Special note: This article is the second of four on the five stages of profitable retailing. If you follow this retail recipe and give equal and careful attention to each of the five stages, you will not only buy better, sell better and manage better, you will have a sustainable retail business model and money in the bank to provide for your family, your lifestyle and your retirement.
NOW YOU FIND YOURSELF at a show (or sitting in front of a vendor) complete with your open-to-buy budget, your new product list, a list of vendors to talk to (new and existing), your aged inventory reports (by vendor) and a very clear idea of what you want to achieve.
There’s a lot going on at shows including social events, tempting offers and show specials, so it can be hard to stay focused and to stick to your plan. As a rule of thumb, if it’s not in your plan or your budget, research it by all means, but sleep on it before you act on it. If you feel the same way by the end of the show or when you get back home, fine, trust your judgment. But if you’re making an emotional decision, think carefully. Remember, if you’re like most jewelers, you still own 80 percent of what you bought at previous shows after 12 months and 60 percent after 2 years. Those are not the sort of odds that will support a secure retirement.
Shows have several major benefits and purposes including networking with your fellow retailers, meeting with existing vendors to enhance relationships and the opportunity to research new products, vendors and trends.
Assuming you have existing terms in place, shows give you the opportunity to sit down with existing vendors and balance your investment, such as more of the product that has sold for you and less of the product that hasn’t. But first a word of advice: Your relationship with your good vendors is symbiotic in nature, that is, you need each other, it is not a conquest where you win and they lose or vice versa. To ask vendors to take back product that is already 12 months old, that you were slow to pay for the first time around and after you didn’t diligently reorder product that did sell quickly, is frankly unfair and unsustainable (for them).
Good vendors don’t want you to be sitting on product that isn’t selling, because it’s costing both of you money — but they will only be eager to help if you’re one of the few retailers who reorder immediately and pay quickly. What vendor wouldn’t want to work with a retailer who pays quickly and takes responsibility for selling and managing their product, not just buying it?
Talking to other, successful retailers (ideally who already own the type of retail business you aspire to become) can help you identify vendors, brands and trends that are either on the way up or on the way out.
Here are some tips for hiring a new vendor:
Research.
- Network at shows and ask other retailers about their experiences.
- Research trade magazines and trade organizations.
- Ask for referrals or testimonials and actually check them out.
- Make sure they are a good fit for your current and future business model. Are they a good personal fit for you, that is, do you trust and like them?
- What is their experience, track record and history in this market segment?
Clearly articulate the expectations of the relationship, what I call the “up-front contract.”
- What you expect from them.
- What they can expect from you.
- Ask for exclusivity in your area (subject to you achieving minimum performance expectations).
- At the very least, find out what other retailers carry the product, or are likely to carry the product, in your area.
- What ongoing support do they offer, for example, displays, training, packaging, brochures.
- Establish terms, i.e., payment terms, stock balance privileges. If you really want to negotiate better terms, pay quickly and reorder quickly.
Establish delivery expectations.
- Lead times for the initial order, reorders (this is super important), and “special orders,”
- Think about your exit strategy. The law of averages says only 20 percent of it will sell quickly, so before you put anything on paper, ask yourself, What will I do if this product doesn’t sell within x days?
And remember, an item that sold quickly the first time has an 80 percent chance of selling quickly again the next time, whereas, if you take that same money and speculate with it, it only has a 20 percent chance of selling. Are you a business entrepreneur or a gambler?