Kobe University Repository : Kernel

タイトルTit le Buyers in Big Retailers : Their Source and Content of Informat ion

著者Author(s) Ogawa, Susumu

掲載誌・巻号・ページCitat ion

The Annals of the School of Business Administrat ion, KobeUniversity,38:77-87

刊行日Issue date 1994

資源タイプResource Type Departmental Bullet in Paper / 紀要論文

版区分Resource Version publisher

権利Rights

DOI

JaLCDOI 10.24546/81003669

URL http://www.lib.kobe-u.ac.jp/handle_kernel/81003669

PDF issue: 2020-08-18

BUYERS IN BIG RETAILERS: THEIR SOURCE AND CONTENT OF INFORMATION

SUSUMU DGA W A *

Introduction

Since the late 1980's, it has been common among big retail firms for different persons respectively to perform either buying or selling. Among them, the question, "What is the role of a buyer?" is more significant than before. This is shown by the emphasis on 'self­merchandising' (jishu - MD in Japanese) in department stores and on the role of the supervisor or distributor in supermarkets.

Little academic research has contributed to solving the problems derived from these phenomena. Their focus was only on the discounted price as the result of the organizational separation of buying and se11-mg.

From what we can notice, this separation in the department stores doesn't seem to be done only for the purpose of getting a price reduction. We have to reconsider the effects of the organizational separation of buying and selling. Therefore, in this paper we focus on the behavior of the buyer.

Specification of the Problem

Annual retail sales of apparel in Japan for 1990 is 12 trillion 300 billion yen. l The sum of the top 20 retail firms' annual sales in 1990 is 4

* Assistant Professor, School of Business Administration, Kobe University. 1. Senken Shinbunshya Henshyukyoku, YOKUWAKARU APPAREL GYOUKAI,

Nippon Jitsugyo Shuppanshya, 1992, 34p. (in Japanese)

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trillion 519 billion and 500 million yen. 2 Therefore, the top 20 market share in the retail annual sales of apparel is 36.7 percent. 3 This means that big retail firms playa significant role in the Japanese retail market of apparel. It is through the buyers of the top 20 retail firms that about 40 percent of clothes in Japan are distributed.

Next, we look at the apparel's market share in the department stores or supermarkets. According to the Nikkei Distribution Newspaper (September, 1992), the share is 41 percent in department stores and 22 percent in supermarkets. It is highest in department stores and second highest in supermarkets. Judging from these data, the performance of the department store or the supermarket depends on the buyers of an apparel division.

Furthermore, the apparel market is characterized by high uncer­tainty in at least three ways. First, seasonal variation in the demand is very large. 4 Coats don't sell in summer and T-shirts don't sell in winter. Second, the duration of the demand of a specific good is very

2. The Top 20 retail companies are:

ranking 1 2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19 20

name (in 1990) ITOYOKADO DAIEI MARUI SEIBU DEPARTMENT STORE TAKASHIMA Y A NICHII MITSUKOSHI SEIYU DAIMARU JUSCO ISETAN MATSUZAKA Y A NAGASAKIYA UNII TOKYU DEPARTMENT STORE HANKYU DEPARTMENT STORE SOGO YOKOHAMA TAKASHIMA Y A KINTETSU DEPARTMENT STORE IZUMIYA

3. Seken Shinbun Henshyukyoku(1992), 37p. 4. In this paper, we define uncertainty as the gap between the amount of information the

buyer requires to perform buying activities and the amount of information he/she actually has.

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short. Third, the amount of a good demanded greatly vanes among geographical locations. In this situation, apparel buyers have to perform buying activities.

In Japan, apparel buyer behaviors have a great impact on both distribution of the entire apparel industry and each firm's performance. Also, each buyer has to cope with relatively high uncertainty. In this situation, how do apparel buyers behave? What is the characteristic of apparel buyer behavior? The purpose of this paper is to answer these questions. In this paper, we try to answer these questions in terms of sources and content of information which buyers in big retailers utilize.

Methodology

To answer these questions, this pilot study sought in-depth data from relatively few sources as opposed to superficial data from many sources. As the relevant population, the study chose the largest department stores and supermarkets in Japan. Personal interviews with buyers of the ladies' wear division were conducted in nine department stores and four supermarkets of the twenty-six largest retailers in terms of ladies' wear sales. 5 In all, forty interviews were conducted.

We chose the ladies' wear division because the ratio of its sales to the whole clothing sales is the highest in both department stores and

5. The name of the companies we interviewed, their ranking in ladies' wear sales, and their retail type are:

ranking name retail type' (in 1990) 1 MARUI D 2 TAKASHIMA Y A D 4 SEIBU DEPARTMENT STORE D 6 DAIMARU D 7 DAIEI S 8 ISETAN D 11 NICHII S 13 SOGO D 14 HANKYU DEPARTMENT STORE D 15 JUSCO S 18 KINTETSU DEPARTMENT STORE D 25 IZUMIYA S 26 HANSHIN DEPARTMENT STORE D

."D" means "department store" and US" means "supermarket".

