Buyer (fashion) - Negotiation

Negotiation

"The Role of the Fashion Buyer" states that one part of a buyer's job is to negotiate prices and details of delivery with the supplier. Since this is an important aspect of a buyer's job, some retailers provide their buyers with negotiation training courses. When the buyer meets with the supplier, the sales executive of the garment manufacturer will submit a "cost price" for a garment. Then the buyer calculates the price that the garment will need to be sold for in order to reach the retailer's mark-up price. The markup price is the difference between the selling price and the manufacturer's cost price. The retail selling price is typically 2.5 or 3 times the price of the manufacturer's cost price. While it may seem like a retailer is making a large profit from this markup, the proceeds are used to cover many costs such as the buyer's salary, store rent, utility bills, and office costs. The markup must be high enough to cover the retailer's expense of "housing" a garment on a rack or a shelf for anywhere from a few days to an entire season, plus the risk that some garments will inevitably have to be marked down to cost to get them out of the store.

Based on how much consumers are willing to pay, buyers can determine the optimum cost price which they should expect to pay. Suppliers take a different approach to the optimum cost price. The suppliers determine the price based on how much it will cost them to produce the garment. The manufacturer's salesperson are typically able to accurately anticipate the price that buyers will expect to pay.

Buyers and suppliers both want to make the largest profits for their companies. The buyers want to buy the garments at the lowest possible price and suppliers want to sell the garments at a high price. Suppliers and buyers must agree on a price and/ financing terms and in some cases they may not agree. If the two cannot agree and the buyer cannot reach a price within the retailer's target margin, the buyer may ask the buying manager for permission to buy the garment at a higher price or else the style may be dropped.