Buying is the lifeblood of the retail operation. Without the proper merchandise, retailers wouldn’t turn the profits needed to make the business prosper and ultimately expand. Because of this, most buyers are paid excellent salaries, with some earning more than executives in other fields. In order to make certain that the buyers are performing as expected, they are regularly evaluated by their superiors, the divisional and general merchandise managers.
Specifically, evaluation is based on one or more of three criteria. They are sales figures, inventory levels, and margin results.
Sales volume is expected to increase according to reasonable goals that have been established by the merchandise managers. They are figured not only in terms of dollars, but also in units sold. Most major retailers evaluate effectiveness by sales per square foot.
2. Inventory Levels
A careful inspection of inventory figures will reveal indicators of buyer effectiveness such as stock turnover (the number of times in a period the average amount of inventory on hand is sold), how much merchandise has been left in the inventory past the expected selling period, and how much has been carried from one season to the next.
3. Margin Results
Such factors as initial markup (the difference between original cost and what the merchandise has been marked to sell for), the maintained markup (the actual selling prices after discounts have been taken to move slow sellers), and the department’s profit are just some of the margin considerations on which buyers are judged.
Those who successfully achieve the goals that have been established for them usually have the opportunity for promotion to the level of divisional manager, and in some cases, the highest position on the merchandising team — general merchandise manager.