Week 3: The Fashion Buyer & Consumer Buying Behaviour Lecture

Week 3 THE FASHION BUYER CONSUMER BUYING BEHAVIOUR White board Is a degree a necessary trait for a fashion buyer career? Why? Why not?  ANSWER WHY IS A DEGREE NECESSARY Yes most retailers prefer a degree You ne...

Week 3 THE FASHION BUYER CONSUMER BUYING BEHAVIOUR White board Is a degree a necessary trait for a fashion buyer career? Why? Why not?  ANSWER WHY IS A DEGREE NECESSARY Yes most retailers prefer a degree You need to skills in understand merchandising, marketing, sales, personnel management and retailing You require Drive Ambition Ability to work under pressure Ability to see what is the next trend Creativity Human resource skills Communication, leadership Merchandise knowledge Analytical ability Computer literacy Retail experience desired  WHY NOT Without a degree Opportunities could exist through working up in a retail environment to assistant buyer however most retailers require a degree and most buyers would have gone on a management training programme The management training programme gives an overview of all the areas within the retail environment and allows the trainees to develop the skills necessary to move into trainee buying roles Harrods management training course Is ‘vision’ something that retail buyers need for their jobs? WHITE BOARD EXERCISE Yes because…. No because...  BUYERS VISION Yes vision is needed The buyer must always be looking ahead to next season or to next year Consumer demand and fashion trends change constantly you need to anticipate that before it occurs In business most profit is made by the retailer that has the merchandise first IF NO VISION If you just kept doing the same as you did last year it leads to failure  CENTRALISED BUYING Occurs when all buying activities are performed from the retailers central headquarters Buyers have the authority and responsibility for the selection and purchase of merchandise for the stores Almost all chains are centralised buying today  Advantages of centralised buying WHITE BOARD EXERCISE Discuss the advantages of centralized buying  ADVANTAGES OF CENTRALISED BUYING Sales forecasts for all stores in a chain are more reliable than forecasts for each separate store using centralised data allows buyers to be more accurate as small number of sales from individual stores is not enough to detect a trend A specialist is making the buying decision centralised buyers make merchandise decisions for only a few products rather than a multiple of different garments therefore it allows them to be more knowledgeable Expenses are reduced as each store doesn’t need individual buyer travel expenses also reduced Purchasing power is stronger due to quantities ordered this leads to lower merchandise costs and greater discounts can be achieved  DISADVANTAGES OF CENTRALISED BUYING Adjusting merchandise selection for local conditions may be difficult Larger sizes and different colours may sell at different rates in various parts of the countries depending on characteristics of the population Timing of seasonal goods varies e.g. usually colder in Scotland earlier than London Many buyers never visit the stores and the connection with sales staff is lost DISADVANTAGES OF CENTRALISED BUYING The inability for established department store chains to create a mix of brands that offer consumers something different has been a real problem “If you look at the likes of a Debenhams or a House of Fraser they tend to have agreements where they offer the brands they stock in most of the locations they have and it limits the way they tailor the offering to different locations in individual regions” Quote from Anusha Couttigane, principal analyst for fashion EMEA at Kantar Consulting, 2018 Understanding your customers Lecture 3 What you will learn Why consumers buy? The changes occurring with consumers: Impact of internet/technology on consumers Demographic, geographic, behaviorist, psychographic factors Discounting Seasonality The importance of ‘new’ The role of technology for retailers Data warehousing Datamining Database marketing  Break out groups WHY CONSUMERS BUY As a buyer you need to determine the reason why customers would buy your product Buying motives can be grouped into 3 categories Break out groups answers on white board Why do you think consumers buy ? Give reasons  WHY CONSUMERS BUY 1 Rational- basic human needs food, clothing, shelter using the ability to reason in logical terms 2 Emotional- purchasing several sweaters or two coats these purchases can involve customers feelings rather than logical 3 Patronage- this explains why a customer chooses one store over another it can be convenience, choice of items, services offered, courteous sales staff Why Consumers Buy? Maslow Hierarchy of Needs (Abraham Maslow, 1950s) Maslow’s Hierarchy of Needs and Related Products 6-17  Awareness of Need Reflection Period Decision Making Theory Info seeking/research Decision not to purchase Assessment of alternative/risk evaluation Understanding why consumers buy Once buyers have an understanding of how consumer markets are changing, they must determine ‘what products and brands are they most likely to purchase’ and ‘What causes targeted consumers to make purchases’ Targeting customers You must first identify markets for your product In other words your potential customers Consumer wants are so varied retailers attempt to serve a market segment, a group of potential customers who have similar needs Dividing the market is known as market segmentation which allows the retailer to identify a particular group of customers with common characteristics The retailer can tailor their merchandise to meet the exact needs of those groups Four types of data are used to segment markets Demographic data Geographic data Behavioural data Psychographic data Identifying changes in consumer markets Most retailers have been adept at targeting consumer segment and providing merchandise assortments to meet the needs and wants of those individuals. However many retailers are not adept at forecasting changes in their customers White board exercise what changes must retailers be aware of in their customers Answers next slide Areas where retailers must be aware of changes in customers : Changes in tastes and attitudes to customers Declines or increases in the size of their target market Changes in spending patterns of customers As a buyer you must have a thorough knowledge and understanding of who your customer is , as well as general trends occurring in the marketplace. Buyers need to analyze each trend and ask themselves what are the implications for my retailer, department or product category Some of the more important consumer trends that will affect future purchases 1 Demographic and consumer behaviour trends 2 Lifestyle trends 1.Demographics Socioeconomic characteristics of a population expressed statistically, such as age, sex, education level, income level, marital status, occupation, religion, birth rate, death rate, average size of a family, average age at marriage 2.Lifestyle trends Busy busy busy lifestyles time poor, cash rich Computer and Social Media Junkies Obesity Digital nesting Hyper-connected consumers spend most of their day on their smartphones collecting, curating, quantifying and filtering through their respective areas of interest Posting, sharing, engaging on social media is ubiquitous People are comfortable