CASE 23 Developing an Assortment Plan for Hughes

A well-established, medium-sized department store in the Midwest, Hughes satisfies consumers' needs by featuring popular names in fashion for the individual consumer, family, and home. It tries to offer a distinctive, wide assortment of quality merchandise with personalized customer service. The customer services include personal shoppers; credit through in-house charge, American Express, and Visa; and an interior design studio. Hughes's pricing policy permits it to draw customers from several income brackets. Moderate-income consumers seeking value and fashion-predictable soft goods are target customers, as are upscale customers with a special interest in fashion.

The department store is implementing new marketing strategies to prepare for continuing growth and expansion. Hughes's merchandising philosophy is to attract the discerning middle-market customers, who make up 70 percent of the population, as well as sophisticated, fashion-conscious consumers who expect to buy high-quality, brand-name merchandise at competitive prices.

One portion of Hughes's buying staff is responsible for the Oriental rug department within home furnishings. The open-to-buy figure for this classification within the home furnishings division will be based on last year's sales history (Exhibit 1).

It has been projected that a 15 percent increase over last year's sales volume can be attained due to Oriental rugs' continued popularity. This year's open-to-buy for fall/winter will be $66,200.

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The buying staff will be making its purchases for fall/winter in Amritsar, India, a city known for top-quality carpets. Ghuman Export Private Ltd. of Amritsar, Punjab, India, is the manufacturer the buyers will contact. Exhibit 2 shows information about Ghuman to use in the decision-making process.

EXHIBIT 1 Previous Year's Fall/Winter Sales Results for Oriental Rugs

EXHIBIT 2 Ghuman's Wholesale Price List

This case was written by Ann Fairhurst, Indiana University.

DISCUSSION QUESTIONS

1. Work up a buying plan to use when purchasing merchandise from Ghuman's.
3. How should Hughes distribute the allotted open-to-buy dollars among the available sizes, colors, and fabrics?
5. Because it is dealing with an overseas manufacturer, how should Hughes address additional costs, such as duties and shipping, that need to be covered by the allocated open-to-buy dollars