Buying
Terms
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- Total amount the retail buyer paid for the goods
- Cost
- The difference between cost and the retail price
- Markup
- Markup on one item or SKU
- Individual Markup
- Markup is established by the Component Addition Method
- Cost Plus Method
- Markup found on multiple units
- Gross Markup
- Markup that doubles the invoice cost of the item to acheive the retail price
- Keystone Markup
- The markup that can be achieved after adjusting for the charges of servicing the goods (alt. or cash discounts)
- Maintained Markup
- When initial markup is based on actual sales
- Gross Margin
- Markup calculated for groups of items w/ different markups at a point in time
- Cumulative/Average Markup
- Markup calculated using the initial retail price of all items at a point in time
- Initial Markup
-
Actual retail sales
(adjusted for markdowns and other losses) - Net Sales
- Difference between the total cost of purchases and total retail dollars of all merchandise in stock at a given time
- Cumulative Markup
- levels used for groups of merchandise to help the consumer discriminate among the similar items
- Pricelines
- Items sold at wholesale cost or below
- Loss Leaders
- Cost, Markup and Retail
- Retail Price Elements
- Equated with net sales, indicating the amount of sales for the business.
- Sales Volume
- Formal document- gives financial overview of the retail business- also called income statement or operating statement
- Profit and Loss Statement
- Profit before taxes
- Net Profit
- Net profit after taxes
- Bottom line
- Occurs when gross margin is too small to cover the operating expenses
- Loss
- Sum of the cost of doing business, except for cost of goods ex- Salaries, rent
- Operating Expenses
- Wholesale cost of the item(s)
- Cost of goods
- Initial sales, without refunds or price reductions
- Gross Sales
- Amounts that are used to reduce the retail price of the item ex-damaged
- Allowances
- Expenses that occur in preparing the merchandise to be places on the floor or sold to a SPECIFIC customer
- Alterations
- Reductions in the billed costs that retailers recieve when the bill is paid on time
- Cash Discount
- Retailer has some control in through choice and supervision to reduce or retain these expenses
- Controllable expenses
- Special reductions in the retail price of items sold by the business to the employees of the business
- Employee Discounts
- expenses that remain the same for every period
- Fixed Expenses
- Expenses that can be attributed to a department, function or special activity
- Direct Expenses
- General expenses that are incurred from running the total business and are not directly caused by any one activity
- Indirect Expenses
- Include the elements of customer returns, employee discounts, markdowns, and stock shortages
- Reductions
- Inventory that is lost, stolen, or damaged
- Stock Shortages
- Cost of moving the goods from the vendor's warehouse
- Transportation
- Expenses that change with the volume of sales or stock or time of year
- Variable expenses
- Long range plan to guide decisions about the retail matrix, merchandise assortment, quality, fashion level, and presentation
- Merchandise Policy
- Wide array of product classifications, but few items within each class
- Broad and Shallow
- Pricing policy of the business ex- full price or discount
- Pricing strategy
- Listing of vendors, manufacturers, or other suppliers who provide merchandise for the retail business
- Retail Matrix
- Total mix of merchandise that is carried by the retailer
- Merchandise assortment
- value of how fast merchandise moves through a store
- Stock Turn
- Combination of floor stock and backroom stock
- Stock-on-hand
- stock that has been ordered from the manufacturer/vendor but has not yet been recieved by the retailer
- Stock-on-order
- the amount of stock that is generally carried in the store during a select period
- Average Stock
- provides a constant supply of merchandise or back up inventory
- Basic Stock
- Level of stock at the beginning of the month
- Beginning of Month (BOM)
- Level of stock at the end of the month
- End of the Month (EOM)
- lead to lost sales and will offset the benefits of higher turn - empty looking
- Stock outs
- Method for calculating planned sales where the size of the selling floor is measured and multiplied by an estimate of dollars per square foot
- Square Foot Method
- Relate stock requirements to planned sales and are an indication of the dollars of inventory needed to sell one dollar of merchandise
- Stock-Sales Ratio
- Method of planning stock using predetermined ratios for estimating stock relative to sales
- Stock-Sales Ratio Method
- Method of planning stock that uses a constant level of stock and adds an amount for sales
- Basic Stock Method
- A working document that the retailer uses to transition from the expanded P&L statement to the assortment plan for shopping in the market
- Six-month Plan
- used to indicate the wholesale value of the merchandise and are called OTB
- Planned purchases at Cost
- Amount of merchandise that can be brought into stock during a given period
- Planned purchases at Retail
- When actual values that are transcribed through the store activities are comparable to the values created in the plan
- Meet Plan
- An organized collection of related merchandise which includes specifications for brands, colors, sizes, and material
- Assortment plan
- Merchandise classification system that is most commonly used
- Outline format
- Merchandise classification system that diagrams the interrelationship across all parts
- Tree format
- Sort products by distincttive features and provide structure and organization for a collection of items
- Merchandise Classification
- When retailers use a set figure as a goal or a comparison point
- Benchmark
- technique where the buyer examines the cost, retail sale, and markup of the items that are sold by a retailer
- Unit control
- Type of dating with no cash discount. Used when vendor doesn't know the retailer or retailer has bad credit
- Cash on Delivery (COD)
- Start time for the dating when no other dates are given- most common type
- Date of Invoice (DOI)
- The cash discount period begins when the retailer recieves the goods
- Receipt of Goods (ROG)
- Dating starts with the end of the month and the invoice is to be paid within the specified number of days after the end of the month that the goods are invoiced
- EOM- End of Month
- Dating that extends credit for additional days in which to receive the discount
- X dating
- Advanced dating that indicates the goods have been "postdated" to allow for the shipment or to allow extra time for the discount
- "as of"
- Time when the full amount of the invoice is due "n/30"
- Net Period
- Discount applied if the invoice is paid before the end of the cash discount period- considered a bonus for early payment
- Anticipation
- An additional invoice discount the buyer can negotiate
- Loading
- To write the purchase order and leave it with the vendor
- Drop Paper
- Shortcut method for finding the final discount price without calculating all of the net values
- On Percent Method
- Discounts given when the buyer purchases a large number of units within one SKU
- Quantity Discounts
- Shopping for the best vendor and purchasing merchandise from that vendor
- Sourcing