If Oliver Stone Made a Movie About Retail

By: Dan Jablons

I'm a big fan of conspiracy movies. I've watched enough of them to know that the world is probably run by a few men who sit in well appointed offices with leather chairs, and they control things like gas prices, medical and technological advances, and reality TV shows. Their power most likely knows no bounds; I'm pretty sure that if I can't find a decent parking spot at the mall, these guys had something to do with it.

OK, I admit that's a little paranoid. But we can probably agree that every industry has its secrets. Retailing is no exception, and I'm about to reveal a big secret in this column. So when you read this, make sure you are in a safe place, as all of our lives could be in danger. (Cue dramatic music.)

Here it is: It doesn't matter how big or how small you are, you can still get markdown money from vendors.

Many retailers that we work with think that only the really big retailers can get markdown money from their vendors. They think that you have to be of a certain size or do a certain volume to get these kinds of benefits. Vendors tell you this so you don't ask them for it.

So how DO you get it? You have to have a system that will tell you a lot about your inventory, your receiving, your sales, and your margins. You need to show the vendors what you received, the margin you expected to make, and then the margins you are able to achieve. For example, you might receive a related separates group that you expected to get 52% margin on, but you were only able to sell it at a 45% margin. Show the vendors the amount of money you "lost" in margin. And, if you still have stock that hasn't sold, show them that as well.

This conversation is best done when the vendor wants to show you next season's line. You can say things like, "Before you show me the line, there is some leftovers from last season that I want to talk about." Then break out your report, and work them over.

The big box retailers have created a culture between vendors and retailers, where the vendor is the retailer's "partner." The reasoning is that the vendor and the retailer came to an agreement that the merchandise would sell, so when it doesn't both sides take some responsibility. To that end, many vendors have established "Vendor Managed Inventory Departments" where the vendors watch inventory and sales at the retail level, and partner in decisions about where the inventory will sell best, at what price, etc. Smaller retailers can benefit from this if they know about it.

So if a vendor is confronted with the hard data (actual printouts from a good POS system), it is more likely that they'll do something to help. If they don't provide markdown money, they might provide something else, such as better terms, or special pricing on promotional groups to help you recoup lost margins.

Now you know the secret. Be careful how you use it. You might never again get a good parking spot at the mall.

For more information, visit www.onestepdata.com.

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