Ethical behaviour in buying and selling in retail

1. ETHICAL BEHAVIOR IN BUYING MERCHANDISE
Introduction
One of the important duties of a retailer is to buy the merchandise he intends to
sell. This duty is important because much of the success of his business depends on the
quality and cost of the merchandise he buys. It the merchandise is of good quality and of
low price, and then he can sell this at an affordable price to the
consumer. Merchandise is any article or good bought by the seller and sold to the
buyer for a profit.
• Sources of Merchandise
Merchandise can be bought from several sources. They are the following:
Middlemen. These are persons who buy the goods direct from the producers or
wholesalers and sell them in retail to the consumers. In this group are distributors of
different merchandise who peddle on foot or drive trucks, selling their merchandise to
retail stores. Another example is the middlemen who enter into contract with
fishermen/ farmers to sell their product to market vendors.
Wholesalers. These are businessmen who buys big quantity or big bulk direct from the
manufacturers and who sell the merchandise on wholesale basis. The merchandise is
sold in cartons, in packs, by the dozens, by the hundreds, or in sets.
Manufacturers and Producers. Producers produce raw products for sale to
manufacturers. Examples of these are the farmers. Manufacturers make refined
products from raw materials. Examples are the manufacturers of soap, paper, oil,
processed food and others.

2. Merchandise Sourcing
The process of merchandise planning takes the buyer through to the stage of
determining the products that he needs to have in the store and the quantities that he
needs of the same. A key decision to be taken by a buyer is to determine where he has to
buy the merchandise from. Determining the source who would supply the products as
required by the retailer, in the quantities needed by the retailer, as per the requirements
of the retailer, is an integral part of the buyer’s function. Over the years, the importance
of sourcing as a key element of merchandise management has increased. This has been
largely due to the shrinking of world borders and the world becoming a global village.
Global travel and the spread of mediums of mass communication have also made the
consumer more conscious of global trends and products
The process of merchandise buying takes place as five step process, which
involves the following:
 Identifying the sources of supply
 Contacting and evaluating the sources of supply
 Negotiating with the sources of supply
 Establishing vendor relations
 Analyzing vendor performance
Amongst the several benefits of merchandise sourcing some are:
 Quality Assurance
 Profitability
 Compliance
 Integrity
Reference: http://www.monashapparels.com/merchandise-sourcing.html
• PRODUCT QUALITY
Rules to Remember in Sound Buying

3. Besides service to consumers, the retailer should make a good buy for his merchandise
to make a good profit. There are rules to remember in sound buying.
Buy from the right source. The word “suki” in the Philippines is a popular name in
trading. A buyer with a “suki” means that there is trust and confidence already
established between buyer and seller. When trust is established, the buyer can buy
merchandise by phone or by mail order without benefit of investigating the product. The
buyer is confident that the goods are of the right quality.
Buy the right kind. Goods are generally classified as high quality or low goods. The
quality depends on the material and quality of the merchandise. High quality goods
usually demand high prices. This is not always true, though. Fruits when in season are of
the highest quality but sell at the lowest price because there is an abundance of the
product in the market, sometimes even more that what can be consumed. The right kind
means the right quality that will suit the purpose. The right quality may not be the most
expensive but it is the most suited for the right purpose or use.
Buy the right quantity. This means buying only what is needed or in demand. This
helps save money and effort in storing. However, there are some goods, like the
nonperishable ones that can be bought at the time that they are cheap and stored for a
long time. Items like textiles, clothing, and accessories are examples of these.
Buy at the right time. The right time to buy the merchandise is when it is in season.
This is especially true of fruits and vegetables. At the height of the season, goods are
cheapest and of the best quality. A good guide for buying other types of merchandise is
this, the best time to buy is the period when supply is great and the demand is low.
Methods of Buying
While remembering the different guides in sound buying, the retailer should
know the different methods of buying. She can choose one or combination of these
methods in buying her merchandise.

4. - Buying by mail or by telephone. This is convenient because it saves time and energy
that is normally spent in going to the store. Big groceries, restaurants, bookstore, and
supermarkets usually buy by telephones or by mail.
- Buying through agents of manufacturers and wholesalers who provide free delivery of
thegoods.
- Buying through foreign representative, if the merchandise is to be bought from other
countries.
- Buying though a resident buyer who may be the purchasing officer at the store. The job
of this officer is to select and buy the merchandise needed by the store, either on regular
basis or as the demand for it arises. Factories and manufacturing companies who need
raw materials for processing have purchasing officers who do this job.
In buying and selling the merchandise, the retailer can do this on a cash or credit
basis. Using cash, the retailer pays the amount of the merchandise as soon as it is
bought or delivered. Using credit, the retailer gets the merchandise with the promise to
pay within a specific period of time. The bases of granting credit are good character,
capacity to pay, and solvent capital. Other retail stores sell on a consignment basis. They
sell merchandise in exchange for a percentage of the profit.
Reference: http://business.wikinut.com/Tips-in-Buying-and-Selling-Merchandise/-
6yg7vxm/
• SLOTTING FEES
Slotting Fees (Slotting Allowances): Are fees paid by a vendor for space or a slot
on a retailer’s shelves, as well as having its UPC number given a slot in the retailer’s
computer system.
Negotiating on Retail Slotting Fees

