RetailVision Advice: Change Is Imperative

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Alan Wolf & Doug Olenick

A willingness to embrace change will be a retailer's key to survival in the quick-paced world where e-commerce meets brick & mortar and vendors must strive to establish partnerships with retailers, not just place and then forget about a product.

These were some of the suggestions passed along by RetailVision keynote speaker Keith Fox, Cisco's VP of corporate marketing, along with market analysts, to those attending the event held April 4-7 at the Century Plaza Hotel in Los Angeles. (For other RetailVision news, see pages 8, 24 and 30.)

"In the old [pre-e-commerce] economy, making a decision to do nothing was sometimes the right decision, but not anymore. Now you must change and move quickly," Fox said, adding that those who choose to sit still will quickly be passed by.

Retailers and vendors need to use the Internet in ways other than selling products, the speakers pointed out.

Fox said retailers should be wired to the manufacturer so that inventory issues are properly handled. The Internet also can be used to save money on training, for example, which can be accomplished online instead of bringing people onsite.

Vendors should regard product placement as a partnership with retailers - who require consistency, a long-term relationship and mutual rewards, rather than simply signing up as many accounts as possible.

That was the message from Adam Levin, principal of Beachwood, Ohio-based Levin Consulting, in his RetailVision University presentation, "Keeping the Channel Happy in an e-Commerce World."

In a seminar that stressed the service component of vendor-retail partnerships, Levin began by pointing out that the best partnerships are built between willing partners. Retailers, he said, need to demonstrate a commitment to manufacturers through marketing, merchandising, sales training and the depth and width of the inventory they stock.

"They can't just put your product on the shelf and see what happens," Levin said, noting that the number-one reason shoppers don't buy a computer product is that they can't find it in the store.

Conversely, vendors need to give retailers the tools they need to properly merchandise the merchandise. That begins with the products themselves and involves issues of functionality and quality control. Suppliers must also provide their retail partners with service and support, and they should price the product to allow for margin opportunities.

Moreover, logistics - including ordering, re-ordering, fulfillment and financing - should be made retailer friendly, "so that they can order however they want," Levin said.

Also on the subject of pricing, he urged consistency, so that all channels are treated equally. For example, if a vendor has established a MAP pricing policy for its brick & mortar customers, then an Internet MAP policy should also be in effect for online stores.

Levin also suggested that merchants be "rewarded for good behavior" by offering monetary incentives for favorable product placement, merchandising and marketing support, training of sales associates, lower return rates or aggressive sell-through. "GE rewards placement dramatically," he noted, "by offering better programs to retailers if 40% of the white-goods floor space is devoted to them."

Levin concluded by citing four business models that are doomed to failure:

Vendors that are not where the customer shops. ("You need to be in retail, e-tail and direct to be wherever the consumer shops," he stressed.)

Distributors that are not world class in logistics, service and operations.

Retailers that do not make e-commerce a major component of their customer experience.

E-tailers that constantly focus on customer acquisition instead of customer retention.

Instead, the way to go is through partnerships, he said, citing recent strategic alliances between Gateway and OfficeMax, Best Buy and Micron, and CompUSA and Microsoft, Prodigy and SBC.

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