Ben Ball

FD Buyer: Vendor Venting

August 16, 2010

FROM RETAILWIRE:
There are complaints about things retailers do, but shouldn't. For example, during demo or promotion times the buyers don't purchase enough product to support the effort. In your experience, which issue cited in the article is the biggest headache for vendors?      [more...]

Generating the desired results from promotional activity has been a struggle for vendors for years. But I'm not sure retailers "cause" it. The fact that retailers treat the goals of maximizing:
1) unit sales,
2) retail revenue,
3) retail sales margin dollars and
4) net landed cost or (net generated revenue)
from any given promotional offer very differently should not be new news to any vendor.

The question is, why do vendors keep going back to retailers who's goals are clearly not aligned with their own with promotion dollars?

As long as vendors continue to offer those retailers incentives to buy more product to meet their quarterly volume targets, hit their quotas and make their bonuses, nothing will change.

And as long as senior management of these vendors use the same old sales management tools and incentive systems, their own sales forces will not change this behavior--they would be cutting their own financial (and probably career) throats.

The only real answer for vendors lies in building brand value through innovation and consumer loyalty that goes beyond promoted price. The brands that will survive the current onslaught of private brands will be the ones that do 90% of their volume off the shelf--not the ones with 400% lifts in "incremental" promoted volume.