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Wholesalers Duties to Dealers
The other side of the coin
This column had an article last spring about the need to become a loyal participant with only one wholesaler. The comments that were made to us by employees of several of the wholesalers after having read the article, were very positive. Everyone, retailers and wholesalers, want to be a near exclusive supplier to a customer.
The surprise responses came from retailers. There were comments of agreement, as well as a couple that raised some interesting cause for question. There was a midwest dealer that told us that he had received his copy of Hardware Age in the afternoon mail, and upon reading that column, decided to place a call immediately.
His request, after detailing his experiences, was the article you are reading today. The topic? If a retailer is loyal to his wholesaler, what are the responsibilities of the wholesaler towards him?
He explained that his store is in a small town located within a county of 40,000 people. At one time, there were two hardware stores in the town. After several years, two of the discount stores came to town and the other hardware store closed. His store is very progressive as shown by his advertising, competitive store hours, and merchandising techniques.
He heard a rumor of a lumber yard scheduled to open in his town. It turned out that this lumber yard had three other locations, and was affiliated with the same wholesaler at each of these other locations, as he was. His calls of concern to the wholesaler before the new store opened provided no results. He now completes with the discount stores on name brands, and competes with the lumber yard, located within a mile of his store, on the same private label merchandise. Where, he asks, is the loyalty from the wholesaler?
The second retailer, from the northeast, explained a similar situation. A small town, but within a trade area large enough to support many of the big box stores. Another retailer was soon going to be moving within 8 miles of him. This was the store that he was most concerned about.
During the past few years, he also had his wholesaler open another store in his town. It was owned by someone that already owned several stores affiliated with the same wholesaler. Before the store opened, he expressed his displeasure with the idea of additional store to the wholesaler. In spite of his objections, the other store did open. Relief, in the eyes of this retailer, came when the other store finally closed. To his surprise, the wholesaler was back within a year asking him what he thought about another retailer opening within his trading area.
During each of these phone visits, We discussed how some wholesalers are redesigning themselves and establishing their level of expectations from their retailers. Looking at these expectations, we agreed that the successful store would be pleased with the wholesaler's guidelines because there are a number of stores whose "less than quality" image could be improved. Stores that present a quality image, probably are assisting in creating a better overall image for their trade name. And any store would benefit because of a customer's previous positive experiences in a store of the same trade name.
The wholesalers are providing at their conventions, actual layouts of their redesigned departments and stores. For some stores, these are no more than new ideas to be considered for their next remerchandising effort. While for some, these designs represent unachievable goals, or unnecessary expenses. In any viewpoint, these are attempts at putting neighborhood hardware dealers on the same playing field as the chain stores.
An interesting point that we heard, was to examine the two sections that are best organized in many stores. The National Hardware display, and the nuts & bolts display are usually the attractive parts of even a very messy store. This could indicate the need, and opportunity for outside additional services and leadership. In any sport, there is no one man team. Even in singles tennis, you have trainers and coaches.
There is perhaps a correlation here. Yet, sad to say, there are many retailers that state that the representative from their wholesalers do not provide the assistance they want.
The managing director of a hardware association recently said that in speaking with his directors, about 10% felt that they got quality assistance from their wholesaler. The alarming part is that you would expect that those individuals that take the time to be actively involved with their association probably work very hard at managing their stores. What would a store be like that had only 10% of their employees working effectively?
A specialty product line sales manager reported that while they were cutting the number of visits to once each year for their marginal dealers, they were planning on having two visits for their better stores. The store owner that reported this mentioned that their store was one of the top ten dealers in that state for this product line. He asked a member of the company's management about this situation, for which the reply was, "stores that want to succeed will find a way."
The purpose of the "Dealer to Dealer" column, according to our editors, is to relate the stories and lessons learned from the day to day life in a hardware store. And while this column is not intended to be an editorial, understandably this month's could be perceived as such. This is not our intent.
Are stores successful because of their wholesaler, or are their wholesalers successful because of the stores? Understandably, a valid question as we find that the definition of wholesaler/retailer relationships being rewritten. From the viewpoint of the wholesaler, they must be concerned about the good of the whole, and from the viewpoint of the retailer, he must think of his store. We must think together, we need each other.
This article is copyrighted by Tom Shay and Profits Plus Solutions, who can be reached at: PO Box 1577, St. Petersburg, Fl. 33731. Phone 727-464-2182. It may be printed for an individual to read, but not duplicated or distributed without expressed written consent of the copyright owner.
Profits Plus Solutions, Inc.