November 19, 2013
Retailers Need to Jump On Year-End Deals
Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Refrigerated Buyer magazine. A long-time Harris Teeter executive, Mr. Harris is a former chairman of the National Frozen & Refrigerated Foods Association and a member of the Refrigerated Foods Hall of Fame.
This is the season when manufacturers will often come to you with heavy-up deals to make their numbers for the year. It’s also the season when you probably have your plans in place through the end of December.
Sometimes when I was on the desk, I’d look at the plans I had already put in place and then at the heavy-up deals just presented to me … and go with the hot deal. I was always surprised when some of my competitors didn’t.
After all, if the manufacturer helped me last year, why shouldn’t I help him this year? He might refuse me down the road when I need help.
What’s more, if I don’t take the heavy-up deal, my competitor will and I’ll have to answer some questions from above. I might not be able to fit in the heavy-up deal right away, but I can get it in by the end of the year or I can take delivery to the warehouse in December and promote in January.
I remember a time a while back when we needed to make a number on juice and it was at the end of the year. Our holiday plans were in place. As a company, we decided to make the purchase and force out the product to the stores due to warehouse space. We were able to get the product on sale the second week of January. I got my incentive check from the company and we were all happy campers.
It needs to be a win-win. The only thing to be cautious about here is items with short shelf life.
Some manufacturers may not even care about being in the ad — they just want to move some cases. They may get it out there in two weeks at a reduced price, but there may not be enough lead-time for an ad. So don’t think twice about taking advantage of the chance to run something at a hot price. Jump on it before someone else does.
Think it through. Are you making your profit targets? What’s competition doing? Will the deal give you a competitive advantage? Will it help make your volume/bonus targets? Will it negatively impact reclamation? Is it the right thing to do for your category?
Bottom-line: don’t overlook the situation when your manufacturers come to you with year-end deals, but do make sure it makes sense for your business.
BrainTrust
Recent Discussions
Discussion Questions
What advice would you have for retail operators about year-end manufacturer deals? What risks do you see in managing them? What questions should guide the decision to enter into a deal? When shouldn’t you do one?
Poll
As an independent, I never pass up on a hot deal, and I’ll run the item at a hot price till it’s gone, and move on to the next offer. I have flexibility in the product I need and the price to move it, where as some big chains have to go thru the process of buying. By the time they decide what to do, the stuff may be gone.
Other big questions are, does the product fits your needs, and is it really a great deal? We all have our niches to fill, and each retailer can determine what is best for them. Bottom line: take advantage of the great offers and your customers will show their appreciation by always looking for the next great deal in YOUR STORE!
Expanding on one of Johnny’s comments, keep in mind that your competitors are likely to see the same offering, unless you soak up all the inventory, which I’m not suggesting you do. It just may work out that way. So if you pass on it and have the space and financials available, you may experience non-buyer’s remorse down the road.
And an observation – inventories appear to be fairly efficient at an industry level. I’m wondering if there might be an increased appetite for opportunity (forward) buys this quarter.
Flexibility is key, as noted in the article. I know of retailers of all formats, grocery, apparel, club stores, etc., that make huge incremental gains by leveraging last-minute deals. A big part of maximizing effectiveness of these deals is store level execution. If the product is not properly displayed as a hot item, then the stores will sit on the merchandise.
These buys need to have emotion taken out. There are relatively few deals that have no historical context by which to determine potential profit. There are plenty of promotion optimization tools available to allow the buyer to be laser-focused upon quick turns and profits.
If the deal has no historical compares, don’t do it without leveraging analytics tools.
More Discussions
How Timely Is the Planned Lowe’s Website Renovation Focusing on Personalization?
Is Lowe’s being timely with its website reno, and is it right to be placed as…Should Costco Be Opening Members-Only Gas Stations?
Is this the right move for the warehouse club?As Boomers ‘Age Out of Peak Purchasing,’ How Can National Brands Retain Interest With Gen Z?
According to a recent First Insight study titled “Is Gen Z Still Choosing Your Brand,” while…
As an independent, I never pass up on a hot deal, and I’ll run the item at a hot price till it’s gone, and move on to the next offer. I have flexibility in the product I need and the price to move it, where as some big chains have to go thru the process of buying. By the time they decide what to do, the stuff may be gone.
Other big questions are, does the product fits your needs, and is it really a great deal? We all have our niches to fill, and each retailer can determine what is best for them. Bottom line: take advantage of the great offers and your customers will show their appreciation by always looking for the next great deal in YOUR STORE!
Expanding on one of Johnny’s comments, keep in mind that your competitors are likely to see the same offering, unless you soak up all the inventory, which I’m not suggesting you do. It just may work out that way. So if you pass on it and have the space and financials available, you may experience non-buyer’s remorse down the road.
And an observation – inventories appear to be fairly efficient at an industry level. I’m wondering if there might be an increased appetite for opportunity (forward) buys this quarter.
Flexibility is key, as noted in the article. I know of retailers of all formats, grocery, apparel, club stores, etc., that make huge incremental gains by leveraging last-minute deals. A big part of maximizing effectiveness of these deals is store level execution. If the product is not properly displayed as a hot item, then the stores will sit on the merchandise.
These buys need to have emotion taken out. There are relatively few deals that have no historical context by which to determine potential profit. There are plenty of promotion optimization tools available to allow the buyer to be laser-focused upon quick turns and profits.
If the deal has no historical compares, don’t do it without leveraging analytics tools.