5. Retailers charge their suppliers slotting fees to secure a place on their shelves. If you're
in the process of getting your first product into a major store, you'll need to be ready to
negotiate these fees when you agree on pricing. Big retailers can be quite ruthless when
it comes to negotiating concessions, so you'll need to have a strategy in place before
discussions begin.
Discuss Early
Raise the issue of slotting fees early on in negotiations. Retailers will typically wait to
secure your best price before discussing concessions, according to product placement
specialist Jim DeBetta writing in "Inventor's Digest." If you know the company you're
dealing with plans to hit you for slotting fees, you'll be at an advantage. You should also
ask about other price concessions such as cooperative advertising allowance, which
retailers ask for to help market your product once it's on their shelves.
Establish a Bottom Line
Add between 10 and 20 percent to the lowest price you're willing to accept per unit. This
will give you plenty of room to negotiate when it comes to thrashing out concessions.
Play hardball. If your buyer asks for a 10 percent reduction for slotting fees, say you
were thinking more in the region of 2 percent. After a little bartering, you could even
walk away having conceded less than you were willing to.
Negotiate Terms
If your buyer wants more than you're willing to concede, try negotiating terms. Say
you'd be happy to pay higher slotting and cooperative advertising fees if it meant you
were able to sell more product. Suggest starting from a base and raising concessions
after a set period of time if you see the results you want. However, make sure any upper
slotting-fee level you negotiate will still leave you in profit.
Assert Your Position
Don't be bullied into giving away more than you can afford to. There'll be little point in
getting your product into a store if you're going to be selling it at a loss, no matter how
high-profile the retailer you're dealing with. Your potential buyer obviously saw promise

6. in your product to begin with, so be straightforward with it. Say you'd love to be able to
give away more, but doing so would leave you out of pocket.
http://work.chron.com/negotiating-retail-slotting-fees-5790.html
• COMMERCIAL BRIBERY
• A vendor or its agent offers to give or pay a retail buyer “something of value” to
influence purchasing decisions.
• A fine line between the social courtesy of a free lunch and an elaborate free
vacation.
• Some retailers with a zero tolerance policy
• Some retailers accept only limited entertainment or token gifts.
ETHICAL BEHAVIOR IN SELLING
MERCHANDISE
• Products Sold
Should a retailer be allowed to sell any product, as long as it is not illegal?
Choosing a product for your retail store to sell may very well be the most difficult
decision you will need to make when starting a retail business. The choices are limitless
and the task may be overwhelming at first. Not only should there be a demand for your
products, but it must be profitable and something you enjoy selling. Before you commit
to a product or product line, consider the following factors while deciding what products
to sell.
Marketability
Let's face it, it won't matter what products you sell if your customers aren't
buying. Before considering what product to sell, determine what market you want to sell
to. Once you know what kind of customer you want, then you'll be able to determine
their needs. If your products only appeal greatly to some people, it may not be enough to
sustain a business. Your product selection doesn't have to appeal to all of the population
but it should be something you can convince a large percentage of shoppers they need.

7. Diversity
Keep your product offering simple in the beginning. If your product line is
narrow and focused, then your marketing efforts can be just as tightly focused, which
will bring you the best results for your marketing dollars. As your business grows, so can
your product line as long as you keep new products compatible with the type of
business, your location and your market.
Some questions to keep in mind while selecting products for resale.
 Would you buy it and use it yourself?
 Can you see yourself getting excited about this product or service?
 Would you sell it to someone you know?
 Is there a real need for the product in today's market?
 Can you imagine yourself selling this item for the next several?

