With over 25 years of frontline experience Tom Shay is America's leading small business
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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.
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This article is copyrighted by Tom Shay and Profits Plus Solutions, who can be reached at: PO Box 128, Dardanelle, AR. 72834. Phone 727-823-7205. It may be printed for an individual to read, but not duplicated or distributed without expressed written consent of the copyright owner.
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With over 25 years of frontline experience Tom Shay is America's leading Small Business
Management
Expert. He's a "Must Have" for your next event.
Perhaps you have investments outside of your small business; gold, stocks, bonds or money market funds. With each you likely know what the rate of return is.
What about your busines? Do you know what the rate of return is for your business? You should. After all, you do not want to be the person who has just bought themselves a job.
We see a lot of social media with what we think is a "sympathy plea" do do business with local small businesses.
It is not going to work. People select where they do business based on positive reasons. We discuss what we are seeing.
Article of the Month
A timely article for the holiday season. With any business that has inventory, are you looking at sales per square foot? Are you looking to see which is the most valuable space in your business? You can increase sales by knowing which items to place where.
Book of the Month
Fix This Next by Mike Michalowicz. We love this description of the book; The biggest problem entrepreneurs have is that they do not know what their biggest problem is.
If you find yourself trapped between stagnating sales, staff turnover, and unhappy customers, what do you fix first? Every issue seems urgent - but there is no way to address all of them at once. The results? A business that continues to go in endless circles putting out urgent fires and prioritizing the wrong things.