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Procedures for Making Purchasing Decisions

Department Stores

1. Information on the manufacturers, their products and brands, promotional brochures and market information are provided to department stores by the manufacturers or their sales personnel.

2. The department stores' merchandisers collate such information and compile reports for discussion and decision-making by managers in weekly business meetings. After the selection process, department managers or their representatives will negotiate with the manufacturers on the terms of cooperation.

3. After the terms of cooperation have been agreed upon by the business department, the cooperation plan will be passed to the deputy general manager for approval. Arrangements will then be made on product entry and setting up sales counters.

Hypermarkets and Supermarkets

In a bid to exercise stricter control over product quality and lower coordination and transaction costs, some supermarkets are moving towards setting up central buying offices to source goods in bulk. Goods will then be distributed through a network of sales centres to various shops.
For products that have not been handled before, newly-developed products with new functions and new features, products provided by new suppliers, and products with new brands, supermarkets usually have a mechanism for handling these new products:

The products are usually sold on trial for three months.

During the trial period, the sales personnel will monitor the display, stock, sales, quality and sales promotion of the new product.

Decision on whether to introduce the new product will be made after the trial period based on the sales performance and other factors. If the trial sale is successful, a formal agreement will be signed. If the sales results are not satisfactory, either the trial period will be extended or the supplier will be notified that the product will be rejected.

Content provided by Hong Kong Trade Development Council
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