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Successful Vendor Relationships: A Win-Win Approach
Sherry Smith shares tips for fostering successful vendor-retailer partnerships, from marketing investment to fast-seller replenishment.
Sherry Smith is director of business development at Edge Retail Academy, the leading jewelry business consulting and data aggregation firm. She can be reached at sherry@edgeretailacademy.com.
The jewelry industry thrives when both retailers and vendors succeed. In recent years, this balance has been disrupted, with retailers experiencing record growth while vendors faced uncertainty.
As a former retail store owner and current industry consultant, I’ve gained unique insights into fostering sustainable and successful vendor partnerships.
My belief is that a win-win scenario is achievable through collaboration and best practices.
Early in my career, as a member of a group of non-competing retailers, I learned the value of benchmarking and sharing proven strategies.
This collaborative environment provided a unique opportunity to identify areas for improvement within my own business, while also celebrating successes and learning from others.
Optimizing Inventory Management
Our initial approach to inventory management was flawed. I met with a limited number of our top vendors in-store, relying on sales reports to guide our reorders.
This resulted in a best-case scenario of two stock turns per year for a small portion of our inventory. This practice meant there were lots of missed opportunities.
The turning point came when I engaged in serious reset conversations with my top 12 vendors, making clear commitments to enhance our operational strategy.
— Regular Replenishment: Fast-selling items were replenished weekly, without fail.
— Training: Utilizing vendor-provided training, we enhanced our team’s product knowledge and brand differentiation.
— Marketing Investment: We committed specific marketing dollars to promote the vendors’ brands.
— Merchandising: Prime store real estate was designated for displaying these brands effectively.
— Financial Responsibility: We ensured timely payments to maintain good standing.
In return, I sought equitable terms from our vendors, such as a one-to-one stock exchange for underperforming items, which most agreed to.
This collaborative approach paid dividends. Our sales grew from just under $2 million to more than $4 million within 18 months on an inventory investment of $900,000.
This success was not only internal but also shared within our retailer group, fostering a community of learning and mutual success.
The Retailer’s Perspective
Retailers control several key factors that directly impact a vendor’s success. They are as follows.
— Sales Team: Are your sales associates well-trained and knowledgeable about the brand? Have you utilized vendor-provided training programs?
— Marketing: Do you consistently allocate marketing dollars to promote the brand? If it’s a new brand, did you have a product launch event?
— Merchandising: Is the brand prominently displayed in prime real estate within your store? Are you utilizing brand-specific merchandising elements?
— Sales Targets: Have you established clear sales goals for the brand, broken down by year and month?
— Open-to-Buy: Are you adhering to your budget and do you have an open-to-buy plan for the brand?
— Fast-Seller Replenishment: Do you consistently replenish fast-selling items on a weekly basis, even daily during peak seasons?
— Inventory Management: Are you avoiding overbuying, which can hinder cash flow and replenishment?
Related stories will be right here …
As a former retail store owner and current industry consultant, I’ve gained unique insights into fostering sustainable and successful vendor partnerships.
My belief is that a win-win scenario is achievable through collaboration and best practices.
Early in my career, as a member of a group of non-competing retailers, I learned the value of benchmarking and sharing proven strategies.
This collaborative environment provided a unique opportunity to identify areas for improvement within my own business, while also celebrating successes and learning from others.
Optimizing Inventory Management
Our initial approach to inventory management was flawed. I met with a limited number of our top vendors in-store, relying on sales reports to guide our reorders.
This resulted in a best-case scenario of two stock turns per year for a small portion of our inventory. This practice meant there were lots of missed opportunities.
The turning point came when I engaged in serious reset conversations with my top 12 vendors, making clear commitments to enhance our operational strategy.
— Regular Replenishment: Fast-selling items were replenished weekly, without fail.
— Training: Utilizing vendor-provided training, we enhanced our team’s product knowledge and brand differentiation.
— Marketing Investment: We committed specific marketing dollars to promote the vendors’ brands.
— Merchandising: Prime store real estate was designated for displaying these brands effectively.
— Financial Responsibility: We ensured timely payments to maintain good standing.
In return, I sought equitable terms from our vendors, such as a one-to-one stock exchange for underperforming items, which most agreed to.
This collaborative approach paid dividends. Our sales grew from just under $2 million to more than $4 million within 18 months on an inventory investment of $900,000.
This success was not only internal but also shared within our retailer group, fostering a community of learning and mutual success.
The Retailer’s Perspective
Retailers control several key factors that directly impact a vendor’s success. They are as follows.
— Sales Team: Are your sales associates well-trained and knowledgeable about the brand? Have you utilized vendor-provided training programs?
— Marketing: Do you consistently allocate marketing dollars to promote the brand? If it’s a new brand, did you have a product launch event?
— Merchandising: Is the brand prominently displayed in prime real estate within your store? Are you utilizing brand-specific merchandising elements?
— Sales Targets: Have you established clear sales goals for the brand, broken down by year and month?
— Open-to-Buy: Are you adhering to your budget and do you have an open-to-buy plan for the brand?
— Fast-Seller Replenishment: Do you consistently replenish fast-selling items on a weekly basis, even daily during peak seasons?
— Inventory Management: Are you avoiding overbuying, which can hinder cash flow and replenishment?
The Vendor’s Perspective
Vendors also have several key responsibilities in a successful partnership. They are as follows.
— Consultative Selling: Have you developed a strategic annual sales plan with the retailer?
— Overselling and/or Selling the Wrong Product Mix: Do you oversell inventory levels that could strain the retailer’s cash flow and ability to replenish fast-sellers?
— Fast-Sellers: Do you identify and quickly deliver top-selling items?
— Stock Balancing: Do you offer flexible stock balancing options based on the partnership agreement?
— Collections/Stories: Have you created curated collections or stories that resonate with consumers and make it easier for retailers to sell your products?
— Training: Do you provide comprehensive product knowledge training that highlights your brand’s unique selling points?
— Co-Op Advertising: Do you offer marketing support, such as camera-ready assets or co-op advertising funds?
Achieving a Win-Win Scenario
When retailers and vendors embrace best practices and focus on mutual success, the results can be remarkable.
In my own experience, implementing these strategies led to significant sales growth and strengthened vendor relationships.
This model not only propels sales but also builds a foundation of mutual respect and shared objectives.
Both parties must commit to open communication, collaboration, and a willingness to adapt.
Retailers should actively communicate their needs and expectations to vendors, while vendors should provide support and guidance to help retailers achieve their goals.
The Way Forward
As the director of business development for the Edge Retail Academy, I now lead a team dedicated to advising businesses on adopting these proven strategies.
Our daily interactions with retailers reiterate the value of mutual commitment and adaptability in achieving collective success.
Understanding and implementing these strategies from both the retailer’s and vendor’s perspectives ensures that both parties contribute to and benefit from the relationship, reinforcing the necessity for both to remain profitable and proactive in this dynamic industry.
Remember, a successful vendor relationship is a partnership built on trust, mutual respect, and a shared commitment to achieving mutual goals.
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