A key element of a retail buyer’s job is knowing the strategies behind making a ‘good’ offer. There are many factors involved in determining whether a deal is beneficial for a company, with things like brand reputation and seasonality impacting this decision.
Here Randi Tutelman, Senior Business Development Analyst at INTURN provides valuable insight into a retail buyer’s profession, explaining how a buyer evaluates an offer, the process in which counter offers are made, tips for negotiating and retail buyer best practices.
How does a retail buyer know whether an offer is worth opening?
A lot of retail buyers waste time opening offers that aren’t so good, so how do you know if the offer is worth it? Typically, retail buyers view 10+ offers a day on Microsoft Excel. This means that they must search for product images by Googling style numbers. The information that they find is in all different formats (PDF, Excel, Google, etc). The beauty of viewing offers on INTURN is that buyers have all this information in one place, in one format.
When retail buyers open an offer, the first few things they check for are:
- Brand recognition (will people know this brand?)
- Type of product (do people want this now?)
- Demand for the product (is it high enough?)
- Whether it is within budget (do I have the open-to-buy?).
- *If the answers are all yes, the buyers will then calculate the mark up or margin they would ideally like on the merchandise.
After this initial assessment, they look more closely at the offer to further determine the profitability of the offer.
- Depth: What sizes are the product available in? Is there a mix of each size? Are there enough units in each size?
- Category: Is the type of product something that merchandises well in the store? Is it right for the store’s clientele?
- Seasonality: Is it winter or summer – will buying coats now make sense at the end of winter? (Even though INTURN deals with off-price, if a brand offers coats in the summer, a buyer wouldn’t necessarily want them to sit in the warehouse for a long time.)
- Size of the store: Is there enough product to fill the store? Or fill stores in multiple locations?
What is the process of making an offer?
- Retail buyers should first check prior purchase history for that brand. Have they worked with the brand before? This is easily accessed on the INTURN platform, as it tracks all the history for current and ended offers and then allows buyers to sort this information based on purchased goods, what worked, etc. This gives the buyers extra insight into how to best negotiate with a brand.
- When retail buyers work with a new brand, they know to start with a smaller budget, testing out the quantity and quality of the products to make better future decisions with that brand.
Do you have any tips for negotiating?
- Know your upper limit: how much you are willing to spend on the merchandise, starting with the lower amount first.
- When determining prices for counter offers, work backwards; define your most needed inventory and consider what prices you would resell them for in your own marketplace. Then, counteroffer on either a unit or total price level based on your target margins.
- Usually the first counter offer is the final price point; however, retail buyers are always looking for the best deal, so why not try for it?
- Speak directly with the brand. This helps drive conversation and builds the brand relationship, as well as providing buyers with valuable product information that affects the final purchase amount. For example, a buyer may be willing to purchase X amount after receiving the original offer, but after learning that one of the products in the offer was a best-seller, the buyer may be willing to purchase more.
- Be upfront regarding the shipping, payment, and cancel dates before diving into the nitty gritty details of the offer. If there is an incompatibility due to the shipping restrictions, taxes, etc., it’s best to not waste time working with that brand.
What should you not do as a retail buyer?
- Do not ignore the seller even if the deal is not going to work. Always give feedback and be responsive: do not just say “not interested” to an assortment. Instead, give a reason as to why. Is it because of price? Is the assortment not strong enough? Is it not a category you’re interested in buying now? This feedback is important, not just for that one offer, but for the relationship between the buyer and brand. You never know, you may want to work with them in the future.
A retail buyer’s profession comes with a number of responsibilities and we’ve just skimmed the surface of these complexities. However, if followed correctly, these tips can help retail buyers have more successful purchases and save time.