William wrote in the other day asking for help. He is a rep for a company that sells name brand shoes and has retailers who are starting to ask for only the best shoes and best sizes in order to place an order with him. He needs help figuring out how to get retailers to buy from him given his company’s use of stock-lots. Long a staple of retailing, stock-lots if a practice where manufacturers require retailers to purchase a wide array of shapes and sizes, even though the retailers may not be able to sell some of them. This is a dinosaur relic of a system that doesn’t work in today’s retailing landscape.
How many times have you gone into a store and not found your size? That’s not only the fault of retail buying groups but also of manufacturers, who require retailers to take a lot of merchandise they may not necessarily want. That practice leaves retailers with leftover merchandise they can’t sell. And retailers are tired of having to take the bad merchandise in order to get the good stuff.
THE REAL WORLD RETAILING TAKEAWAY
Retailers are increasingly in the driver’s seat on this one. And manufacturers should take notice.
In the changing economic landscape, vendors need to cater to their buyer’s wishes, not the other way around. Demanding that retailers take the merchandise you want them to take just isn’t smart business as they end up with excess merchandise which causes a couple problems:
- It ties up their open-to-buy, which means they can’t buy more goods from vendors when they need it
- Retailers end up marking down the vendor’s goods, which hurts the retailers and the vendor from a brand perspective
I have to side with retailers on this whole issue. Retailers – be demanding. Don’t buy from a vendor or distributor if they require you to purchase goods you don’t want to purchase. Often there is more than one rep company or distributor so go find the alternative who is willing to work with you.
You’ll hit some walls along the way, but the smart vendors and distributors will get you what you need. Vendors and distributors need to understand that zero percent of zero is zero. Do you want perhaps a smaller sale, that allows a retailer to sell through merchandise and buy more from you? Or do you want to risk not making a sale at all. Ask any business person if they want zero percent, or if they’re happy to take part of a sale. You know the answer.
So retailers, stick to your guns and start directing how you want to work with vendors and distributors. It will go a long way toward helping your business during these tough times.