Mar 31 2016
Succeeding in DIY
My former head of retail sales once remarked to me that there are two types of product vendors selling in the DIY channel: those who sell to Lowe’s and those who want to sell to Lowe’s.
I always found that comment to be a truism that accurately captured the dynamics of the home improvement retail industry. Lowe’s is a clear leader in that channel, so much so that vendors will do just about anything to win Lowe’s business. You see similar dynamics in other industries where certain retailers are ‘must haves’ on the client list of product vendors who want to be market leaders themselves (Walmart for mass, Costco for wholesale, Best Buy for electronics, etc).
But being a vendor to Lowe’s or any other retail giant is no longer good enough; it’s no longer the end-game. Or, it certainly shouldn’t be.
Get Smart or Disappear
Smart vendors need to be more than just product suppliers. It’s not enough to just ship products on time to the retailer. Sure, vendor scorecards are important to the retailer as they help to track fill rates and measure lead times on the logistics side of the business. But equally important, if not moreso, are the value-added insights that vendors are able to bring to their buyers on a weekly basis to grow and optimize their joint business.
Launching a new product across your retailer’s stores? In the old world, you celebrated the ‘big win’ when you found out that your product would be listed, and you were considered a hero when you got the PO and shipped the product on time. But rarely did you worry about how that product performed once it ended up in store.
In today’s world, you shouldn’t be celebrating until that product has sold through at a rate that your retail buyer is happy with. Your job is to be on top of your point-of-sale data, and make sure that your products are selling at the expected rate. If they’re not, it’s up to you to course correct and find a way to improve sales. Pricing changes, merchandising changes, marketing changes…whatever it takes. Don’t just sell it in; sell it out.
What if it’s selling faster than anticipated? On the surface this sounds like a good problem to have – yes – but it’s still a problem when you get an unexpectedly large or early PO. If your supply chain isn’t ready and you’re caught explaining your short shipments to your frustrated buyer, you’ve lost credibility as a supplier. And credibility is arguably the most important thing you have as a retail supplier.
The Retail Data Imperative
Today there is more data available to product vendors than ever before. Most large and even mid-sized retailers have moved beyond the fear of the unknown and now share detailed point-of-sale data with their suppliers. Why? Because they want their suppliers to help them optimize their retail business, and smart suppliers get this.
Successful product suppliers are programmatic when it comes to using their retail data to constantly improve their business. These suppliers understand that their status as an active supplier is potentially one or two mis-steps away from changing to former supplier.
Many retailers have done their part in this new order by figuring out how to get data to their suppliers. Over the last 10 years or so, most major retailers have invested in systems to share this data with their supplier base. Up until recently, there was an expectation that only the largest vendors would pay attention to the data and actually do something with it, perhaps under the banner of collaborative planning, forecasting and replenishment programs (CPFR). But this is no longer the case.
With the broad availability of retail analytics tools that enable even the smallest vendors to make intelligent, data-informed decisions and provide value-added input into their buyer’s merchandising plans, retailer expectations have gone up. In fact, they have risen to the point that the salesperson’s truism, quoted above, has now morphed into: there are two types of product suppliers – those who are using retail data effectively, and those who should be.
If you’re a retail product supplier who is not yet making use of point-of-sale data to improve your retail business, it’s time to get on board the retail analytics train. Otherwise, you may soon find yourself on the outside looking in at all your data-enabled competitors who just took your shelf space.