Comparing Merchandising planning across Retail Brands vs. Manufacturers vs. Buying Offices
Merchandising plans stay different for all three sectors in the clothing supply chain. They play different roles, but their coordination is essential for each. While doing this, they form a unique position for themselves, from manufacturers producing suitable clothing that meets the demands of the industry.
These clothes are usually sent to buying offices, where they store them. Buying offices are intermediates in the supply chain. Retailers buy these clothes and supply them to customers. They aim to create many sales and attract as much clout as possible.
In this blog, we’ll explore the differences between the plans formed by these sectors. If you need to know a merchandising plan or want a recap, read our blog (insert a link to appropriate blogs).
Table of Contents
#1. Key focuses
Key focuses are different for all three sectors as they are targeting different consumers. Retailers focus more on sourcing clothing that is trending amongst their customers. The merchandising plan focuses more on retailer demands and needs.
Moreover, retailers try to provide a seamless experience for consumers. For manufacturers, the merchandising plan drastically changes as the merchandise planning becomes more production-oriented.
The manufacturer’s primary goal is to deliver products on time and of acceptable quality that meet the retailer’s demands.
Merchandise planning involves very well-analyzed logistic knowledge to maintain costs. Apparel manufacturers may consider consumer choices, especially when choosing designs, but volumes and quality depend more on retailer demand.
In this case, the buying offices are trying to balance these functions. They source from manufacturers and supply to retailers. Hence, they focus on negotiating terms with retailers and trend-based sourcing from manufacturers.
#2. Inventory management
Inventory management is a significant factor in business, especially clothing. Predicting demands is very beneficial. For example, when retailers notice a sudden hike in demand for product A. They’ll try to keep them available in their inventory. If they run out of product A, the consumers will go to the retailer’s competitors.
No one wants to lose ready business. Hence, retailers try to manage their inventory based on demand-driven data. What’s new and in trend is more of their focus.
On the other hand, manufacturers do not stock clothing but raw materials. They calculate their investments and try to avoid overinvesting. For buying offices, this process is again to align production and demand.
#3. Pricing strategies
Pricing strategies for retailers are more consumer-oriented. The retailers analyze the demand and competition in the market when they set prices. Retailers use this competitive benchmarking method in order to predict their profit margins and also keep the retail prices aligned with the target audience.
The strategy towards pricing is different regarding manufacturers, as they set wholesale prices. There is a minimum purchase unit set of how many clothing pieces a retailer should buy from them.
The prices of these units are not only set to cover the production cost but also profit them. Buying offices, meanwhile, should set up deals so that all three sectors profit. Their pricing strategy usually includes trying to negotiate prices with manufacturers and favourable terms so that when retailers receive these items, they benefit.
#4. Promotional activities
Promotional activities are essential to reach more people and generate more sales. Retailers have a more direct approach as they are targeting the customers. They plan discounts, sales, loyalty programs, and in-store unique experiences. Retailers are usually collaborating with manufacturers. Manufacturers could also give bulk discounts or make retailers stock more clothing. This strategy is called trade promotion. Buying offices don’t do as many promotions but collaborate with the retailers. However, they bring in more stock if the retailers are selling or promoting a new clothing line.
In conclusion, the three sectors are very different and have different goals. However, having a clear understanding of these differences and how to work across different sectors to create a strategythat will result in a successful clothing line should be your end goal.
Conclusion
We hope this list of Merchandising planning across Retail Brands vs. Manufacturers vs. Buying Offices gave you a good starting point for you to build something that stand the test of times. If you are looking to start a clothing brand, we recommend that you read our guide – how to start a clothing brand.
If you have already started a fashion brand and you are looking for suppliers, do read our guide on how to find clothing manufacturers and do not forget to download our checklists. If you want to get in touch with us, please connect with us here.
We also have a separate section – Commonly asked questions about the most expensive clothing brands, it is worth checking out.
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Learn more:-
- Merchandise planning for buying offices
- Role of Merchandise planning in Manufacturing – key differences from Retail
- Why Retail Merchandising plans focus on consumer trends
- How to create a merchandising plan for a retail brand
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