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MONEY SHOP Feeding the hand that bites!


Footwear Today’s financial plumber, footwear retailer David Gummers, asks why do retailers feed the hand that bites them! What could manufacturers do to help us?


I


do not know if any of you watched Chef with Lenny Henry in the late 1980s.He had an appointment with the bank manager and when he had finished his pitch-the Bank manager said ”Why do you not give all your


diners a tenner and be done!” There are two reasons that I mention this, first it is a flippant way of


getting the message across that if every penny you take is used to cover your costs what is the point in trading. The second reason is I was reading some of my father’s articles from that period of time. The strange thing for the younger generation is that the principles of business have not changed in the last 30 years! If you own your freehold are you charging an economic rent? He said, “if you are not you are deluding yourself that the company is more profitable than it really is.” He stirred up the trade with an article on margins and a stinging rebuke for manufacturers who gave recommended prices. It is no more the prerogative of a supplier to tell a retailer for what price


they should sell a product, as it is for the retailer to tell a manufacturer the cost price. Neither has much idea of their respective costs. With the advent of the Internet, people are able to quickly check prices, should this be a worry for the independent retailer? To a degree yes, however, they should not fret too much. Yes, the customer can probably buy the product cheaper and I have no problem with that at all. You have one advantage over the Internet, you offer a human service and are entitled to charge a bit more for your added value coupled with the risk of carrying stock. I can give a good example of this, my father had a customer who had


been to the competition in one of our towns and had tried to get a shoe from them. Their price was £29.99 (shows how long ago it was!). The customer came to us and we fitted the shoe we at the time charged £39.99, the customer complained. My father, on the ball as ever, asked, “Why did you not buy it from the other shop?” She responded, “He did not have my size and would not order it for me.”


The shoe was bought and we won a customer by offering a good service, even if we were a little more expensive. Turning back to suppliers - I had a very interesting conversation with a


retailer from across the water while at the Moda Show in Birmingham NEC about what the manufacturers do for the independent retailer except supply us with shoes. This set me thinking - he is right. In the past they supplied us with shoes and maybe had a clearance shop for their rejects and over makes. Today, they still supply us with shoes, but they now have an Internet site, where they sell their full range, often at a lower price. Now, I do not blame the manufacturers for this, but it does not engender


loyalty-after all without the retailer when they were establishing their brand the public awareness would not have been there for them to do this. As my father put it in a scathing article, “Why do retailers feed the hand that bites them! What could manufacturers do to help us? I know that the bigger you are the cheaper the shoes become, due to economies of scale.


One thing that would help and may make the retailer a little more loyal


would be an extra discount if you increase your pairage from one season to the next. If you buy 100 pairs for spring, and 120 for the following spring an extra 5% discount. Size should not matter on this. The bigger retailer will still get more money off, but little incentives do help. How many agents and reps pop into your shop for a coffee and a chat, without expecting an order? I am aware their time is valuable, but surely they could spare a couple of


hours out of their selling time to see how their product is doing. Being fully aware about finance, I appreciate the fact that individually our


orders have very little impact on their bottom line. I suggest though that collectively we are a lot cheaper for them than they having to open their own shops. We use their display material to promote their products, and get them into the customers’ consciousness. I fully accept this is not a selfless act; it is also good for us to be selling good quality products from suppliers who deliver on time. The other subject we discussed was the reluctance of suppliers who


would like us to try their lines for the first time to offer 50 pairs of their choice on an absolute sale or return. This could also be useful for us if a manufacture, who we buy from, is trying something new. When you suggest this to a supplier however, you could be forgiven for thinking you have just grown a second head! Most retailers want a good two way relationship with their suppliers and I think this is what manufacturers would like as well. Profitable manufacturers need profitable retailers who pay their bills.


If you would like David to look at your business costs, he promises that if he cannot save you any money you pay him nothing. But for every pound he saves you pay him, 15 pence. If you want to learn more email David on david@fdickinsonfootwear


Website: http://www.fdickinsonfootwear


.co.uk or call 01229 580654 .co.uk/


OCTOBER 2013 • FOOTWEAR TODAY • 31


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