Footwear companies interested in obtaining private-label contracts submit a bid price per pair, down to the
penny. The bid price represents what the footwear-maker is willing to charge to deliver the required
private-label pairs to the retailer’s premises (the bid price thus has to cover all production and shippingrelated
costs, any tariffs that might apply on pairs coming from a foreign plant, and any exchange rate
effects, plus include an allowance for profit). Bids may be submitted to chain retailers in any or all of the
four geographic regions. For reasons of simplicity, each footwear company submits only one price bid per
region (this limits the number of bid prices to a maximum of four, as opposed to having price bids for
dozens of different chain retailers worldwide). Chain retailers arrange the bids from the lowest to the
highest price per pair and award contracts, starting with the lowest bidder in each region and ascending in
order of next lowest price in that region until either total chain retailer demand for private-label footwear in
the region is satisfied or all qualified bids are accepted, whichever occurs first. In the case of tie bids on
price, chain store buyers will choose the supplier with the highest global image rating in the previous year.