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Web Changing Rules For Vendor Success: Adam Levin

9/26/2005 02:00:00 AM Eastern

The days when a vendor needing to be overly concerned with in-store point of purchase (POP) and packaging are over, said Adam Levin, president/CEO of Levin Consulting, during a RetailVision seminar held here earlier this month.

For vendors, Levin said, this is a time to think outside the box. Consumers have altered their buying patterns so greatly that doing business as usual is a recipe for disaster.

In today's retail world, product design and optimizing a company for Web sales should take priority, along with bending to a retailer's will when it comes to product design even if that requires a major reworking of a device. A vendor has to have a great Web site. Give product information and product comparisons — with competing products, not yours. That is what keeps a consumer on your site, said Levin.

“A consumer has to be able to buy whenever and wherever they want. Don't force the customer to buy from a specific place. Let them buy direct from you. This will upset some retailers, but they will expect it,” Levin said.

Customers are also much less category-loyal. They no longer will only purchase consumer electronics from a CE specialty chain, but from a mass merchant, online or a drug store.

Vendors must also help retailers sell their products online. This assistance primarily means being able to supply excellent product information to the retailer for display with your product because retailers are simply too busy handling other aspects of their business.

“Vendors have to supply product info, and it should be interactive content,” said Tom Fristoe, president/CEO of Tentoe, a firm that develops product content for retailers.

A very important point, Levin said, to keep in mind while creating online POP information is that consumers do the vast majority of their window shopping online, so online POP is more important than the in-store variety.

“Shift your money to Web operations.” Levin suggested.

Levin also discussed the impact that the iPod has had on the industry from a design perspective. He suggested that American consumers are now behaving like their Japanese counterparts by being more interested in a device's design. Not to the point where form takes precedent over function, but after enduring a decade of the beige-box PC, people are ready for something different.

“Add more colors, think younger, design for geography, design for ethnic groups, and design your packaging and merchandising at the same time. Fashion is now key,” he said.

With so many vendors flooding certain categories, and customers less interested in shopping strictly on price, design can be the deciding factor.

“Right now there are too many TV vendors. There are now 160. You have to differentiate using design, not price,” Levin said.

All of these steps need to come together to develop the hot product for a category, and being the creator of that hot product is more important than ever before. Levin said that in past years, a category's hot product would still only garner a small percentage of a category's total sales, but now consumers tend to make such a product dominant. Pushing this trend along is the fact that many retailers no longer cram their shelves with similar SKUs, but only three or four, thus limiting a consumer's choice.

Because a retailer is keeping a cap on his merchandise levels, a vendor has to be willing to bend over backward to gain shelf space. With more retailers directly sourcing from Chinese factories, a vendor looking to do business with a CE or PC chain must do what the store asks or it will simply ask an original design manufacturer to come up with what it wants.

Levin stressed that a retailer knows his customer best and will not buy a product that does not meet his desire.

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