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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

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Chapter 2 l.jpg

CHAPTER 2

THE ROLE OF RETAIL PRODUCT MANGAGERS


Learning objectives l.jpg
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


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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 retailer

    • Centralised

    • Dedicated personnel

    • Buyers control large sums of money

    • Buyers interact with other people who are involved with RPM



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RPM PROCESS STAGE 1: VIEWRECOGNITION OF RETAIL CUSTOMER NEEDS

  • Recognition of new product requirements

  • Tracking existing customers’ requirements

  • Information sources available:

    • internal sales data

    • trade publications

    • consumer publications, special interest mags.

    • suppliers

    • market research

    • competitor analysis


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RPM PROCESS STAGE 2: VIEWWRITE 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


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RPM PROCESS STAGE 3: VIEWSEARCH 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 l.jpg
RPM PROCESS STAGES 4 and 5: VIEWSPECIFY 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 Performance

    • of product e.g. sales, profits etc.

    • of supplier e.g. on time, delivery accuracy

    • includes qualitative measures e.g. customer feedback



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LIMITATIONS OF TRADITIONAL BUYING PROCESS MODELS VIEW

  • 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


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CONSUMER-LED RETAIL PRODUCT MANAGEMENT VIEW

  • 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


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TRADITIONAL BUYING ORGANISATION VIEW

Insert Figure 2.2a


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CONSUMER-LED BUYING ORGANISATION VIEW

Insert figure 2.2b


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CENTRALISED RETAIL BUYING ORGANISATIONS (Figure 2.5) VIEW

= Flow of products

= Flow of information

Buying

& M

Marketing

Logistics

Human

Resource

Management

CENTRAL HEAD OFFICE

Stores

International

Operations

Finance

Non-Store

Operations

Property

International

Distribution

Centre

Call Centre

Stores

Suppliers

Customers


Centralised decision making advantages disadvantages l.jpg

Buying power VIEW

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

CENTRALISED DECISION MAKING:ADVANTAGES & DISADVANTAGES


Buying organisation roles the buying director l.jpg
BUYING ORGANISATION ROLES: VIEW 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 l.jpg
BUYING ORGANISATION ROLES: VIEW 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


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BUYING ORGANISATION ROLES VIEW: 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 l.jpg
BUYING ORGANISATION ROLES: VIEW 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 l.jpg
BUYING ORGANISATION ROLES: VIEW 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


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BUYING ORGANISATION ROLES: VIEW 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


Buying organisation roles the buying assistant l.jpg
BUYING ORGANISATION ROLES: VIEW The Buying Assistant

  • 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


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ADDITIONAL BUYING DECISION MAKERS VIEW

  • Technologists

  • Quality Controllers

  • Product Developers

  • Corporate Designers

  • Logistics managers


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THE BUYING COMMITTEE VIEW

  • 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


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THEORETICAL ROLE VIEW

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

THE RETAIL ‘DMU’


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DESIRABLE ATTRIBUTES IN RETAIL PRODUCT MANAGERS VIEW

  • Analytical

  • Good communicator

  • Objective

  • Product knowledge

  • Degree


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THE BUYING GROUP VIEW

  • 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


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