Kobe University Repository : Kernel

Buyers in Big Retailers : Their Source and Content of

Title
Information
Author(s) Ogawa, Susumu
The Annals of the School of Business Administration,
Citation
Kobe University, 38: 77-87
Issue date 1994
Resource Type Departmental Bulletin Paper / 紀要論文
Resource Version publisher
URL http://www.lib.kobe-u.ac.jp/handle_kernel/81003669

Create Date: 2011-12-13

 BUYERS IN BIG RETAILERS: THEIR SOURCE
AND CONTENT OF INFORMATION
SUSUMU DGA WA *

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 'self-
merchandising' (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)
78 S. OGAWA

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 uncer-
tainty 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 name (in 1990)

1 ITOYOKADO
2 DAIEI
3 MARUI
4 SEIBU DEPARTMENT STORE
5 TAKASHIMA Y A
6 NICHII
7 MITSUKOSHI
8 SEIYU
9 DAIMARU
10 JUSCO
11 ISETAN
12 MATSUZAKA Y A
13 NAGASAKIYA
14 UNII
15 TOKYU DEPARTMENT STORE
16 HANKYU DEPARTMENT STORE
17 SOGO
18 YOKOHAMA TAKASHIMA Y A
19 KINTETSU DEPARTMENT STORE
20 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.
 BUYERS IN BIG RET AlLERS 79

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".
80 S. OGAWA

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-lus-
trated in figure 1. Following this, we describe the source and content of
information conveyed between them.

Figure 1 Buyer Contact

Textile
Manufacturing
Company

Apparel
Manufacturing
Company

Buyers in the
Same Company
Buyers in
Other Companies
(Not Competitors)

v---- Upstream

D -------- Downstream
 BUYERS IN BIG RETAILERS 81

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-chan-
dising 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.
82 s. OGAWA

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 merchan-
dising 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
 BUYERS IN BIG RETAILERS 83

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,
84 s. OGAWA

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
 BUYERS IN BIG RETAILERS 85

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 informa-
tion about the merchandise categories which the company doesn't sell.
Attributes of goods in one category cannot be determined inde-
pendently. 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
 86 S. OGAWA

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
• information about the latest fashions T
foreign countries
• 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.
 BUYERS IN BIG RETAILERS 87

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.