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supermarkets in Japan.

Results

From the interviews, we found that apparel buyers usually try to keep in contact with diverse types of persons. The relationship is il-lus­trated in figure 1. Following this, we describe the source and content of information conveyed between them.

Buyers in Other Companies (Not Competitors)

Figure 1 Buyer Contact

Apparel Manufacturing

Company

Buyers in the Same Company

Textile Manufacturing

Company

v -------- Upstream

D -------- Downstream

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I. Vertically Upwards

The first characteristic of apparel buyers is the contact with persons of upstream manufacturing companies. There are three patterns in terms of personal contact. The first one is the contact with sales department persons of apparel manufacturing companies. The second one is the contact with merchandising (MD) department persons of the apparel companies. The third one is the contact with persons of textile manufacturing companies.

H. Contact with Sales Department Persons of Apparel Companies

First, the information buyers can collect through contact with sales persons of apparel manufacturing companies is the data about sales of their competitors. Buyers seek to collect the information about goods which are selling well at the shops of their competitors or goods which are not at them. Through this contact, buyers can also get the information about sales and their growth rate of goods in which the competitor and the apparel manufacturing company deal.

Furthermore, buyers can obtain the information about sales promotion of the apparel manufacturing company at other retail shops. This type of information is important since buyers can compare their company with their competitors and can decide which goods to buy as soon as possible.

Second, buyers can collect the information about the future merchandising or sales promotion plans. The information is what plan each apparel company has in the future merchandising or sales promotion, and what plan their competitor has in the future mer-chan­dising or sales promotion in terms of the goods of the apparel company in question.

m. Contact with Merchandising(MD) Department Persons of Apparel Manufacturing Companies

Persons of apparel companies whom buyers contact are not always sales persons. Buyers are ready to contact the persons of the merchandising department. The majority of buyers think that this type of contact is the most important.

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We found three types of information which buyers can collect in contact with the persons of MD departments.

The first type of information is about the trends of goods in question. The trends are about color, pattern, material, design, price, and sales performance of the goods. This type of information is the most common kind accumulated in the MD department.

The second type of information is about next year's plan for merchandising. Buyers collect this type of information and utilize it to plan their next year merchandising or sales promotion. As a result, the negotiation between the sales person and the buyer can go more smoothly.

The third type of information is about production of the apparel company. The content is the capacity of its factory, the interval between manufacturing and selling, or the potential of production adjustment. This type of information is important for buyers when they decide the timing of merchandise introduction or sales promotion and the quantity to buy.

The contact with MD persons has another advantage for buyers. It is that buyers can be involved in the merchandising phase of the manufacturing company and can communicate their concepts to MD persons. As a result, buyers' concepts can be incorporated into goods.

IV. Contact with the Persons of Textile Manufacturing Companies

Furthermore, buyers try to follow a stream upward to its source. They try to contact the persons of the textile manufacturers.

The contact with the persons of the textile manufacturing companies has two meanings for the buyers.

First, the contact means that before buyers plan their merchan­dising or sales promotion, or decide which goods to buy, buyers can collect the information of the material which apparel manufacturing companies plan to purchase. The content of information is "Which apparel manufacturing company has the plan to purchase a certain kind of material?", "What kind of material is a certain apparel company purchasing?", or "What kind of pattern are most of the apparel companies planning to sell?" Buyers can utilize this type of information to plan their merchandising or sales promotion before they contact the persons of apparel manufacturing companies. They would like to use

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this type of information to have an advantage in contact or negotiations with the persons of apparel companies.

Second, the contact means that buyers can find potential apparel companies to transact business with, and also, they can find out who their competitors will be. The contact with the textile manufacturers can inform buyers about apparel manufacturing companies with which the buyers have never transacted business and whose sales are recently increasing. Since the apparel company transacts business with other retail types or companies, the buyer can also find their potential competitors.

V. Information from Abroad

Buyers collect information not only in Japan but also from abroad. It is said in Japan that sources of information about ladies' wear are foreign countries. For example, the material exhibition in Paris, or pret-a-porter collections in Paris, London, and New York have a great impact on the trend of the apparel industry. Therefore it is important for buyers to contact the persons of the apparel industry in these countries.

VI. Vertically Downwards

Buyers also try to contact downstream persons. We found two types of contact with downstream persons. First, buyers contact the sales manager or sales persons of their firm. Second, they contact consumers at their shops or on the streets.

From the data stored through the cash register, buyers can obtain information about the past sales such as the category of the good which sold well, its quantity, its price, or when it sold. However, buyers emphasize the importance of dialogue between themselves and the sales persons, and they are ready to contact the consumers at their shops. The reason is that the dialogue and contact provide the buyers with information which the buyers can't obtain from the data stored through the cash register.

