week 4 ch 6: retailer/vendor relationships fm10211 – retail operations

Week 4

Ch 6: Retailer/Vendor Relationships

FM10211 – Retail Operations

FM10211 - Retail Operations 2

Benefits to Retailers

• Lower costs– Fixtures & Signs– Training– Shelf Management

• More expertise

• Benefits to sales associates


Benefits to Vendors

• Closer to consumers

• Closer to sales associates

• More control

• Better sales


Partnership Conflicts

• Difficulties can arise

• Must be negotiated or accepted

• Can hurt relationship

• Variety of problems


Order Cancellation/Merchandise Substitution

• Both vendors and retailers

• Can occur without warning

• Little can be done


Unauthorized Returns to Vendor

• RTV

• For any reason

• “Adjustments” are an alternative– I.e. discounts

• Proper procedure help maintain relationship


Exclusivity

• Retailers may ask to be exclusive

• Can be for a limited time

• Vendors may choose to break deal

• Retailer may not continue

• Does sales level justify exclusivity?– How much?

• Be creative about what’s exclusive!


Ordering• Special Orders

– Orders by retailer for specific customers– Particularly bad if not fulfilled

• Reorders– Previously placed orders– A/k/a standing orders– Vendor may be counting on it

• Minimum Orders– Vendor specified– Retailer may order less but want same deal otherwise


Discounts and Allowances

• Price concessions vendor gives to retailer

• In return for certain retailer actions

• Vendor may not honor


Unreasonable Conduct or Dishonesty

• Builds tension

• Destroys trust

• Vendor/Retailer relationships are often tense and fragile already


Why to Negotiate

• Solve problems

• Resolve conflicts

• Reduce costs

• Improve profit

• Many opportunities– Vendor <> Retailer– Retailer <> Sales Staff


What to Negotiate• Obtaining certain merchandise• Extra markup or markdown money• Transportation and delivery charges• Cooperative (Coop) advertising

– Vendor helps pay for retailer’s ads

• Terms of sale– Discounts, delivery, transport costs

• Dating– Discounts given for prompt payment– E.g. 8/10 EOM = 8% discount if paid by 10th of month


How to Negotiate I

• Act collaboratively, not competitively– Negotiation is about everyone getting what they want (or at least

will accept)– Not about “winning”

• Prepare– Research other party– Rehearse

• Understand going in– What you need– What you can give up


How to Negotiate II

• Make time your ally– Most concessions are given at deadline

• Be willing to take creative risks– Too conservative and other can take advantage

• Focus on long-term goals– Build relationships


Sales Representatives• Represent a manufacturer’s product

• Company/Corporate Reps– Work directly for vendor

• Can be an Independent Rep– Under contract to a specific company

– May handle other (non-competing) lines

• Trend is away from Independents– Less common given consolidation

• One sales call may represent many retailers

• Less expensive


Purchase Orders

• Once sale is negotiated

• Contract between vendor and retailer

• Contains all terms– Merchandise purchased– Terms– Discounts– Etc.


Other Order Types• Open Orders

– Standing order

– Vendor fills when they feel necessary

• Advance Orders– Longer timescale

– Examples: Imported goods, Seasonal

• Back Orders– Full or Partial Orders waiting to be fulfilled

• Blanket Orders– Commitment for later date without all details

Chapter 8

Personal Selling and Customer Relations


Sales and Profit

• Why have a retail operation?– Status?– Something to do?– PROFIT!

• What creates profit?– Selling!

• What should you sell?– Generate the largest long-term profits!


Personal Selling• Direct contact with the customer• Wholesale

– Manufacturer to customer

• Retail– Over-the-counter

• Sales personnel (associates)

– House-to-house (door to door)– Mail

• Fastest growing!• Sales associates• Guest hosts• Telemarketers


Expanding the Customer Base

• How?– Open more stores– New markets– Diversify merchandise assortment– Meet or exceed sales goals!


Retail-induced Incentives

• Compensation– Direct Compensation

• Wages• Commissions• Bonuses• Prizes and Awards

– Indirect Compensation• Non-monetary rewards/Perks

• Recognition– Employee of the Month


Vendor-induced Incentives

• Everything mentioned, plus:

• SPIFs– Sales Promotion Incentive Funds– Added incentive to sell vendor’s products

• Contests

• Training


Training Sales Associates

• Represent company to the customer

• Investment made by company in employee

• Must understand and meet company’s goals

• Policies– Rules for how business is run

• Procedures– Steps to take to reach a goal

• Training can be more than a week!


Formal Training

• Highly structured• May include

– Lecture– Demonstration– Videos– Meetings, seminars, conferences– Role playing– Case analysis


Informal Training

• On-the-job

• Often up to the employee

• Can be problematic– For employers– For employees, too!


Six Steps to Complete a Sale

• Approach and greet the customer

• Determine needs and wants

• Present merchandise/service

• Relay product info/answer questions

• Suggest related items

• Close the sale

week 4 ch 6: retailer/vendor relationships fm10211 – retail operations

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