Merchandising

(1)

FASHION

(2)

Fashion Industry- Levels of

Merchandising

• Retail Organization Merchandising

• Buying Agency Merchandising

(3)

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}

(4)

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

(5)

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

(6)

Merchandising - involves 6 rights

• Right Merchandise

• At Right Price

• At Right Time

• At Right Place

• In Right Quantity

• With Right Promotion

(7)

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.

(8)

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

(9)

THE CARDINAL SIN OF

FASHION MERCHANDISING IS

TO BE OUT OF TREND

(10)

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

(11)

INTERPRETING

CONSUMER DEMAND

(12)

TARGET MARKET

BUYING MOTIVATIONS

(13)

Identifying Target Market

Behavioral Psychographic

Demographic

Market

(14)

Demographic Segmentation

Mainly grouped on the basis

of:-• Population

• Age

• Income

• Sex

• Occupation

• Education

(15)

Geographic Segmentation

Mainly grouped on the basis

of:-• Cities

• States

• Regions

(16)

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.

(17)

Behavioral Segmentation

Grouped on the basis of opinion on

specific products or

services-• Rating of usage of products & services.

(18)

DETERMINIG WHY CUSTOMERS

BUY

BUYING MOTIVATIONS

RATIONAL MOTIVATIONS EMOTIONAL MOTIVATIONS

•Durability •Dependability •Comfort •Economy of Operation •Price •Imitation •Emulation •Prestige •Pride of Appearance •Distinctiveness

(19)

FASHION PURCHASES

 _{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}

SPECIFIC SELECTION FACTORS

(20)

_{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}

(21)

FASHION RETAIL

ORGANISATIONS

Organizational Structure &

Responsibility

(22)

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

(23)

Various Fashion Retail Businesses

Three basic

Formats-• The Small Single- Unit Store

• The Departmentalized Store

• The Chain Store

(24)

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.

(25)

Stock holders Board of Directors

President

Vice President and General Manager

Merchandising division GMM Sales Promotion Division Sales Promotion Manager Finance and Control Division Treasurer & Controller Operating Division Store Superintendent Personnel Division

Personnel Director Branch storesExecutive in charge of branches

STAFF

Legal counsel research department STAFFOther advisory services

-BUYING OFFICES -COMPARISON BUREAU -DIVISIONAL MANAGERS -department managers -assistant buyers -sales people -FASHION COORDINATORS -HOME PLANNING BUREAU -ADVERTISING DEPARTMENT -artists -copywriters -direct mail -layout

-radio & television -DISPLAY DEPT. -Interior displays -sign room -ACCOUNTING OFFICE -a/c payable -cash office -general a/cing -inventory taking -insurance & taxes -payroll office -sales audit -statistical -CREDIT OFFICE -ADJUSTMENTS -ARCHITECT’S OFFICE -CUSTOMER SERVICE -sales people -service desk

-telephone & mail orders -bridal registry -DELIVERY -ELEVATORS -MAIL DIVISION -EMPLOYMENT OFFICE -interviewing -placement -termination -HOUSE ORGAN -PERSONNEL BUDGETS -PERSONNEL TESTING -RECORDS & REVIEWS -budgets & records -job analysis -Audit -credit -store planning -maintenance -receiving -transfer of merchandise -employment training -merchandising -sales planning -advertising -displays

(26)

The Merchandising Division

General Merchandise Manager (GMM)

Divisional Merchandise Manager (DMM)

Merchandise Managers (MM) Buyers Assistant Buyers Trainees Hard Line Soft Line

(27)

Qualities of a Fashion Buyer

• Dedication

• Enthusiasm

• Awareness

• Stamina

• Foresight

• Creativity

• Product Knowledge

• Decision-making skill

• Mathematical ability

• Communication skills

• Negotiation skills

• Managerial skills

(28)

Work Area of a Fashion Buyer

• Liaising with suppliers (immediate vendor)

• Liaising with internal departments

Quality Control/Tech Finance

Marketing/PR Retail Sales people

Fabric technology Design

Buying Colleagues

(29)

THE BUYER’S JOB

• Planning

• Buying

• Selling

(30)

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.

(31)

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.

(32)

Selling

• Communication and promotional activities.

