FASHION BUYING & MERCHANDISING ESSAY
Critically assess the benefits and the drawbacks of centralized buying within large high-street fashion retailers. What measures would you recommend to overcome the drawbacks?
1,576 words
GEORGIA COLLINS
00124773
FASHION TECHNOLOGY FT3
FASHION BUYING & MERCHANDISING E18BM
ANDREW GRIEVE
In the fashion industry centralised buying is used by many retailers, typically by larger High-street brands. Centralised buying or purchasing is a single buyer or buying department within a retail organisation that makes the purchases for all departments, to simplify the buying process. The company can use in-sourcing to maintain control over certain key elements of the organisation such as the buying function, manufacturing or transportation of products. Capital normally used to pay quotas, tax and transport fees will be saved.
Alternatively, it can be outsourced to a retail cooperative that effectively uses bulk purchasing power to get products, raw materials or merchandise at a cheaper rate, in special deals or with an applied discount. Essentially, by using this method of buying economies of scale are effectively utilised.
Both in-sourcing and outsourcing can be used within the organisation, leading to vertical integration where the supply chain of the organisation is owned by the company itself. For example, Zara own factories in Spain that produce materials used to manufacture garments, allowing them to dye or add special
Costco buys the majority of its merchandise directly from manufacturers for shipment either directly to Costco’s selling warehouses or to a consolidation point where various shipments are combined so as to minimize freight and handling costs. As a result, Costco eliminates many of the costs associated with multiple step distribution channels, which include purchasing from distributors as opposed to manufacturers, use of central receiving, storing and distributing warehouses, and storage of merchandise in locations off the sales floors. (1)
Cue is an Australian fashion retailer, which has been in operation since 1968. The company opened its first story in Sydney, but has since opened a number of shops across the country. The retailer focuses on fashion, which is creative, innovative and youthful. The company has become one of Australia’s most loved and Marie Claire readers awarded it with the title of the Best Australian Fashion brand in 2015-2016.
That being said, suppliers can have some power in regards to choosing the number of stores where their product can be purchased at. This allows the suppliers to regulate their sales and stay away from the “red tape”. The bargaining power of customers impacts HBC as customers are able to influence pricing based on their buying habits. Of course, customers do not choose the retail prices offered to them, however, if inexpensive clothing were to lead the industry, retail stores would adapt to this consumer demand and offer an abundance of inexpensive clothing due to consumer preferences. These forces lead to rivalry among competitors due to the many options offered to consumers to grant their desires. These forces combine to cause strategic implications for HBC. HBC must differentiate itself from its competitors who, similar to HBC, have large annual revenue, strong and profitable supplier agreements and large amounts of capital. As well, due to competitors large sale volumes, competitive pricing is an implication which faces
One of the most successful clothing brands in the world, Polo Ralph Lauren has built its success around more than just its line of luxurious designer clothes, but the company is one of the top marketing designers also. It was awarded “ Luxury Brand of the Year” in 2010 by the Luxury Daily. A company that was founded by a man named Ralph Lifchitz, better known as Ralph Lauren of the Bronx, New York in 1968. Since the age of 12, Lauren’s had a strong appeal and taste for looking classy. He would spend the money he earned working with his father after school, purchasing expensive suites. In his latter years, while working for a company called A. Rivetz & Co., Lauren began designing wide ties, the beginning of what latter evolved into the
Corporate values are ‘the operating philosophies or principles that guide an internal conduct of the organization and its association with its clients, partners and shareholders’. It is also a fundamental and long-lasting belief that specific mode of conduction highly valued by the organization’s membership’ according to IBM corporate responsibility report (2002, What is the value of company).
Clothing styles have always had a close connection to developments in clothing creation. The two are inextricably linked by public demand, fabric availability, and the wealth of people to afford them. Even back to the Industrial Revolution and Renaissance, when people began to have more clothing choices, one can see the relationship between what the people need or want and what the manufacturers create.
Bargaining Power of Buyers: The bargaining power of buyers is high in the department store retail industry. The volume of buyers is high, and buyers are very price sensitive in this industry. The products are not highly differentiated, and there are numerous stores that offer the same, or similar, products, giving buyers the opportunity to search for the lowest prices and information. The industry has substitutes available in the form of specialty, differentiated products and stores. This increases the power of buyers,
Vertical integration – when you choose to produce raw materials and/or distribute finished goods themselves rather than rely on independent suppliers, factors and agents for these tasks
λ TFC has to develop a unique strategy and differentiate its products to prevent copies.
b. Does the issue of branded vs. private label enter into this consideration? Why or why not?
Whittington, E. (2006).The Only Game in Town, Purchasing Single/Sole Source Goods Effectively. Retrieved from: https://www.instituteforsupplymanagement.org/files/Pubs/Proceedings/HDWhittington.pdf
One of the most heavily discussed topics, in this last decade, is the environmental decay of our planet. Diverse concepts have materialized in order to find solutions for the problem. Ecology and sustainable growth have been confirmed to be the main solutions currently. Innovations for sustainable growth include: creation of hybrid cars, recycling and minor discharge of carbon dioxide in factories among others (Christ 23). Environmental awareness was also introduced to the world of fashion, unfortunately, it wasn’t very successful; lately there has been a change of situation and that is what we are going to attempt to understand.
In comparison to competitors, Zara’s business strategy, in regards to strategic partnerships and cost of production, provide for a strategic competitive advantage. Zara, unlike its competitors such as Gap, Benetton, and H&M, does not use Asian outsourcing. Eighty percent of Zara’s materials are manufactured in Europe, with 50% made in Zara controlled facilities in the Galicia region of Spain near headquarters. Most of Zara’s competitors have 100% outsourcing to cheap Asian countries. Though the cost of production in Spain is 17-20% more expensive than Asia, Zara does have a competitive advantage over its competitors in regards to operations. The local strategic partnerships that Zara maintains with manufacturers in Europe allow for a product throughput time of 3-4 weeks from conception to distribution. To make this happen, the company designs and cuts its fabric in-house and it acquires fabrics in only four colours to keep costs low. The proximity of these suppliers gives Zara great flexibility in adapting their product lines based on up to date market trends and consumer behaviour. It also decreases costs of holding inventory. Zara’s competitors, through outsourcing to Asian countries such as China, sacrifice the benefits of proximity for low labour and production costs.
Marketing planning involves looking at all angles, the best strategy that will enable a company utilize it resources efficiently. Organizational resources are scarce and thus planning become inevitable. Analyzing the marketing requires adequate knowledge with proper strategies to seize opportunities that exist. Market planning requires that organization understand their internal and external environment. Internal
Being an upscale industry, Abercrombie and Fitch would appear to be a successful corporation. Although the company was once successful for a number of years, it’s apparent that there has been a significant decline in its overall appeal and how much revenue the company acquires each year. With just over 1,000 retail stores in the U.S., Canada, and Europe, Abercrombie and Fitch has thrived to be one of the most avid corporate extensions.