with their own nests Discounting Continuous discounting is a real threat to retailing Some feel that it has become the expectation of the market to only pay a discounted price or to postpone their purchase until the merchandise is discounted This has a significant impact on profit margins White board your views on discounting What’s the point of buying a full price? The ‘New’ factor Modern consumers have short attention spans and do not feel the need to wait, demanding instant gratification Seasonality How do you get the right product in front of the right customer at the right time? What are the right seasons? Do people really want to buy summer clothes in February when it traditionally launches? Are customers in the right frame of mind to buy winter clothes in the summer months? Shoppers are shifting focus away from seasons when buying Understanding consumer markets Understanding consumers is becoming harder for the fashion buyer for the following reasons: A wider range of fashion influencers exist today, often spread virally by social media There is a media hyped, ever-increasingly faster demand for change and the ‘new’ People in developed economies generally have higher levels of disposable income Increased levels of social connectivity between different cultural groups have led to greater levels of fashion awareness and a need to keep abreast of trends Understanding consumer markets Social and peer-group pressure is generated and stoked by poplar media commentators which encourages fast changing trends There has been a macro change from formal to casual dressing across the whole world – even in business Fashion has become generally less gender-specific, androgynous dressing styles have been adopted more by both men and women E-tailing (and the internet) has opened trade between overseas markets making global trends more accessible Data Warehousing Data warehousing and data mining In addition to identifying and examining trends related to the general population, most retail decision makers and specifically buyers are now using techniques that allow them to identify, analyse, and take advantage of trends prevalent among their own customers Data warehousing Involves electronically storing information that customers generate about themselves Traditionally, retailers have used this data for financial and accounting purposes only and ignored the value of the data for making merchandising decisions data kept by different parts of the retail organisation With data warehousing, there is a single source of data Data might be related to sales, margins, inventory and other key merchandising performance measures Data warehousing Process requires retailers to transfer significant amounts of data from operational computer systems to analysis systems Data becomes more readily available to decision makers and buyers in the store as well as suppliers Results in strengthened relationship with vendors (suppliers), an improved selection of merchandise, more effective promotional campaigns Benefits and uses of data warehousing Data warehousing allows retailers access to detailed customer, inventory, and financial data on a perpetual, real-time basis Retailers can maximise purchase decisions and promotion efforts by directing them to the consumers who are more likely to buy Retailers can determine how well a particular product is selling in a specific store as well as making merchandise replenishment decisions based on facts rather than intuition The systems can also track what customers ordered that was NOT in stock Data mining Searching through warehoused data to find trends and patterns that might otherwise have gone unnoticed Software tools are used to dig through and analyse information as well as extract its meaning and draw inferences Using data mining techniques The general types of data that can be found: Associations Eg customers buy a new tie 65% of the time when dress shirts are regularly priced, but 85% of the time when dress shirts are on sale Sequences Linking events over time Eg 50% of customers who purchase a suit may than purchase shoes within 30 days Clustering Eg decision makers may be better able to pinpoint customer groups most likely to use the retailer’s e-commerce site Forecasting Tools can be used to analyse data to predict whether a customer will continue to shop at the store and even forecast future purchases based on patterns within warehoused data Targeting current customers Importance of understanding all customers (from most loyal to the most indifferent) Selling to an existing customer is generally easier and less expensive than converting a new customer Retailers who fail to use targeting techniques with their existing customers can bring about customer attrition or churn Reducing churn involves offering promotions and incentives to customers identified as likely to defect How to Reduce Customer Churn Lean into your best customers and identify most valuable customers Be proactive with communication. Define a roadmap for your new customers educate them on products Offer incentives. Ask for feedback often. Analyse churn when it happens. Stay competitive offer best service A framework to classify current customers Disciples Shoppers who do most of their shopping at your store Secure Shoppers do most of their shopping at your store and consider it acceptable Susceptible Customers who shop regularly with you but do not really like it compared to the competition (motivated by convenience, inertia, proximity) Vulnerable Customers may shop your store regularly at more than one department but who really don’t like it and most of whom are actively looking for a better alternative Disgruntled Shoppers who shop at one department in your store but do most of their shopping elsewhere. They do not really like the other store where they usually shop but prefer it to your store  Database management Also known as: Relationship marketing One-to-one marketing Involves collecting mountains of information about customers, analysing it to predict how likely customers are to buy a product and using that knowledge to develop a marketing message designed to best match customers’ wants and needs Database marketing’s evolution Computer technology has enabled retailers to target large, undifferentiated groups of mass markets, to smaller segments, and now to niche or micro marketing to the smallest consumer segment of all – the individual Goals of database marketing Targeting promotional offerings to specific customers Gaining a better understanding of customers Strengthening the store-customer relationship Gaining a more detailed understanding of the best customers Tailoring merchandise offers to specific customer segments Reducing the cost of new customer acquisition Improving customer service Assisting in the merchandise selection process Preventing customer defections Identifying changes in consumer markets Demographic trends related to consumer characteristics change very slowly and retailers cannot look at such trends and make immediate changes in their strategies Fashion buyers need to be fervent watchers of society and changing trends  A DAY IN THE LIFE OF A BUYER You tube Fabulous fashion careers life as a fashion buyer for urban outfitters London fashion week AW A day in the life of a fashion buyer Mercedes fashion https://www.youtube.com/watch?v=vGa R2lh0BnQ https://www.youtube.com/watch?v=Knl2FUurV9U