If you’re a sole trader or a family operated business you may be wondering who I am talking about in the title. After all, you’re the only owner right? That may be true from a legal point of view, but as is commonly referred to today, your business has not only shareholders, but stakeholders – others with a vested interest in whether you succeed or not.
Staff are obviously stakeholders – their income and job security depends on the ability of the business to survive and thrive – but they’re not the only ones. Your community may include stakeholders as well – your landlord is a stakeholder, customers are stakeholders, those who deliver you parcels are stakeholders, the list can be endless.
A jeweler’s success will rise and fall depending on who he works with. Aside from staff and customers the other human resource crucial to a business which is often overlooked by many store owners is the vendor – after all, without him there is no product with which to sell.
Vendor relationships are as varied as are human emotions. Antagonism can often develop caused by either party and it is easy to see your vendor as being on the other side of the fence. Yet despite any differences, you share a strong common bond – you both benefit from seeing more of their product being sold to your customers. From this perspective you can see yourself, less as friendly adversaries and more as united partners.
So how can you make this relationship stronger?
• Make a commitment to your vendor. The more you spend with them the more valuable you become and the more they will do for you in return. You know with your own business that the customers who spend the most with you get the best treatment. If you spend a little each with thirty different suppliers you can’t expect the same treatment as you would if you spend a lot with ten.
• Re-order your fast sellers. This is basic common sense for both you and your vendor. What is the cost of buying a new item in? The wholesale price? No. For you it’s the time you spend looking at the rep’s range, the cost of travelling to trade fairs and the setting up of the item in your computer system along with your staff’s time with display tickets and getting it displayed. For your vendor it’s the design and set up costs and the travel to retailers or trade shows. What is the cost to you both when you reorder that item? Ignoring freight and restocking, the only cost is an e-mail and the price of the goods, and the same is true of your vendor. The profit comes, for both of you, when that item sells a second, third, fourth and fifth time. What’s more, the chances of an item selling again when it has already sold once is four times as great as a brand new item that you’ve just brought in.
• Pay your bills when they are due. Will a vendor show his best stock to the customer who meets his obligations or the one he has to hound for payment? I know what I would do.
So what do you gain from all of this?
A retailer with a strong relationship with a vendor will often find the other party is able to do the following:
• Offer you their best price. Doors open when you commit to a vendor. Like anyone, they can do better deals the more you spend, and it need not be an upfront payment. A promise to reach certain buying targets over an extended period will see you get the best price possible.
• Provide memo inventory. Certain vendors can only provide large quantities of this in a limited capacity, but almost all are able to send you some extra pieces around special promotional periods or to show special customers. Again, the ability to take advantage of this will depend on the level at which they value your business and the extent to which you are prepared to reorder what sells. It is in both your interests to get good sellers back whether they are items you own or have on memo.
• Exchange slow moving inventory. Again it’s in the interests of both of you that old items are moved out to make way for product that can sell several times over. The vendor can often on-sell this to another retailer, however there is no point in asking 18 months after you’ve bought it when the market has changed. This product needs to move on while the vendor can still sell it.
• Exclusivity. You can sometimes find the items you buy can be exclusive to you in your shopping centre or town. You can also get first choice in new items when they are introduced to the range.
• Customer evenings. Your vendors will often provide you with extra product or specials for these events and even attend in-store evenings themselves with their full range of products.
Developing the relationship as a win/win has obvious benefits for both parties. It’s worth spending the time to evaluate how you can do more for the vendors in your business – you may be pleasantly surprised what they will do for you in return.
David Brown is President of the Edge Retail Academy, an organization devoted to the ongoing measurement and growth of jewelry store performance and profitability. For further information about the Academy’s management mentoring and industry benchmarking reports contact Carol Druan at email@example.com or call 877-569-8657.