CGTA RETAILERS RANK WHOLESALERS AS A BIGGER THREAT THAN BIG BOX STORES!

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A recent survey by the CGTA identified increased costs from wholesalers as one of the top problems faced by CGTA retailers.  

How big a concern is this?  Retailers ranked it as a bigger threat than competition from big box stores!

Now if you are a supplier think about this:  Your own customers view you as a bigger menace than their actual competitors!

RETAILERS SATISFACTION WITH WHOLESALER TAKES A NOSEDIVE ..."NOT ENOUGH NEW PRODUCTS"

Not only do wholesalers get low marks for high prices, retailers aren't too happy with new product introductions.

Retailer's satisfaction with new product introductions has plummeted by 50%...customer's are half as
satisfied today compared to 2006. 

Basically retailers want more products at better prices, yet CGTA wholesalers are doing the exact opposite according to retailer surveys.

At the recent trade show some wholesalers at least a little attempt to address this problem by offering show specials.  But these are often not that great for either the wholesaler or the retailer.

YESTERDAY'S LOSERS AT 25% OFF IS NO DEAL AT ALL

Often the items on "show special" are last year's products presently gathering dust in the warehouse.  We all know that retailers go to the trade show to source new products not yesterday's leftovers. Sorry wholesalers, but that's not going to cut it.

WHOLESALERS NEED TO MAKE PROFITS TOO

Now it's possible some suppliers had some of the season's newest products on special.  But offering a discount on new products creates a problem for the wholesalers.  They need good profit margins too,  and if you discount your products you need to sell a lot more to make the same profits as you normally do.

Last time we checked the lease rates at the CGTA didn't decrease, nor did sales rep commission nor did all the set up costs.  Offering show specials to customers who would buy anyway is a losing strategy.

Discounting simply eats into profit margins that wholesalers need to finance and source new products for our customers.  And customers are complaining, "loudly", that CGTA wholesalers are not bringing enough new product to market.

WHY WHOLESALERS HAVE TOO FEW NEW PRODUCTS
It is really quite simple.  Wholesalers do not know what retailers will buy,,,it's a complete stab in the dark (as we explained here).

Basically wholesalers show up to the trade show with a few new products. Perhaps they have 500 units of each item.  They sellout on a few items and then have hundreds of units left over of other items.

These items can sit it their warehouse for a long time.  It could take 12-18 months to sell out their remaining stock.  So until they liquidate the stock, they really can't afford to bring in many new products to the next trade show.  It's that simple and its a vicious circle.


HOW SOME WHOLESALERS AND RETAILERS SOLVE THE PROBLEM

A number of wholesalers offer early-booking programs.  This allows the wholesaler to show the new products to their customers 4-5 months before trade show season.  Because they have insight into what will sell, and what doesn't, they are able to forecast their production runs more accurately.

In return, they offer retailers as much as 15% off "new" products.

They can also afford to offer lots of new products because these wholesalers only produce what they need...they don't worry about excess inventory they eventually unload at Homesense!

Wholesalers offering booking programs are typically able to offer 5 times more new products  each season than non-booking wholesalers.

They solve the two main problems retailers complain about:  too few new products and high product costs.

How good are early-booking programs?   We'll elaborate on this topic over the next few posts.

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