In chasing volume, some suppliers let down their customers
Several suppliers in categories in or nearby our channel are reviewing retail partner arrangements, preferencing retailers who spend more with them as if the annual spend is the most important measure.
In a couple of cases, the local Australian suppliers are being told what to do by large international brands they represent.
None of those involved in this resetting of local retail relationships appear to have considered the impact on the customers, those who love and purchase their brands at retail.
Australian geography as it is sees many retailers serving small communities, dedicated communities.
In one such community, the retailer is delivering brand penetration several times greater than capital city retailers. But since their annual spend on a brand does not reach the bar set by the owners of the brand, they are losing the product.
This is a stupid and ignorant move by the brand. Some of their customers, brought to their brand by the local retailer, may pay more for online (once you add shipping) while others will give up on the brand, in part because of their actions against a local retailer they love.
Too many business owners and leaders chase volume / size because they think size matters.
While size does matter as an overall business performance marker, the best size, or revenue, is that which is spread across many accounts, many retailers. This approach is smart business as it means the supplier is not reliant on a few. But it is harder business to get and manager, with many more accounts.
Predictable business is important in any business. Serving a smaller number of large accounts is not as predictable as serving a large number of smaller accounts. Sadly, some large brands don’t see it that way. I guess leadership team members are not there long enough to see this.
In our retail businesses, we, too, need to manage for efficiency and predictability. This is why I try and have balance in my retail businesses, less reliance on a supplier or product category dominating revenue or GP achieved in the business. This way, one can fall and the business itself is not too harmed.
Any retail business dominated by one supplier is unhealthy at its core, at risk the supplier’s interests are not its interests.
There is too much talk in news outlets and business magazines about business size, too much obsession at business conferences and in industry trade journals about what big business thinks and does and about what successful big business people have done. we need to focus more on our scale, efficiency at our level, at business predictability at our level.
Business size does not matter. What matters is the value the business provides those who rely on it: the owners, employees and customers. In small business retail, our decisions and actions will do more to drive this value than a performance bar set by a supplier.
The suppliers chasing larger accounts, pushing us to reach an arbitrary bar they have set for doing business with them … good luck to them. I don’t trust them enough to believe that achieving today’s bar will satisfy them. I’d rather replace them with two or three smaller suppliers whop are more interested in and appreciative of my business.
