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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
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 retailerCentralisedDedicated personnelBuyers control large sums of moneyBuyers interact with other people who are involved
with RPM
Figure 2.1 A traditional view of the organisational buying process, adapted to retailing Recognition of retail customer need Write specification of product to satisfy need Search for a supplier that can produce a product that meets specification Choose supplier that meets supply requirements Specify the order (time, quantity, delivery) Evaluate performance of product and supplier
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 publicationsconsumer publications, special interest mags.suppliersmarket 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 manufacturer’s 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 Performanceof product e.g. sales, profits etc.of supplier e.g. on time, delivery accuracy includes qualitative measures e.g. customer feedback
Buy Class New task Modified re-buy Straight re-buy Stages Recognition of retail customer need
Yes No No
Write specification of product to satisfy need
Yes Maybe No
Search for supplier to produce specified product
Yes Maybe No
Select supplier Yes Maybe No
Specify order Yes
Yes Yes
Evaluate performance of product and supplier
Yes Yes Yes
Adapted from: Davies (1993:66)
COMPLEXITY OF BUYING TASKS: Table 2.1
Table 2.2 Buying Committees - Advantages and Disadvantages
Advantages:
Buying is sanctioned by the highest authority, so the decision is not that of the
individual, but of the whole organisation.
The cumulative experience of many senior people within the retailer is brought to
the decision-making process.
Experts can be called upon to make a contribution on specific aspects of the
decision.
Disadvantages:
Gathering the committee takes time, so buying opportunities may be missed
Senior individuals may use their status to force their personal opinions through the
committee process.
Different members of the committee will have different areas of expertise and
different knowledge gaps, which may make consensus difficult and lead to
conflict.
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 customer’s
purchasing; anticipating future needs through research and analysis (pull rather than push approach)
Brings management of demand close to management of supply
TRADITIONAL BUYING ORGANISATION
Insert Figure 2.2a
CONSUMER-LED BUYING ORGANISATION
Insert figure 2.2b
CENTRAL HEAD OFFICE
Marketing Logistics HumanResource
Management
International Operations
Non-StoreOperations
PropertyFinance
Buying& M
Stores
Suppliers
DistributionCentre
Call Centre
International
Customers
= Flow of products
= Flow of information
CENTRALISED RETAIL BUYING ORGANISATIONS (Figure 2.5)
Stores
CENTRALISED DECISION MAKING:
ADVANTAGES & DISADVANTAGES
Buying power Buyers become
specialists Aggregated sales data
for better forecasting EOS Control Consistency Store personnel free
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
Buyer’s assistant / buying administrative assistant / buyer’s 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
BUYING ORGANISATION ROLES: The Buying Assistant
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
influencer
buyer
decider
gatekeeper
RETAIL ROLE
customer, represented by sales personnel or market research
technologists, designers, product developers etc.
buyer, assistant buyer or category manager
merchandise director
merchandise manager or assistant buyer
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