The Buyer
This person is responsible for selecting merchandise, capturing trends, and driving profitable sales and gross margin.
The Fashion Buyer
Sales before customer returns, markdowns, or other reductions are deducted.
Gross Sales
The difference between the cost of merchandise and its retail price.
Markup
A reduction to the selling price of a product.
Markdown
The amount of merchandise available for sale.
Inventory
This type of merchandise is replenishable and may be reordered weekly, every other week, or monthly based on selling patterns.
Basic Merchandise
A department has Gross Sales of $80,000 and reductions of $12,000. What are Net Sales?
$80,000 − $12,000 = $68,000
What pricing strategy establishes an original retail price and then frequently promotes merchandise at a lower price?
High/Low Pricing.
What are the four analytical criteria buyers use when determining markdowns?
Outdate, Weeks of Supply, Sell-Through Percentage, and Build.
What is the difference between Physical Inventory and Book Inventory?
Physical Inventory is based on an actual count of merchandise, while Book Inventory is based on record keeping of inventory transactions.
A customer purchases a jacket online and chooses to pick it up at a nearby store. What omnichannel service is the customer using?
BOPIS — Buy Online, Pick Up In Store
What are two ways a buyer can increase Gross Margin?
Increase sales and/or decrease COGS.
What pricing strategy establishes predetermined prices for similar products within a classification based on historical selling prices?
Price Lining.
A product has high Weeks of Supply and low Sell-Through. What does this tell the buyer?
The product is selling too slowly, and the buyer should consider a markdown to accelerate sales.
Name 3 things that reduce inventory.
Any 3 of: sales, markdowns, employee discounts, returns to vendor/manufacturer, or transfers to other locations.
A buyer is comparing several vendors to determine which has the right merchandise, price, quantity, and delivery. Which step of the Five-Step Buying Process are they completing?
Evaluate Alternatives
Why would a buyer compare Actual Sales to Planned Sales and Last Year's Sales?
To evaluate performance and identify whether sales are trending above or below expectations or previous performance.
Why might a retailer intentionally sell a product at a lower-than-normal price even if it does not achieve the normal markup plan?
It may be used as a loss leader to attract customers, with other merchandise helping balance the markup plan.
Give 4 reasons a buyer might take a markdown.
Any 3 of: driving sales/traffic, freeing open-to-buy, slow-selling merchandise, correcting buying errors, broken assortments, planned promotions, pricing errors, late product, or end-of-season clearance.
A store's book inventory says it has 12 dresses, but the physical inventory count finds only 10. What is the retailer experiencing?
A shortage.
A buyer says, “I personally hate this trend, so I'm not buying it,” even though reports show strong customer demand. What major buying principle is the buyer ignoring?
The customer should be central to buying decisions / Buyers must remain objective rather than buying based on personal preference
A department has strong sales, but its COGS is also very high. Why might the buyer still be concerned?
High COGS reduces Gross Margin, so strong sales do not necessarily mean the department is highly profitable.
Name at least 4 factors a buyer should consider when setting retail prices.
Any 4 of: wholesale cost, Gross Margin/profit goals, competitors' pricing, MSRP, historical markdowns, business expenses, supply and demand, the economy, or relationships between departments/categories
Why would a buyer prefer an effective in-season markdown instead of waiting until end-of-season clearance?
An in-season markdown can accelerate sales and reduce remaining inventory, helping minimize more costly clearance markdowns later.
When a retailer experiences an inventory shortage, what happens to COGS, Gross Margin, and overall profitability?
COGS increases, while Gross Margin and overall profitability decrease.