by Warren TylerThen there is the question of finances—cash or charge. It really doesn’t matter which since the retailer’s name is usually on the line. We all know what it takes to buy or lease a location and the tens of thousands of dollars, maybe more, it takes to create an effective selling showroom with design, samples and displays, not to mention inventory.
Add to this money it takes to train personnel, promote and advertise, putting even the smallest dealer at risk for hundreds of thousands of dollars. Set up with an attractive location, it costs the average dealer 25% to 30% of sales volume to keep it running.
Compare this to those without a retail location and those on the Internet. The expenses for both are almost nil compared to maintaining a physical store. The installer or peddler who works out of his car has what expenses? Whenever a supplier sells to these businesses, it is actively cutting into its best customers’ businesses.
When I was a rep, I was ordered to keep selling a man in Brookline, Mass., because he was responsible for $1 million a year. His expenses? $50,000. What about the average retailer? As much as $300,000 to display and promote the mill’s goods in the best light possible. Where is the loyalty, ethics and fairness?
Selling through the Internet takes even more advantage of smaller retailers because consumers use showrooms to shop and find more information using a retailer’s expertise and time without any reimbursement. To some extent people who sell from their car follow the same pattern. For the life of me, I don’t know why small dealers take this.
Suppliers should re-evaluate their moral and ethical compass when they realize how abusive they are to the ones they brought to the dance.
It even gets worse when they sell to the boxes. The manufacturers provide free training for these stores on location. What about your store? They provide ad funds without the restrictions put on small retailers and they provide ways to sample and display their merchandise at no or little cost to the boxes. What about your store?
I could go on—exclusive goods, private labeling, better pricing (including promotional). Is it any wonder small retailers get disgusted with the industry?
About the only way specialty stores have found to fight the un-fairness in the industry was to band together and form merchandising groups, which in many cases has been successful but even here the front line troops (the sales arm) of manufacturers fight tooth and nail against them. My observation beyond fury is if suppliers took a long cold look and decided not to sell through the unfair merchants, they would not lose any sales. If they cut off the boxes, consumers would simply go elsewhere.