SHOPFLOOR ANALYSIS | Choosing the right supplier


THE RIGHT SUPPLIER HOW TOCHOOSE


Retail consultant Toby Griffin analyses the factors that retailers need to consider when choosing the right suppliers for their businesses, from lead times to buying terms and customer service, with additional insights and opinions from retailers and suppliers accross the industry


D


o you know the difference between a customer and a client? Well despite


seeming interchangeable, the answer is clear – a customer purchases


a thing from you,


whereas you sell a client a service. Now I know that the higher end of the KBB sector has a penchant for using the word client – as a nod to the greater design emphasis to their offering,


but KBB retailers are all


looking to make a sale of goods at the end of the day, and so the companies that supply your businesses are vital. Without anything to sell, a retail business can’t


exist. Without being


able to sell products at a net profit, a retail business can’t continue to exist in the long run. Without having products with the style, functions and


48 price points our your customers want,


we’d be struggling. So how do we choose


suppliers? How they


perform is absolutely paramount to maintain and thrive in a competitive landscape.


From my discussions with industry associates added to my own experience, here is a list of factors that most retailers look for in a supplier: ■ Buying terms and competition; ■ Stockholding and lead times; ■ Product range; ■ Product quality; ■ Brand awareness, image and ethics; ■ Credit limits and terms; ■ Display terms; ■ Customer service / technical support. So let’s look at one of the big ones


first – buying terms and competition, which is definitely the most contentious


and legally-regulated aspect of the


retailer/supplier relationship. The discount that a retailer can negotiate with a supplier generally represents the


achievable gross profit, and


therefore the greatest variable on the net profit of the business overall. With the bathroom industry seemingly dominated by RRPs – although kitchen brands are often more coy on this matter, the public is given an expectation as to starting prices, and a sizeable discount from this is very important.


Directly linked to pricing is competition, as – when different retailers are competing for the same customers – there is a temptation to win orders by discounting, which is an overall win for consumers as their purchase is cheaper, and a loss for


retailers as profitability is eroded in favour of turnover.


Governed by the Competition Act 1998 and Enterprise Act 2002, it is illegal for suppliers to work with retailers to “distort, restrict or prevent competition” so they are in a difficult position. Nevertheless, it’s a retailer’s prerogative to work with suppliers that offer them the best way of maintaining margin, and traditionally this has been the biggest single factor in choosing suppliers. But although we are entering the post-pandemic phase, we are still not in ‘normal times’, and the traditional emphasis


on Lead times


Front and centre in the supplier/retailer relationship at the moment stands one of the industry’s biggest challenges: stockholding and lead times. Let’s be honest, the unprecedented boom for the industry created by the Covid lockdowns, have been countered by unprecedented disruption to the supply of a huge number of products – the classic double-edged sword. Dave Rowland, MD of the Long Eaton Appliance Company in


· June 2022 prices has, for


now, been usurped by the next consideration.


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