The key to having a successful business is to know your products and to believe in
the merchandise that you are selling. If you do not believe in the product yourself, then
you probably won't be successful at selling it. Keep brainstorming and you'll find a
product or product line that meets both the needs of your target market and your own
ability to locate it, purchase it and resell it.
Reference:http://retail.about.com/od/startingaretailbusiness/a/product_select.htm
• Selling Practices
Should a salesperson, while not saying anything wrong, be allowed not tell the
customer all the facts?
To attain exceptional levels of success in the retail business, you have to be
willing to go the extra mile. In addition to designing a store that people want to spend
time in and filling it with merchandise that they want to buy, you need to be on top of
your game in terms of using effective sales strategies. The importance of training your

8. salespeople effectively cannot be overemphasized. You can’t hope to train them
properly, though, if you’re unaware of how to maximize your store’s sales potential. Tips
for doing just that are outlined below.
Educate Yourself about the Products that You Sell
Large, impersonal chains don’t have to be super knowledgeable about what they sell –
their low prices give them a huge edge over the competition. To compete with the big
guys, you have to have in-depth knowledge about every item that you sell. Learn the
pros and cons of each item that you carry. Keep up to date on new developments, and
try to stock the most current models. When training new staff, try to get them up to
speed on how various products work. Do your best to keep your employee turnover rate
low, because replacing a knowledgeable salesperson is costly and time consuming.
Be Enthusiastic about Your Products
This point dovetails nicely with the previous one. A customer is a lot more likely to buy
what you’re selling when he gets the sense that you’re genuinely enthusiastic about it. It
helps tremendously to be a fan of the products that you sell. It’s smart to hire people
who are truly into the things that you have on your shelves. When conducting
interviews, then, try to get a feel for whether or not they care at all about the nature of
what you sell.
Be Friendly, Not Oppressive
If you’ve ever been harassed by a store salesperson, you know how off-putting and
aggravating it can be. Give a customer that kind of experience and you can forget about
earning any repeat business from him. You should make your presence known and be
friendly, but you shouldn’t hover over your customers or breathe down their necks.
Suffocating a customer is a surefire way to chase them away. Breathing space is essential
here, so resist the urge to follow their every move. In the long run, this strategy will work
out well.
Ask the Customer Questions
Asking questions is a lot more effective than pushing a product on a customer – at least,
it is if you want to make lots of sales. Even if you are dying to unload a lot of a particular

9. item, you shouldn’t alienate your customers by endlessly extolling its virtues. When you
ask questions about what they want or need, you show customers that you care. This is
especially effective when it is done in a low-key and laid-back way. Keep the pressure to
an absolute minimum and make it clear that you genuinely want to help them find the
right thing.
Avoid Asking “Can I Help You?”
How many times have you walked into a store, been asked if you need any help and said,
“No thanks, I’m just looking?” It’s probably happened more times than you can
remember. Asking a customer that is like handing them a card that excuses them from
interacting with you. A better way to go is to let them walk in and get the “lay of the
land.” Once they’ve roamed for a minute or so, ask them a question based on where they
are browsing. You’re less likely to be blown off that way.
Sell Add-Ons, But be Savvy About It
Cross-selling related items to a customer is a tried-and-true way to boost sales. It tends
to annoy people, though, when you do it at the register. By that time, the customer has
made his decision and is ready to move on with his life. Being pestered to buy even more
can sour the whole experience for him. Instead, suggest additional items while he is still
out on the floor. If possible, put a personal spin on things by relating stories about the
related items that you’ve put to good use.
Putting stellar sales techniques and strategies to use can make an amazing difference in
your overall success in the retail game. It’s even better when you can bolster those
strategies with salespeople who are knowledgeable, friendly and genuinely enthusiastic.
The ultimate goal here is to make people want to come back again and again. When they
leave with positive thoughts about the sales staff, they are a lot more like to come back.
Repeat sales are crucial to developing a robust business, so do your best to keep the
above points in mind. Happy customers develop through unaggressive, friendly sales
techniques that gently steer people to buy what you have to sell.
Reference:http://blog.cashierlive.com/2011/04/28/6-tips-for-selling-more-merchandise-
at-your-retail-store/

10. ETHICAL BEHAVIOR IN THE RETAIL-EMPLOYEE
RELATIONSHIP.
• Misuse of Company Assets
Employees must understand that ethical behavior is demonstrated not only in
how they act toward others but also in how they treat property that doesn't belong to
them. The key to success is understanding who owns what and what boundaries exist for
its use.
• Job Switching
Retail jobs can be exciting. However, you may want to leave your current
employer due to reasons such as interest in a new career path, desire to move to a
different location, desire to grow professionally, lack of opportunities in your current
job, differences of opinion with colleagues or management, stress, or ethical grounds.
Switching jobs involves making key decisions, so it is necessary that you evaluate your
current employment situation before you move.
The following points will help you evaluate your current job and make the right
decision.
1. Are you currently satisfied with your retail job?
According to an old saying, a bird in the hand is worth two in the bush. Are you involved
in a situation with your present retail employer that makes you feel dissatisfied? Are you
discontented with your colleagues or with your retailer’s culture? Has there been a
change in the employment situation (for example, a merger or an acquisition) that has
made you feel insecure? If you feel your satisfaction levels have changed considerably,
then it is time to switch to another retailer.
2. How do you evaluate your interest in your current job?
Perhaps you have lost interest in working for your current retail employer due to the