A certain buyer said, "The data stored through the cash register are the mere result of sales. " Furthermore, he said, "Let us suppose that a red article of clothing is bought. There are various red colors,

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and therefore, if we don't see it, we can't know which red color it actually is. Let us suppose that ten articles of clothing were bought. Even if we refer to the data stored through the cash register, we cannot know whether one customer bought all ten articles or ten customers bought them respectively. We also cannot know why the customer

bought the article. The reason might be for taking a walk or for going to a party. We have no other means to obtain such information than the dialogue with sales persons or the contact with the customers at our shops. "

Buyers also try to see the usage situation of their merchandise. To do so, they often observe the consumers on the streets.

Buyers believe that there is information which they can obtain only at their shops and/or on the streets and that such information is important to order the articles or make their future merchandising plans.

VII. Contact among Buyers

In addition to persons on the vertical positon, buyers actively contact persons in the various fields. For example, editors of fashion magazines or marketing consultants are included in these fields. We will take up the contact among buyers since we think it the most important of the various contacts.

Buyers in question have three types of contact with other buyers. The first type is contact between the buyers in their company. The second type is contact with a buyer in other companies which are not their competitors. The third type is contact with a buyer in the other companies which are their competitors.

VI. Contact between Buyers in the same Company

First of all, contact between buyers in the same company makes it eaSIer for the buyer in question to contact vertically upstream persons. This is related to the reason why the persons of textile manufacturing companies or apparel companies are willing to contact retail buyers.

First, the textile manufacturing companies seem to have the following reason. It is said that not until after two years IS a new

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material developed by a textile manufacturing company widely distributed in the retail market. The company introduces the new material to the retail market as a test two years before. The new material is sold as a brand of each apparel company in the retail market. Each textile company wants to know the information about the extent to which its or its competitor's new material is selling in the retail market. It is the retail companies that have the most information about it.

Second, persons of merchandising(MD) departments make plans for their goods to be distributed after a year. From sales department persons in their company, they can obtain much information about the demand for their own goods and their competitors' goods. However, it is difficult for the apparel manufacturing company to obtain informa­tion about the merchandise categories which the company doesn't sell.

Attributes of goods in one category cannot be determined inde­pendently. Each attribute closely interrelates with that of goods in other merchandise categories.

For example, in a certain merchandise category, it is said that articles with design tendency of pret-a-porter in the previous year have a good demand. It is also retail companies that have such information.

Therefore, the contact with buyers in different merchandise categories is very important for buyers in question to utilize their own strength and improve the predictability of their market demand.

]X. Contact with Buyers in other Retail Companies

Buyers actively contact buyers in other retail compames. They frequently contact buyers in the companies which are not their com petitors.

For example, when department store buyers in Osaka make plans to sell their merchandise in winter, they contact and ask ones in Hokkaido about the demand of their merchandise in Hokkaido since it becomes cold there earlier than in Osaka.

Furthermore, in formal places (such as an exhibition) and/or in informal places (such as a bar) buyers also contact buyers in other companies which are their competitors. Each of them confirms the agreement or disagreement about the market needs in their location and their plans of merchandising or sales promotion, although they don't

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talk about the details of the plans. Lastly, we will sum up the source and content of information

which buyers in big retailers utilize, in table 1.

Table 1 Source and Content of Information which Buyers in Big Retailers Utilize

source content

textile manufacturing company • sales of materials bought by apparel manufacturing companies with which the retail company in question transacts business. T

• sales of materials bought by potential apparel manufacturing companies with which the retail company in question doesn't transact business. T

• demand of new materials in the retail market. W

MD (merchandising department) • trend of attributes of goods T persons • sales of goods T

• the apparel company's plans of merchandising T • information about production T • the retailer's future plan of merchandising W • plans of merchandising in other merchandise categories

W . • sales of g'ood in other merchandise cate~ories W

sales department • sales of other retail companies T persons of apparel • sales of other apparel manufacturing companise W manufacturing company • next season plans of merchandising which the company

in question has T,W • sales of goods made by the apparel manufacturing

company W

foreign countries • information about the latest fashions T • usage situation of clothing T

sales department • daily sales T persons of retail • circumstances at the time when their goods are bought T company in question • consumer motives for purchasing T

• apparel manufacturing companies' future plans of merchandising W

• sales of goods in other stores of their own company (or other retail companies) W

consumers • usage situation of clothing T • attributes of consumers T • consumer motives for purchasing T

buyers in the company • plans of merchandising and sales about other merchandise of the buyer in question categories which the buyer doesn't purchase T

• plans of their merchandising and sales about the goods which the buyer purchases W

buyers in other retail companies • sales of goods in each location T,W (not competitors) buyers in other retail companies • information about the market needs of the specific location (competitor) T,W

* In the above table, the mark "T" means that the information flows from the persons whom the buyer in question contacts to the buyer, and "W" means that the information flows from the buyer to the persons whom the buyer in question contacts.

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Concluding Remarks

In this paper, we tried to clarify the source and content of information which buyers in big retailers utilize when they make their decisions related to buying activities. We found that the buyers contact diverse types of persons and obtain different information from each person.

However, we have not yet found the answer of the following questions: "Who is the most important source of information when buyers perform their buying activities?" or "What type of information do high performance buyers utilize?" These are the next questions that we must answer in the future.

Received September 1,1993.