U.S.
furniture retailers seek reliability in vendors |
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| Retailers seek reliability in vendors How do retailers choose their vendors? Ninety stores responding to a Furniture/Today survey said the most important factors were reliable delivery and the profitability of a product line. Not far behind were two other, but similar, factors: speed in receiving replacement parts, and the perceived price/value relationship in a product. The survey by e-mail earlier this year. In addition to revealing how they choose vendors, the respondents also told how they compute their own profitability, and gave their opinions - many of them unfavorable - on single-vendor stores. Retailers ranked their most important factors in choosing vendors on a scale of 1 (not important at all) to 5 (very important). Ten factors scored 3.5 or higher. Several involved the mechanics of doing business, led by reliable delivery (which scored 4.8) and speed in receiving replacement parts (4.5). Also along those lines were the ability to return damaged merchandise (4.2) and ease of purchase (4.1). Other factors involved the product itself, headed by how profitable the line is to the store (which scored 4.8) and the perceived relationship of price to value (4.5). Also in this category were style leadership and breadth of selection (both at 3.7). Also scoring high were knowledgeable sales reps (4.0) and the availability of sales aids (3.6). At the bottom of the list were ISO 9000 certification (2.2) and some high-tech capabilities such as bar coding (2.5) and electronic data interchange (2.6). Several retailers offered comments on what they wanted from vendors. "Accountability is the real key item that I look for in my vendor choices," said one retailer. "If I can't communicate openly with a vendor, I can't really benefit from the line or help the vendor to grow either," he continued. "Honest reps are the link that makes the whole operation work for us. ... They lie, we drop the line ... simple." Another retailer said that manufacturers "seem to want to sell everyone in every market. There doesn't seem to be any protection anymore, which leads to lower margins and more stores going out of business." He went on: "My major concern about what vendors I carry is, who else in town are they already selling, or are they going to continue looking for more stores to sell their product in our town?" When it comes to measuring their own profitability, almost two-thirds of the retailers said they use gross margin, annual stock turns and gross margin return on investment. Not quite half factor in the markup they can apply to a line. Strong feelings about single-vendor stores Questions about single-vendor stores brought some strong comments. Four-fifths of the retailers that responded said they didn't believe a single vendor could provide the variety and depth of merchandise to satisfy customers. "A single vendor could never supply the mix, style and price points needed to outperform a well-merchandised, multivendor store," said one retailer. Another said, " I believe that I will have greater success by offering the best of a small number of vendors. All vendors have a unique story that makes a certain part of their line better in some customer's eyes. I like to give the customer the right to choose the features that are most appropriate for them." Four-fifths of the retailers also believe that manufacturers have too much control over single-vendor store operations. "In a vendor store situation," one retailer said, "the vendor believes that she/he doesn't need to be competitive in style/price/value because they believe there is no comparison with other brands. This is only true within a single store. The consumer is shopping other stores against their brand.¡" Aside from the profit motive, one retailer pointed said, "Single-vendor stores take all the fun out of buying and giving your store a personal touch and creative image." Seventy percent of the respondents said they wouldn't carry the lines of vendors that also have single-vendor stores in their market. More than two-thirds of the retailers responding to the survey conceded that single-vendor stores are a good way for a manufacturer to build a brand. However, less than half agreed that "Consumer brand awareness created by single-vendor stores creates more interest in furniture, and that's good for the furniture business." Some were fine with the single-vendor concept, as long as manufacturers don't own the stores. "Vendors should not be in both the wholesale and retail ends of the business. I would not buy from a wholesaler who also operates stores," said one retailer. Added another, "While I do not have a problem with single-vendor stores owned by individual retailers, I would not do business with a manufacturer who owned and operated a store in my market. In my opinion, that would create an unfair advantage to the manufacturer-owned store." |
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