Objectives Of Open To Buy

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Register to read the introduction… Since space is either owned or rented, retailers will likely have to pay either rate or mortgage repayments in addition to operating costs, the cost incurred by running and maintaining the business Fernie et al. (2003), such as heating, electricity, insurance and staff salaries.

In order to generate the most revenue in order to maximise the gross profit, retailers must make certain that the correct stock is purchased. In order to make sure that the right stock is procured the retailer needs to set up a rational method by which products are purchased to make certain that the right collections and choices are
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The “Open to buy is the amount of money available to the buyer to spend on stock in any given period. It is the result, arithmetically, of deducting sales and markdowns from the opening stock and take that figure away from a planned closing stock” Elliott and Rider (2000 …show more content…
Conversely, another reason a retailer may want to keep a reserve within the open to buy is that if the sales haven’t been as good as they had hoped they can restrict further purchases of that particular product and instead look into using the reserve to buy a new and different product that they can hope to recoup some revenue that they will have lost on the poorly selling product they have purchased previously.

In underperforming retailers problems are often most apparent in their ranges as a direct consequence of them losing touch with their customers. If a worthy assortment and therefore range plan has been drawn up its because both plans have been customer driven as the merchandiser and buyers for the retailer have identified which product attributes are most important to the customer and planned accordingly. This is perhaps the biggest benefit for developing an assortment plan and range plans is that if the customer has been catered for they will purchase from the retailer and, as a result sales will be

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