• Determining the selling features of the

merchandise for promotion purposes and the

timing of these promotions.

(33)

What is the difference

between Buyer &

(34)

 _{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.

(35)

(36)

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

(37)

Three Forms of Central Buying

• The central merchandise plan

• The warehouse and requisition plan

• The price agreement plan

(38)

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.

(39)

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

(40)

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.

(41)

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

(42)

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.

(43)

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.

(44)

THE DOLLAR MERCHANDISE

PLAN

THE PLANNING &

(45)

1.To satisfy the needs and wants of

customer

2.To earn profit

(46)

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.

(47)

• 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.

(48)

Net sales – cost of goods sold = gross margin - expenses = profit 70,000 – 42,000 28,000 - 24,000 4,000 100 – 60 40 –34.3 5.7

Earning a profit

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

(49)

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

(50)

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

(51)

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

(52)

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.

(53)

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.

(54)

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,

(55)

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.

(56)

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. )

(57)

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

(58)

(59)

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

(60)

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 .

(61)

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

(62)

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.

(63)

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

(64)

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.

(65)

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.

(66)

(67)

What is Buying cycle?

The key events and process in which the

fashion buyer is involved in order to buy a

garment range.

(68)

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.

(69)

6 Weeks Mid Nov-Beg Jan

Winter 2 /Christmas

3 Weeks Mid Oct-Mid Nov

Winter Festive/Holiday

6 Weeks Beg Oct -Mid Nov

Winter 1

8 Weeks Beg Aug -End Sept

Autumn

6 Weeks Mid July to End Aug

Autumn Transition

2 Weeks Mid July to Beg Aug

Summer Sale

8 Weeks Mid May to Mid July

Summer 2

6 Weeks Mid Apr-End May

Summer 1

2 Weeks Beg Apr- Mid Apr

Spring promo

8 Weeks Beg Feb - End Mar

Spring

6 Weeks Mid Jan-End Feb

Spring Transition

Approximate Durations (with overlaps) Seasons

(70)

• PHASES- Various ranges introduced within

the season.

• TRANSITIONALS- Ranges which bridge the

gap between one season and the next

(71)

The Buying Cycle

Review of current Season’s sales

Budget Planning

Comparative Shopping

Directional Shopping

(72)

Range planning

Garment samples sourcing for range

Pre Selection of garment samples

Price negotiation with suppliers

Final Range Selection

(73)

Placing orders for ranges

Pre production sampling & approvals

Bulk garment manufacturing

Delivery of products to the retailer

(74)

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

(75)

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}

(76)

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.

(77)

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

(78)

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

(79)

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

(80)

Critical paths for product development, production & delivery (Time & Action Calendar)

Due in warehouse Ex factory Bulk production Pre production sample approval Bulk fabric &

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

(81)

MANAGING MERCHANDISE

ASSORTMENT

(82)

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.

(83)

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

(84)

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

(85)

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

(86)

• 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.

(87)

“DOES THE SYSTEM REFLECT

THE WAY IN WHICH THE

CUSTOMERS BUY

MERCHANDISE?”

(88)

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.

(89)

APPAREL

SOURCING

(90)

Suppliers of Fashion Goods

Suppliers from Domestic Market Suppliers from Foreign Markets

Local Manufacturers Importer wholesaler

Exporter Foreign selling agents Resident buying Office

Import trade fairs

Buying trips abroad to market & Manufacturers

Foreign Buying Office Foreign trade fairs

(91)

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

(92)

BUYING FOREIGN

MERCHANDISE

(93)

Objectives Of Foreign Buying

Prestige- image store & Uniqueness

Better quality Lower cost

(94)

Foreign Buying Problems

Variation of quality standards Deliveries and reorders

Size discrepancy Monetary problems

Time involved Other conditions

(95)

• Language Barriers

• Unethical practices (e.g. Child Labor)

• Political unrest

(96)

Methods Of Buying Foreign Merchandise

Domestic importers Resident buying office Foreign selling agents Import trade fairs

Domestic sources

Liaison Offices

Foreign buying offices

Foreign sources

(97)

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

(98)

• 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.

(99)

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.

(100)

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.

(101)

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

(102)

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