Tim Sommer, President of Sommer Time Consulting

In a changing marketplace, it is the relationship that creates sustainable success. There will always be a lower priced alternative to whatever you’re selling, wholesale or retail. In our industry we have often lost our way in regard to this concept. There has been an inexorable race to the bottom in pricing and everyone lost the race.

The Vendor/Dealer relationship is something often spoken about though rarely practiced in earnest! I must admit that in years of buying goods and managing vendor relationships I have created the occasional one sided nobody wins but me scenario. That being said, they were all short lived, and not as productive as anticipated. While we may have experienced some short term gains, they were wiped out quickly by the competition. On occasion the vendor decides to quit playing, I found myself left exposed. In either case we would constantly be searching for a new solution.

The answers lay in creating true win/win/win scenarios. It is fairly common among manufacturers of better selling lines to have stringent requirements regarding minimum orders, floor model placement, slotting, process flow and more. In some cases these requirements are entirely self serving and offer the retailer more challenges than solutions. Distribution becomes another issue, one that is a valid concern for retailer and manufacturer alike. Distribution choices made without serious review can undermine a retailer’s business significantly. Like any coin, there are two sides. It is equally common for strong retailers to flex their volume with requirements for allowances, discounts, credits, free floor models, AND significantly reduced pricing. Of course there are additional requests for process flow and communications that may be completely out the manufacturers own internal processes.

Distribution controls are present in almost all conversations.

Creating win/win/win scenarios means that all parties have to win at some level. It’s ok to be demanding; high standards are a hallmark of successful companies. But imposing requirements that all but eliminate the opportunity for profit for the other party also eliminates any possibility of a long range success with the program.

As a retailer I was willing to accept higher cost of goods on certain parts of a program if I could get a pricing advantage on a specific item for promotion. I would routinely agree to “work short” on a promo item if the factory would also work short, this combination created the third win, for the consumer. One of the challenges in providing the third win to the consumer is that the presence of branding can often get in the way of providing real value. We have often said that perception equals reality, so by extension the perception of value is all that is needed! If an item looks like a good value because it has a brand name association and sells well then mission accomplished. In the race to the bottom, real value has often been lost in an effort to create the ultimate unbeatable competition-proof, incredibly strong offer! I refer to this as the ultimate coupon you get two free with the purchase of none! In the end it will always boil down to one product in the hands of one customer and how THAT relationship works out that matters most.

Tim Sommer is available to speak at national and regional sales meetings and industry events; the “Indispensable Rep” program expands on much of what was covered lightly here.

SommerTime Consulting Specializes in training retail salespeople and manufacturer’s reps as well as Dealer/Vendor relationship building.

Inquiries should be directed to:
tim@sommertimeconsulting.com

or call (818) 761-8560