSTOMERS BUY
MERCHANDISE?”
 TAILORING THE
CLASSIFICATION SYSTEM
• If majority of your Customers ask for merchandise by COLOUR , FABRIC,
and SIZE you can put the store brand merchandise together with that of a
number of different DESIGNERS within the same SUB CLASSIFICTAIONS.

• IF
– EXAMPLE: if customers look for blue wool pants in size 10,then you
make classification of all pants together and under it sub classification of
all wool pants.
– CONCLUSION: DNKY, CK etc would be in the same sub classification.

• HOWEVER
– EXAMPLE: If customers look for Calvin Klein pants in size 10.
– CONCLUSION: All CK pants would be in one SUB classification. And
DKNY pants into another ,and all other pants into another.
APPAREL
SOURCING
Suppliers of Fashion Goods

Suppliers of Fashion Goods

Suppliers from Domestic Market Suppliers from Foreign Markets

Buying trips abroad to market

Local Manufacturers
& Manufacturers
Importer wholesaler
Foreign Buying Office
Exporter Foreign selling agents
Foreign trade fairs
Resident buying Office
Import trade fairs
 Advantages of Domestic
Manufacturers
• Delivery
• Proven specification
• Availability of merchandise in selected quantities
• Availability of reorder
• Very close control on the merchandise planning
and production
• Accommodation of changes due to any reason is
easy
• Planning and control of stock relatively easy
• Permit the stock adjustment to new trends
BUYING FOREIGN
MERCHANDISE
Objectives Of Foreign Buying

Prestige- image store

& Uniqueness

Better quality

Lower cost

Specification buying
Foreign Buying Problems

Variation of quality standards

Deliveries and reorders

Size discrepancy

Monetary problems

Time involved

Other conditions
 Other Problems
• Language Barriers

• Unethical practices (e.g. Child Labor)

• Political unrest
Methods Of Buying Foreign Merchandise

Domestic sources Foreign sources

Domestic importers Liaison Offices

Resident buying office Foreign buying offices

Foreign selling agents Direct Exporters

Import trade fairs

 Domestic Importers/Wholesalers
• Stockers of foreign merchandise
• Prove to be more useful for smaller stores
• Goods can be bought closer to the time of need
• Risk involved lies with the importer
• Costs higher than direct buying
• Offers less exclusivity
• No concessions are offered
• Very small qty. of merchandise can also be
purchased.
• Sells through showrooms or directly from
warehouse
 Resident Buying Office (RBO)
• RBO situated in the same place where the retailers are.
• RBO has many retailers as their members.
• RBO also offers trend inputs in forms of periodicals and
catalogues to the members.
• Goods are sourced keeping the member stores and their target
customers in mind.
• The orders can be large or small as they can absorb
• Group purchasing plan is also offered which lowers the cost for
the participants.
• Commitments must be made far in advance of the selling
season
• Risk & problems of off shore sourcing are managed by RBO.
 Foreign selling agents
• They are a group of foreign manufacturers who may or may
not carry stock in the importing country.

• They make periodic trips abroad to be up to date with the

foreign market developments.

• Buyer can actually see the merchandise with the styling and
uniqueness.

• Orders need not be large as many orders are compiled

together before sending

• No guarantee of quality standards, size discrepancies etc.

 Import Trade Fairs
• Fairs organized in the importing countries with the goods
from the exporting countries

• Some trade fairs feature the fashion merchandise of only

one country, such as Italian Donna Moda.

• Although there is an advantage in being able to view so

many lines in one place, because of space limitations ,most
manufacturers can only show a small portion of what they
can manufacture.
 LIAISON OFFICE
• Store owned foreign buying offices
• Located in major fashion centers & in exporting bases of
the world
• Advise buyers about new trends
• Accompany buyers on their market visits acting as
interpreters and planning market itineraries
• Because of their broad & strong base in the local market
they get the best resources according to the need of the
buyer
• Function as a follow up service to ensure prompt delivery
and quality control
• Each liaison office works as a separate profit centre
• Types of stores that have such offices are – GAP,NIKE
 Foreign Buying Offices
• Generally located in a major city of the foreign buying area and
facilitates indirect exporting
• They are independent buying agencies and are also known as
Foreign Commissionaires
• They work for many buyers/retailers
• They often organize buyer manufacturer meet in their offices
and also take the buyers to visit manufacturer's’ facilities.
• They must have very strong vendor base with them.
• They do not make purchases for the client unless authorized to
do so
• The client pays them fee usually a percentage of the first cost
• They then follow up to make sure the delivery is made on time
and the quality is checked
 Direct Exporters
• The manufacturer- exporter undertakes the entire
export process.
• Increases its profit margin by saving on payments to
an intermediary
• Develops a closer relationship with the overseas
buyer.
• Cost of establishing another market may overweigh
the monetary benefits of direct exporting
• The exporter may be exposed to more direct risks.
 MERCHANDISING
RESPONSIBILITIES IN
BUYING & EXPORT
HOUSES
 Export House

• Coordinator of all activities at the manufacturer's

end
• Correspondence with buying Agencies
• Could be handling many buyers at a time
• Takes care of PD, sampling, costing, negotiations,
delivery schedules, production planning, fabric and
trim orders, regular follow up.
• Sources of information are limited as compared to
buying house merchandiser
• Is directly responsible for the merchandise
• Ensuring inspections and quality levels.
 Buying House
• Could be looking after one account/ one
division of a buyer but many vendors
• Product exposure is much more
• Depends for all information on vendors
• Are responsible for- PD, sampling, costings,
negotiations,delivery schedules, production
planning
• Responsible for vendor selection and
development