Retailing 791
Although no self-respecting retailer would set
aside the checklist, or the need to experience
the ‘look-feel’ of a potential site, GIS offers
immediate answers to many ‘what if?’ ques-
tions. These questions are not restricted to new
sites but can be extended to the evaluation of
branch performance, set against an objective
model of potential. The knowledge of neigh-
bourhood characteristics provided by GIS can
also guide decisions about product ranges,
price levels and promotion at the branch
level.
Product selection and buying
The buying function represents the main inter-
face between retailers and other members of the
supply chain. Accordingly, many suppliers
create specialist sales teams to serve key retail
accounts, developing a close knowledge of the
organization and the individuals involved. In
some retail organizations, individual buyers
have extensive autonomy within their specific
product category; in others, the buying team is
the norm, which typically includes selectors,
merchandisers, technologists and quality
controllers.
In selecting products and suppliers,
numerous criteria must be considered by retail
buyers, not least of which are the projections of
sales and profitability. Product selection is a key
element of differentiation and buyers are
becoming increasingly proactive in sourcing
items that will help to provide a competitive
edge. Buyers must also consider the capabilities
of the supplier, in terms of volume, flexibility
and reliability.
Nowhere is the shift of power from manu-
facturers to retailers more directly manifest
than in the buying offices of major retailers. The
‘table banging’ style of buying, characteristic
of the early days of retailer power, has
indeed given way to more sophisticated and,
sometimes, longer-term forms of retailer–man-
ufacturer relationship. Talk of ‘relationship
marketing’ can, however, obscure the consider-
able power of the retail buyers within that
relationship. To their economic buying power,
retailers have now added more focus, expertise
and information, increasing further their over-
all power.
Although large retailers clearly hold the
balance of power, the development of category
management practices has increased the
involvement of some large suppliers in product
category decisions. Category management is
defined as:a retailer/supplier process of managing cate-
gories as strategic business units, producing
enhanced business results by focussing on
delivering consumer value.
(IGD, 1999)Category management has, in some cases,
opened up much broader information exchan-
ges between major suppliers and retailers, as
experts within both firms deal more directly
with each other. Figure 30.7 illustrates these
typical linkages, which seek to overcome the
‘information bottleneck’ that can be created
within the traditional buying model. In the case
of Procter & Gamble and Wal-Mart, many of
the supplier’s executives were moved to the
retailer’s headquarters in Arkansas, running
some categories on behalf of Wal-Mart, to
agreed performance targets (Management Hor-
izons, 1999).
While category management may have
increased the influence of the supplier chosen
as ‘category captain’, it may have the reverse
effect for other suppliers. The Competition
Commission in the UK, and its predecessor the
Monopolies and Mergers Commission, have
been monitoring over many years the effects of
retailer power. Both stopped short of advocat-
ing legislation to limit the scope of retail buyers
to extract better terms, purely on account of
their buying power (such as the Robinson
Patman Acts in the USA). However, the Com-
mission noted concerns about some possible
effects of category management, which could
act as a barrier to others wishing to enter the
market (Competitition Commission, 2000).