1. Week 4 Ch 6: Retailer/Vendor Relationships FM10211 – Retail Operations

2. FM10211 - Retail Operations2 Benefits to Retailers Lower costs –Fixtures & Signs –Training –Shelf Management More expertise Benefits to sales associates

3. FM10211 - Retail Operations3 Benefits to Vendors Closer to consumers Closer to sales associates More control Better sales

4. FM10211 - Retail Operations4 Partnership Conflicts Difficulties can arise Must be negotiated or accepted Can hurt relationship Variety of problems

5. FM10211 - Retail Operations5 Order Cancellation/ Merchandise Substitution Both vendors and retailers Can occur without warning Little can be done

6. FM10211 - Retail Operations6 Unauthorized Returns to Vendor RTV For any reason “Adjustments” are an alternative –I.e. discounts Proper procedure help maintain relationship

7. FM10211 - Retail Operations7 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!

8. FM10211 - Retail Operations8 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

9. FM10211 - Retail Operations9 Discounts and Allowances Price concessions vendor gives to retailer In return for certain retailer actions Vendor may not honor

10. FM10211 - Retail Operations10 Unreasonable Conduct or Dishonesty Builds tension Destroys trust Vendor/Retailer relationships are often tense and fragile already

11. FM10211 - Retail Operations11 Why to Negotiate Solve problems Resolve conflicts Reduce costs Improve profit Many opportunities –Vendor <> Retailer –Retailer <> Sales Staff

12. FM10211 - Retail Operations12 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 10 th of month

13. FM10211 - Retail Operations13 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

14. FM10211 - Retail Operations14 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

15. FM10211 - Retail Operations15 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

16. FM10211 - Retail Operations16 Purchase Orders Once sale is negotiated Contract between vendor and retailer Contains all terms –Merchandise purchased –Terms –Discounts –Etc.

17. FM10211 - Retail Operations17 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

18. Chapter 8 Personal Selling and Customer Relations

19. FM10211 - Retail Operations19 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!

20. FM10211 - Retail Operations20 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

21. FM10211 - Retail Operations21 Expanding the Customer Base How? –Open more stores –New markets –Diversify merchandise assortment –Meet or exceed sales goals!

22. FM10211 - Retail Operations22 Retail-induced Incentives Compensation –Direct Compensation Wages Commissions Bonuses Prizes and Awards –Indirect Compensation Non-monetary rewards/Perks Recognition –Employee of the Month

23. FM10211 - Retail Operations23 Vendor-induced Incentives Everything mentioned, plus: SPIFs –Sales Promotion Incentive Funds –Added incentive to sell vendor’s products Contests Training

24. FM10211 - Retail Operations24 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!

25. FM10211 - Retail Operations25 Formal Training Highly structured May include –Lecture –Demonstration –Videos –Meetings, seminars, conferences –Role playing –Case analysis

26. FM10211 - Retail Operations26 Informal Training On-the-job Often up to the employee Can be problematic –For employers –For employees, too!

27. FM10211 - Retail Operations27 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