Should I Keep This Vendor Or Not


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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 management

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Should I Keep This Vendor Or Not

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