CASE 35

Rustin Steib, Kelsey Robinson, Amanda Mayeux, Christian Pohlman

TREADWELL DEPARTMENT STORE

Traditional department store founded in 1898 by Oliver Treadwell in the American Southwest

Symbolized the spirit of the Southwest maintaining exclusive merchandise related to the region

Provides moderate to better apparel, accessories, and home furnishings

Concerned with maintaining image of company as well as profitability of firm

TREADWELL DEPARTMENT STORE

18 branch stores located at major cities in Colorado, New Mexico, Utah, and Arizona Central distribution

Buying offices and distribution center in Phoenix, AZ

TIFFANY BRENTWOOD

She has been promoted to buyer of women’s sleepwear and loungewear

She successfully managed the intimate apparel and children's department at the Santa Fe branch for four years

She also held position of assistant buyer for children’s sleepwear and accessories for one year.

Her long term professional goals include becoming a divisional merchandise manager and store manager

TIFFANY AS A NEW BUYER

Tiffany wants to enhance images of the Southwest yet maintain profitability

She has sought out unique merchandise that will reinforce Southwestern image for Treadwell’s

She believes this style is not a passing fad in this part of the country and would be a staple item in her department

MERCHANDISE

Merchandise found is pajamas, nightshirts, and tunics with matching leggings

MERCHANDISE

Merchandise features Southwestern motifs and traditional Native American blanket designs

Garments made of 100% cotton knit and produced in fashionable colors

MERCHANDISE

Found similar styles and colors of merchandise were available from two different domestic vendors: Southwest Specialties- L.A based vendor J.C. Enterprises- local Phoenix vendor

VENDOR 1: SOUTHWEST SPECIALTIES- Requires minimum order of $5000 at cost Offers terms 3/10, net 30 Does not provide transportation costs

Estimated to be $4.50 per dozen garments Rumor of trucking strike by independent

truck lines in region Willing to participate in cooperative

advertising program Assures merchandise will be in stock and

available for reorder

VENDOR 2: J.C. ENTERPRISES-

Local vendor No minimum purchase Will deliver merchandise for free Also offers terms 3/10 net 30 Not willing to share costs in cooperative

advertising because it is a small company

Cannot guarantee immediate delivery- needs 48 hour delivery notice

TIFFANY’S INITIAL ORDER

Quantity Style Southwestern Specialties

Cost

JC EnterprisesCost

12 dozen Pajamas $174/ dozen $180/ dozen

6 dozen Nightshirts $150/ dozen $155/ dozen

20 dozen Tunics $117/ dozen $120/ dozen

15 dozen Leggings $117/ dozen $120/ dozen

SOUTHWESTERN SPECIALTIES COST

Pajamas: 12 dozen@ $174/dozen=$2088

Nightshirts: 6 dozen @ $150/dozen= $900

Tunics: 20 dozen @ $117/dozen=$ 2340

Leggings: 15 dozen @ $117/dozen=$1755

Total: 53 dozen = $7083.00 Shipping ($4.50/dozen) = $

238.50 Grand total =$ 7321.50

J.C. ENTERPRISES COST

Pajamas: 12 dozen@ $180/dozen=$2160 Nightshirts: 6 dozen @ $155/dozen= $930 Tunics: 20 dozen @ $120/dozen=$ 2400 Leggings: 15 dozen @ $120/dozen=$1800

Total: 53 dozen =$7290.00 Shipping (free) =$ 0 Grand total =$7290.00

BOTH OFFER 3/10, NET 30

3/10 net 30: 3% discount if invoice is paid within 10 days, in not paid within 10 days, no discount given and total is due in 30 days

Southwestern Specialties Cost

Total: $7321.50

Discount: $ -219.65 New Total: $7101.85

J.C. Enterprises Cost

Total: $7290.00

Discount: $ -218.70 New Total: $7071.30

PROBLEM

Which vendor should Tiffany choose? Southwest Specialties or J.C. Enterprises?

Southwest Specialties

J.C. Enterprises

OPTION 1

Choose Southwest Specialties and pay total of $7101.85 for merchandise

Pros: Immediate re-order Cooperative advertising

Cons: Pay for shipping

additional $238.50 Possibility of trucking strike

Southwest Specialties

J.C. Enterprises

OPTION 2 Choose J.C. Enterprises and pay total of

$7071.30 for merchandise Pros:

Local vendor in Phoenix No extra charge for shipping

Cons: Does not share in advertising

costs Cannot guarantee immediate

delivery Need 48 hour delivery noticeSouthwest

Specialties

J.C. Enterprises

OPTION 1- NO THANK YOU

Vendor in LA Uncertainties in transportation and delivery

More expensive option Pay extra for shipping Risk of trucking strike

Would they reimburse us for the cost of shipping if a strike did occur?

No need for cooperative advertising Merchandise is sleepwear and a staple good,

neither of which are commonly promoted

OPTION 2- YES PLEASE!

Local vendor Merchandise can go straight from vendors

distribution center to Treadwell’s distribution center

Cheaper option Free shipping No risk of trucking strike

As buyers we CAN control shipping, so it shouldn’t be something that is an uncertainty

As buyers we have enough uncertainties in choosing apparel that will sell, don’t need added uncertainty of merchandise NOT arriving in stores

QUESTION FOR CLASS

Can you think of a third option for Tiffany?

Our third option: Tiffany has yet to explore international

vendors and the advantages they offer Tiffany then needs to compare domestic

sourcing vs. international sourcing

DOMESTIC SOURCING

Advantages Faster lead time available Usually have better credit terms Know American styles and sizing Higher quality in assembly- attention to detail

Disadvantages Higher cost of goods due to

Higher labor costs Greater factory and utility expenses

Fewer options because decline in apparel manufacturing in U.S.

INTERNATIONAL SOURCING

Advantages Low cost to manufacture High quality of material

Cotton from India is world renowned

Disadvantages Early purchase commitment required

Long lead time needed for guarantee of delivery Unfamiliar with western style motifs Quota and customs restrictions Sizing differences and consistency Unforeseen delivery problems

Shipping delays, weather problems, dock strikes

OPTION 3

Tiffany researches foreign vendors and their pricing options

Tiffany then re-evaluates her 3 option Southwest Specialties J.C. Enterprises Foreign vendor

OPTION 3- NO THANK YOU Disadvantages of foreign sourcing outweigh

the advantages Use of foreign vendors doesn’t support

Treadwell’s philosophy of selling American produced goods

Job she possibly couldn’t do alone Might need to hire a team to facilitate foreign

sourcing Added employees would be a greater expense than

what it is saving the company on merchandise cost

SOURCES

Clodfelter, Richard. Retail Buying, From Basics to Fashion. 3rd. New York, NY: Fairchild Books, 2008. 334-350. Print.

http://www.theacademylb.com/?tag=native-geometry http://calivintage.blogspot.com/2009/11/native-

american-inspired.html http://www.hipsterwifehunting.com/2010/08/13/

indian-summer-fashion-friday-part-2-hipster-appropriation-of-native-american-culture-for-fashion/

http://www.worldatlas.com/aatlas/infopage/fourcorn.htm