should i keep this vendor or not
DESCRIPTION
As a vendor, you need to know what goes through a retailer's mind when they review their assortment. As a retailer, you need to know what are the key steps to effective category managementTRANSCRIPT
Should I Keep This Vendor Or Not?
A Key To Effective Category Management
Presented By:
Yohan Jacob
Retailbound
Short Quiz
What is the common factor among these retailers?
Answer
They are all out of business!!!
What Happened??
Tight margins Poor cash flow Weak Management Slow to respond to competitor’s moves Lack of innovativeness Over-assorted and hard for the customer to shop
Category Management
Retailers who have similar products on their shelves cause customer confusion
Retailers who have similar products on their shelves also see lower sales and gross profits
Today’s (and tomorrow’s) retail customer
As a result of the economy, shoppers’ buying patterns are changing
To be successful, retailers must constantly review vendors and skus
Case Study – Good assortment
Retailer has 36 lineal feet dedicated to pillows Retailer has 15 pillows Retailer has 3 brands Merchandising strategy – by density, then by brand Educational signing
Case Study – Poor assortment
Retailer has 80 lineal feet dedicated to pillows Retailer has over 40 pillows Retailer has 14 brands No merchandising strategy No educational signing
Vendor/Sku Rationalization – Key Benefits
Consolidation of higher cost vendors Competitive bidding to drive price concessions Volume consolidation to drive additional discounts Reduces duplication of vendors/skus Improves cash flow Increases the number of inventory turns Better time management
Vendor/Sku Rationalization - Steps
Assessment
• Define scope• Identify product
assortment targets
Alignment
• Determine options• Prioritize efforts
Rationalization
• Negotiation with vendors
Implementation
• Transition between vendors
Vendor/Sku Rationalization - Steps
Assessment• Define scope
– What are your objectives– How are you going to
measure success
• Identify product assortment targets– Categories that have
high sales (or potential high sales volume)
– “Low-Hanging Fruit”
Vendor/Sku Rationalization - Steps
Alignment• Determine options
– Unique: cannot be provided by other vendors
– Competitive: vendors offer similar products
– Commoditized: products are undifferentiated and readily available
• Prioritize efforts
Vendor/Sku Rationalization - Steps
Rationalization• Negotiation with
vendors– Create RFQ packet– Send packet out to
current and potential vendors
– Create spreadsheet tracking tool
– Weed out the weak proposals
Vendor/Sku Rationalization - Steps
Implementation• Transition between
vendors– Internal communication– Inventory liquidation– Store plan-o-gram reset– Marketing plan
Key learnings
Retailers who have similar products on their shelves cause customers to be confused which results in lower sales and gross profits
Rationalizing vendors (and skus) will improve Gross profit Back-end rebates Time management Inventory management Cash flow Customer in-store experience
Questions
Thank you for your time
Retailbound
630-246-4068