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CASE 35
Rustin Steib, Kelsey Robinson, Amanda Mayeux, Christian Pohlman
TREADWELL DEPARTMENT STORE
Traditional department store founded in 1898 by Oliver Treadwell in the American Southwest
Symbolized the spirit of the Southwest maintaining exclusive merchandise related to the region
Provides moderate to better apparel, accessories, and home furnishings
Concerned with maintaining image of company as well as profitability of firm
TREADWELL DEPARTMENT STORE
18 branch stores located at major cities in Colorado, New Mexico, Utah, and Arizona Central distribution
Buying offices and distribution center in Phoenix, AZ
TIFFANY BRENTWOOD
She has been promoted to buyer of women’s sleepwear and loungewear
She successfully managed the intimate apparel and children's department at the Santa Fe branch for four years
She also held position of assistant buyer for children’s sleepwear and accessories for one year.
Her long term professional goals include becoming a divisional merchandise manager and store manager
TIFFANY AS A NEW BUYER
Tiffany wants to enhance images of the Southwest yet maintain profitability
She has sought out unique merchandise that will reinforce Southwestern image for Treadwell’s
She believes this style is not a passing fad in this part of the country and would be a staple item in her department
MERCHANDISE
Merchandise found is pajamas, nightshirts, and tunics with matching leggings
MERCHANDISE
Merchandise features Southwestern motifs and traditional Native American blanket designs
Garments made of 100% cotton knit and produced in fashionable colors
MERCHANDISE
Found similar styles and colors of merchandise were available from two different domestic vendors: Southwest Specialties- L.A based vendor J.C. Enterprises- local Phoenix vendor
VENDOR 1: SOUTHWEST SPECIALTIES- Requires minimum order of $5000 at cost Offers terms 3/10, net 30 Does not provide transportation costs
Estimated to be $4.50 per dozen garments Rumor of trucking strike by independent
truck lines in region Willing to participate in cooperative
advertising program Assures merchandise will be in stock and
available for reorder
VENDOR 2: J.C. ENTERPRISES-
Local vendor No minimum purchase Will deliver merchandise for free Also offers terms 3/10 net 30 Not willing to share costs in cooperative
advertising because it is a small company
Cannot guarantee immediate delivery- needs 48 hour delivery notice
TIFFANY’S INITIAL ORDER
Quantity Style Southwestern Specialties
Cost
JC EnterprisesCost
12 dozen Pajamas $174/ dozen $180/ dozen
6 dozen Nightshirts $150/ dozen $155/ dozen
20 dozen Tunics $117/ dozen $120/ dozen
15 dozen Leggings $117/ dozen $120/ dozen
SOUTHWESTERN SPECIALTIES COST
Pajamas: 12 dozen@ $174/dozen=$2088
Nightshirts: 6 dozen @ $150/dozen= $900
Tunics: 20 dozen @ $117/dozen=$ 2340
Leggings: 15 dozen @ $117/dozen=$1755
Total: 53 dozen = $7083.00 Shipping ($4.50/dozen) = $
238.50 Grand total =$ 7321.50
J.C. ENTERPRISES COST
Pajamas: 12 dozen@ $180/dozen=$2160 Nightshirts: 6 dozen @ $155/dozen= $930 Tunics: 20 dozen @ $120/dozen=$ 2400 Leggings: 15 dozen @ $120/dozen=$1800
Total: 53 dozen =$7290.00 Shipping (free) =$ 0 Grand total =$7290.00
BOTH OFFER 3/10, NET 30
3/10 net 30: 3% discount if invoice is paid within 10 days, in not paid within 10 days, no discount given and total is due in 30 days
Southwestern Specialties Cost
Total: $7321.50
Discount: $ -219.65 New Total: $7101.85
J.C. Enterprises Cost
Total: $7290.00
Discount: $ -218.70 New Total: $7071.30
PROBLEM
Which vendor should Tiffany choose? Southwest Specialties or J.C. Enterprises?
Southwest Specialties
J.C. Enterprises
OPTION 1
Choose Southwest Specialties and pay total of $7101.85 for merchandise
Pros: Immediate re-order Cooperative advertising
Cons: Pay for shipping
additional $238.50 Possibility of trucking strike
Southwest Specialties
J.C. Enterprises
OPTION 2 Choose J.C. Enterprises and pay total of
$7071.30 for merchandise Pros:
Local vendor in Phoenix No extra charge for shipping
Cons: Does not share in advertising
costs Cannot guarantee immediate
delivery Need 48 hour delivery noticeSouthwest
Specialties
J.C. Enterprises
OPTION 1- NO THANK YOU
Vendor in LA Uncertainties in transportation and delivery
More expensive option Pay extra for shipping Risk of trucking strike
Would they reimburse us for the cost of shipping if a strike did occur?
No need for cooperative advertising Merchandise is sleepwear and a staple good,
neither of which are commonly promoted
OPTION 2- YES PLEASE!
Local vendor Merchandise can go straight from vendors
distribution center to Treadwell’s distribution center
Cheaper option Free shipping No risk of trucking strike
As buyers we CAN control shipping, so it shouldn’t be something that is an uncertainty
As buyers we have enough uncertainties in choosing apparel that will sell, don’t need added uncertainty of merchandise NOT arriving in stores
QUESTION FOR CLASS
Can you think of a third option for Tiffany?
Our third option: Tiffany has yet to explore international
vendors and the advantages they offer Tiffany then needs to compare domestic
sourcing vs. international sourcing
DOMESTIC SOURCING
Advantages Faster lead time available Usually have better credit terms Know American styles and sizing Higher quality in assembly- attention to detail
Disadvantages Higher cost of goods due to
Higher labor costs Greater factory and utility expenses
Fewer options because decline in apparel manufacturing in U.S.
INTERNATIONAL SOURCING
Advantages Low cost to manufacture High quality of material
Cotton from India is world renowned
Disadvantages Early purchase commitment required
Long lead time needed for guarantee of delivery Unfamiliar with western style motifs Quota and customs restrictions Sizing differences and consistency Unforeseen delivery problems
Shipping delays, weather problems, dock strikes
OPTION 3
Tiffany researches foreign vendors and their pricing options
Tiffany then re-evaluates her 3 option Southwest Specialties J.C. Enterprises Foreign vendor
OPTION 3- NO THANK YOU Disadvantages of foreign sourcing outweigh
the advantages Use of foreign vendors doesn’t support
Treadwell’s philosophy of selling American produced goods
Job she possibly couldn’t do alone Might need to hire a team to facilitate foreign
sourcing Added employees would be a greater expense than
what it is saving the company on merchandise cost
SOURCES
Clodfelter, Richard. Retail Buying, From Basics to Fashion. 3rd. New York, NY: Fairchild Books, 2008. 334-350. Print.
http://www.theacademylb.com/?tag=native-geometry http://calivintage.blogspot.com/2009/11/native-
american-inspired.html http://www.hipsterwifehunting.com/2010/08/13/
indian-summer-fashion-friday-part-2-hipster-appropriation-of-native-american-culture-for-fashion/
http://www.worldatlas.com/aatlas/infopage/fourcorn.htm