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Part Two Apparel Industries
Electronic merchandising is promotion via
electronic devices, such as computers and mobile
technology. Retailers alert their customers about
special sales or new merchandise through
e-mails, social media messages, or other appli-
cations (apps). In these ways, businesses try to
have personal conversations with their custom-
ers. Often the retailer provides a linked website
address, so the consumer can click to see the
goods being promoted. Items with the chosen
styles, colors, and sizes can be selected for pur-
chase and check-out. Retailers can evaluate the
success of each promotion by analyzing how
many people clicked through from the e-mail
to the retail website. They can even trace who
those people are.
How Retail Works
Retailing is direct selling. It is the exchange
of merchandise in return for money or credit.
Retailers sell goods directly to the fi nal consumers
who will use them. This is done through stores,
mail-order catalogs, Internet websites, or other
methods. It completes the channel of distribution.
A channel of distribution is the route that
goods and services take from the original source,
through all the middle people, to the ultimate
user. A standard channel of distribution, or
supply chain, is shown in 7-5. The more specifi c
apparel channel of distribution, or textile/apparel
pipeline, starts with textile producers and ends
with retailers selling to consumers who wear
the clothes. See 7-6.
Retailers buy large amounts of apparel and
other goods, usually directly from manufac-
turers. They, in turn, sell small quantities of the
goods, or individual apparel items, to many
different consumers.
Retail Terms
Fashion merchandising is also called apparel
retailing. It involves the planning, buying, pro-
moting, and selling of apparel and other fashion
merchandise to consumers who will wear the
goods. It tries to satisfy customer demand as to
price, quantity, quality, style, and timing.
The difference between the retail company’s
cost of goods bought (purchase price) and the
retail price of goods sold is called the markup.
Some of that money is profi t. Most of the
markup, however, must be used toward oper-
ating expenses and overhead. It must also cover
losses from damaged goods, unsold merchan-
dise, and shoplifting. Shortages from customer
and employee theft can be shockingly high.
Markdowns are price reductions made in
the hope of selling certain goods. Markdowns
are most often made at the end of a season.
They enable stores to move otherwise unsal-
able, excess merchandise. They are necessary,
but they cause retailers to lose a great deal of
potential revenue. Sometimes retailers receive
markdown money from manufacturers to com-
pensate for losses when the selling prices of the
goods must be reduced.
Odd-fi gure pricing is the pricing of retail
merchandise a few cents lower than the next
higher dollar. Examples are $2.99 and $19.98.
The purpose is to make the merchandise seem
less expensive in shoppers’ minds.
Channel of Distribution
Basic Materials
↓
Finished Products
↓
Wholesalers
↓
Retailers
↓
Ultimate Users
7-5
The channel of distribution takes basic materials
through all steps of production and handling to the ultimate
users of the fi nal products.
Textile/Apparel Pipeline
Textile Producers
↓
Apparel Manufacturers
↓
Retailers
↓
Consumers
7-6
The textile/apparel pipeline is the channel of distribution
for fashion items. After being made, garments usually go from
manufacturers to retailers, without a separate wholesaler.