Breaking the buyer mold: margins, marketing and technology critical to success

NATION\VIDE DSN REPORT -- Demands by consumers for selection, quality and value have put an increased burden on buyers to have the right merchandise, in the right quantities, when they are needed, and at the lowest possible price. A buyer's role has become more precisely defined, sometimes broadened, but always critical to the success of a retail chain.

Within this highly demanding, unforgiving retailing environment, buyers are often the linchpin of the system that links retailers, vendors and consumers. Some buyers have been given new responsibilities while shedding or sharing others that once dominated their workdays.

"The whole buying process is changing. Buyers now buy more frequently. They are getting more inventory in the pipeline when it is needed, and not before. They are also working to minimize the investment in inventory while staying in-stock. And they are reducing handling costs, so direct delivery and cross-docking are being used instead of warehouses," said Mike Killeen, an Arthur Andersen partner based in Cleveland.

Today's buyer has a complex job, agreed Fred Hurley, assistant vice president and merchandise manager at Hills Stores. No longer is the buyer solely concerned with products. Now he or she must deal with the impact of margins, TV advertising, and fewer, but more powerful manufacturing resources.

"There are more big picture concerns than ever before," Hurley said. Today negotiations are more intense and partnership more important. "It has to be more of a partnership than a negotiation," he said.

The coming years will get tougher for buyers. "They will have to be more demanding with manufacturers to run early TV campaigns," said Hurley. "They will have to be better at reading trends. They can't buy everything."

A key factor in these more demanding buyer roles is a raft of new technology that helps make the job doable. "New technology, such as automatic replenishment, does two things: First, a lot of the paperwork that buyers used to have to handle has been streamlined and, second, systems like EDI give buyers more information about what is going on and give them the ability to do their job better," he added.

Greater use of this new technology in retailing has also created a demand by retailers that their buyers be computer literate.

At Pamida, the regional chain based in Omaha, Neb., senior vp Stephen Robinson said new technology and its capabilities will play an increasingly important role in replenishment and automatic reorders. However, he added, "My perception is that many regional chains are still grappling with automatic replenishment and effective ad instocks. Right now, those functions require a tremendous amount of buyers' time."

One change taking place throughout retailing is closer cooperation between buyers and their counterparts in other departments like logistics and MIS.

"One of the problems from the past was that buyers were expected to emphasize the company's goals for gross margins or the type of deals they made. Now the job is more focused on providing consumers with what they want. That is, basically, a recognition that the consumer has the power, and that retailers have to provide the right goods," said Killeen.

Within some organizations the buying function itself has been parceled out and is now shared with MIS and logistics. The number of work hours dedicated to buying may not have changed significantly, but the people doing the work may carry many different titles.

From the perspective of major regional discount chains, Robinson contends there are not fewer buyers, but they now have somewhat lower levels of support staff.

"Buyers used to have their own secretaries, but now they share because they have systems that can do so much more. Generally speaking, there are the same number of assistant buyers because there is a need for bench strength. Companies win in the long term if they can promote known talent from within instead of going outside," Robinson observed.

Along with all the other demands of their jobs, buyers are also faced with new challenges as many retailers begin to embrace the trendy concept of category management.

Ron Buch, former apparel and accessories gmm at Kmart, mused on the evolution of the buyer and the category manager.

"I've got a problem with the concept of the category manager," said Buch. "A buyer is a buyer. I would say a category manager title really should reference the planning function more than the buying function. I believe the position is very appropriate for basic and commodity type, and maybe even seasonal-basic products, but totally inappropriate for fashion and seasonal-fashion products. You can analyze all you want, but you have to have the courage to do what you have to do--and miss a whole season if you are wrong."

Buch feels the buyer should be more artistic, a risk taker. "It's new terminology, but maybe a category manager can be the balancing act between the planner and the buyer."

Mark Minsky, senior vp, gmm for apparel at Caldor, differs. "To me, category manager is part of the job description of buyer because other than distribution, all "the details in any particular business are the responsibility of the buyer, from selection of merchandise to advertising."

Caldor has a merchandise distribution replenishment staff that supports its buyers. This gives the buyer more tools to work with," said Minsky, "because the business is more complex."

Career-wise, buyers are probably better positioned for advancement now than they ever have been. Along with the high expectations and new demands being made of buyers has come the opportunity to expand their range of experience.

According to Robinson, the buyer most likely to win promotion is a "terrific generalist, someone with good people skills, good computer skills and who works well with other specialists like those in MIS."

"A good buyer is a good salesperson, someone who can sell advertising, stores and warehousing on supporting your program. If a buyer is good at that, he will be more successful in winning promotion to other management levels," said Robinson.

Natalie Gauthier, vp of San Diego-based Jeffrey Allan Associates, an executive search firm, also pointed out that buyers have benefitted from changes in the way they are compensated.

"For the average buyer, there was always a base salary and a bonus of up to 20% to 25%--if they met their numbers. The amount of that bonus used to be based on the company's overall performance, but now a lot of smart companies are basing a lot of it on whether the individual buyer hit his or her plan," she said.

"Buyers have been given the ability to increase their bonus. If they stay within their open-to-buy and if their numbers are consistently right, they are being given credit," said Gauthier.

Leaner staffing at some headquarters has also created opportunities to take on responsibilities once exercised by merchandising managers and even divisionals and gmms. Many senior executives have taken severance packages in recent years as part of a broader cost-cutting effort. Seasoned buyers are now sometimes asked to help fill the resulting void.

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