O.K., Trade Partners, It's Time To Play Let's Make A Deal
By Jules Steinberg, Professional Retailing -- TWICE, 7/23/2001
Life could be so much sweeter and simpler for consumer electronics and appliance retailers if suppliers would offer merchandise at one price, or at least clearly spell out the details of quantity discounts on all price sheets.
Instead, depending upon the negotiating ability of the buyer, too many suppliers offer price concessions in the form of cooperative advertising allowances, paid vacations for dealers, bonus payments to the stores' salespeople, and other such incentives that are used to actually reduce the cost of goods sold.
To take advantage of such buying incentives, a merchant must be a good negotiator, as the objective of his suppliers, it should be remembered, is to enhance profits by giving away as few of those perks as possible. In this regard our industry is far from unique. Nor are manufacturers the only ones who bend the rules.
Last month, while shopping at my local supermarket outlet, I was surprised to discover that a box of my favorite cereal was no longer displayed as prominently as it had been. The store manager, who is a friend, explained that the chain had negotiated a better cost price for a different brand of cereal in exchange for giving away the better shelf location.
If this is the way the retailing game is played today, it is time for all dealers to sharpen their negotiating skills. A good starting point is to learn the prices one's competition may be paying for the same merchandise. This may not be as difficult to accomplish as it seems.
For example, the U.S. government, in the guise of military post exchanges, can be a major competitor for appliance and consumer electronics retailers within their trading areas. In an effort to assess the seriousness of this threat, this column has researched just how much Uncle Sam has been paying for those SKUs that are also carried by owner-managed stores. Our results offer the following:
For 30-day delivery of a Zenith 27-inch color-TV (model B7A11Z) with A/V jacks and universal remote, the government paid $268.46. At the same time, a four-head Zenith mono VCR including voice directed programming with VCR remote cost Washington $84.68. And on the digital side of the shelf, Zenith's DVD 2200 model DVD player was available to military stores for $208.47.
At the top of the line, a 42-inch Zenith plasma monitor (model IQB42P97G), with 16:9 aspect ratio and 15 PIN VGA inputs and resizes all images to fit the screen, cost our government $7,525.25. A 50-inch projection TV (model IQB50M90W) with 17 A/V jacks and two-tuner PIP was procured for $1,238.46.
Over in the appliance department, a white-on-white l5 cubic foot top-mount refrigerator (model CTM 1521ARW) made by Maytag under the Magic Chef brand with two full wire shelves and left-hand door swing, carried a wholesale price of $394.80. And a black-on-black electric cooktop (model CSE9600ACB) with five instant-heat elements was available to military exchanges for 30-day delivery at $525.46.
This information, along with other pricing data, is available to any computer-savvy individual with Internet access by calling up http://vsc.gsa.gov. If nothing else, it should help level the buying field, and that's all any dealer has a right to expect.
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