How to Handle Vendors that Diminish Your Sales?
Q: What do you do when you've helped build up sales of vendors, especially those starting out or new to your area, who after a period of time saturate the area near your store with their products, diminishing your own sales of those same products?
A: I know when I worked with toy retailers, that was the story. A new guy comes out, "I've got this new toy. It's awesome. It's all natural. Blah, blah, blah." The independent retailer sees it. They make a commitment. They buy it. That gets the vendor enough sales that even the little ones want to make more money and they look at the larger players.
They go to the big boys and say, "Hey, all of these little stores have been selling this at a rate of X, Y, and Z. It would be great for you." And then they sell it to the mass merchant and it may or may not sell.
If you're the little guy vendor thinking that's the easy answer, not always, because if it doesn't sell, more often than not, it's going to come back on you to buy back that inventory. And going back the smaller retailers gets really hard; you can burn your own bridges if you're the manufacturer.
But at the end of the day, that's kind of the way the world works. The little guys build it up to a size, then the smaller manufacturers can bring it to the big ones. You know, I get it. That's the story of retail.
Your options are cut them out and not be a vendor with them, live with it, or slam them on a bunch of your association sites. But at the end of the day, where does that get you? If it bothers you that much, I would say just leave.
I just had to get rid of a vendor of mine who thought it was more important what they thought about their business than mine. And I was like, "You know what, this isn't working. Let's just move on." And so, that may be appropriate for you. But don't be halfway and then create an adversarial relationship. I don't think that really helps.
Subway's going through this very problem. A lot of people opened Subways, and then Subway sold it to pretty much anyone around them, and now that's a really saturated area. And now they're going to have a $5 footlong. And their cost of goods is like four bucks, and they're really upset. But that's the system they bought in to. Either you have to say, "I'm going to make it work or not." But don't just sit in the middle and say, "I'm going to be bitter and do both."
That's just not going to help you. So either get rid of it or make peace with it. Ultimately, you are about as successful as you make your mind up to be. Sell what you've got in your four walls.
Because many times shoppers do not realize the same product is in a nearby store due to the merchandising. If yours is working for you, be grateful and have a dialogue with your supplier.