11. monotony of the job, or perhaps your retail employer lacks the avenues to make your
current job profile more diverse. These factors may lead to a lack of interest in your
current position. Determine whether your employer is willing to offer you another
position that would keep you interested in your career with the company; otherwise, it is
advisable to seek a change.
3. Does your job offer you an avenue to develop your core skills?
Maybe you have not been able to develop your skills beyond a certain level with your
current retail employer. If your employer is not able to offer you avenues to further
develop your skills, you might want to move on. Those in retail careers need to
continuously evolve in order to advance in the industry.
4. Have you discussed this idea with others?
Discuss the prospect of switching jobs with friends, family, and acquaintances. Ask for
input regarding whether you are making the right decision at the right time. Also, access
resources online, or visit the nearest employment center to see if there are enough jobs
available to merit your consideration.
5. Have you researched retail openings that interest you?
Comprehensively study the retailers that interest you. Conduct detailed research on
their profiles, and check to see if they have suitable openings. You can do this by reading
as much as possible about the retailers in question in the news or by contacting people
you know in the retail industry to discuss your plans.
6. Do you have the necessary qualifications and experience for the new
positions you’re interested in?
Consider whether you will need additional qualifications to join another retailer. Adding
to your skill set can be a good idea if you are sure it will help you get the job you deserve.
Many business schools and colleges offer varieties of courses that will suit your needs.
However, do not overextend yourself. Are you already extremely busy during the week?
If so, you might want to opt for weekend, correspondence, or online programs instead.

12. 7. Have you looked for internal avenues for promotion?
Quite often, managers offer in-house opportunities to deserving candidates that can lead
to better pay and prospects with the same retailer. Check with your employer to see if
there are internal programs such as training series or workshops that you can attend.
8. Have you considered seeking an alternative position with the same
retailer?
Before pursuing other options, why not try making an internal switch within the same
retail organization? This may allow you to utilize the knowledge you have already gained
in your new position.
9. Is your current retailer losing market share?
If the retailer you work for is losing revenue and market share to competitors, then it is
advisable to search for a job with another retailer.
10. Is the new retailer you are considering joining offering you more pay
and better working conditions?
If so, then it is advisable to leave your current job. There are both pros and cons when it
comes to switching jobs. Therefore, it is always best to evaluate one’s current
employment situation before making a final decision.
Reference: http://www.retailcrossing.com/article/350032/Switching-Jobs-in-the-
Retail-Industry/
• Employee Theft
Employee Theft from a retail store is a term that is used when an employee steals
merchandise, food, cash, or supplies while on the job. However, in the eyes of the law,
employee theft is just theft…the elements of the crime are identical. To commit theft, the
employee must “intend” to permanently deprive their employer of the value of the item
stolen.

13. Employee theft can occur just like shoplifting by concealing merchandise in a purse,
pocket, or bag and removing it from the store. It can also occur by stealing cash,
allowing others to steal merchandise, eating food, and by refund, credit card, or check
fraud. Employee theft can sometimes be charged as embezzlement due to the trusted
fiduciary status of the employee. All of these methods lead to loss of inventory
(shrinkage) and/or profit for the merchant. Employee theft is an insidious crime
because the merchant is paying a wage and benefits to the thief on top of paying for the
cost of their dishonestly. Studies have shown that employees can do a lot more damage
than shoplifters because they are trusted and have an insider’s knowledge of store
security measures.
Employee Theft Profile
There is no real physical profile for a dishonest employee. Dishonest employees come in
all shapes, sizes, ages, sexes, ethic backgrounds, religions, levels of education, and
economic status. You simply cannot accurately determine who is likely to steal based on
their demographic status alone. However, an employer can make reasonable
assessments based on their conduct, integrity, and judgment. A person’s past conduct,
integrity, and judgment often provides the best indication of their future behavior.
Retail store employees have a constant opportunity to steal cash or merchandise…all
they need is the desire and sufficient motivation to do so. What keeps most employees
honest is moral character, loyalty, respect for the law and their employer, and the desire
to be viewed as trustworthy. Studies support this by proving that shrinkage is
significantly less in stores with reduced employee turnover and fewer part-time workers.
For others, the only barrier to dishonesty is the fear of getting caught. The employee
thief risks getting fired, being arrested, jailed, and paying restitution. The criminal
record and bad job reference will have a compounding effect that will follow them for
years. Merchants must not be sending a clear message to their employees because most
employee thieves that I have encountered never thought they would be caught.
R e f e r e n c e : h t t p : / /www. c r ime d o c t o r . c om/ emp l o y e e _ t h e f t . h tml