The Buying Function and the Buying Cycle in Retail
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What is Buying Function?
The basic role of a buyer (retailer) is to find, evaluate and select merchandise for the retail store.
In this process, the retailer needs to cultivate sources for which suitable merchandise can be secured for the retail organization.
The Buying Cycle
The buying cycle starts with determining the requirement of the product that needs to be stocked in the retail stores, this is followed by the process of selecting suppliers.
Having determined the quantity that needs to be purchased and suppliers to source it from, then it needs to move forward to actually placing the order.
The person, who is to take buying decisions for a retailer organization must be aware of the consumer needs and wants.
An understanding of buying process is necessary. Apart from this, a clear understanding is also necessary of what products are actually selling and where.
An interaction with the sales staff is also needed, as they can offer valuable insights into why a particular product is selling or not selling.
Factors affecting the Buying Function
1. Size of the Retail Operation
The size of retail organization majorly affects the buying function.
How big is the retailer? Is it a small operation with a single e-commerce website, or is it a major retail conglomerate with stores worldwide and websites in every language?
In case of a small retail outlet, the owner might take this responsibility.
However, as retail organization expands its business product management becomes more complex and the number of people involved in the buying function will grow.
2. Separation of Duties
Separation of duties is common in mid-size and large retail operations.
Often, buying, planning and selling may be separate tasks and responsibilities for a variety of reasons, from security to specialization.
When the same person is not taking care of all three parts of the merchandising equation – buying, selling and planning – retailers need to consider how that could impact overall merchandising efforts.
However, In case of small retailers all these duties are assigned to a single person. Thus, it's crucial that retailers take into account who is doing what at their companies.
3. Shopping Channel
Another key consideration of merchandising is the shopping channel.
Nowadays, consumers have a number of options when it comes to how they want to shop – online, through television, in-store, via mail catalogs, etc.
While retailers should offer all of these options to customers, it's important they have the merchandising strategy in place to support this initiative.
On the other hand, web-based initiatives can be executed in near real-time.
Buying Function – Examples
Nike Footwear
Nike sources footwear from 191 footwear factories located in 14 countries.
Virtually all of the footwear is manufactured outside of the United States by over 15 independent contract manufacturers, which often operate multiple factories.
For fiscal 2021, contract factories in Vietnam, Indonesia and China manufactured approximately 51%, 24% and 21% of total NIKE Brand footwear, respectively.
The company also has manufacturing agreements with independent contract manufacturers in Argentina and India to manufacture footwear for sale primarily within those countries.
Walmart
Walmart Commits to Sourcing $10 Billion of India-Made Goods Each Year by 2027.
Stating India’s continuing rise as a global hub of manufacturing, Walmart in 2020 announced that it will triple its exports of goods from India to $10 billion each year by 2027.
The sourcing will entail developing hundreds of new suppliers in categories such as food, pharmaceuticals, consumables, health & wellness, general merchandise, apparel, homeware and other key Indian export categories.
Walmart has sourced goods from India for more than 20 years, supporting local suppliers to help upgrade their operations and meet international standards.
This video is on Buying Functions and it has the following sub-topics.
Time Stamps
0:00 What is Buying Functions?
1:06 The Buying Cycle
1:55 Factors affecting the Buying Function
3:22 Buying Function – Examples