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