Suppliers and what January’s retailer results tell us about them!

Over the last few weeks a significant number of retailers have posted their results from the supermarkets to Dixons Carphone, Halfords, Poundland, B&M Bargains, Thorntons and many others. Aside of the rise or decline of sales numbers, the weather and tough times ahead there has been one recurring theme with all of them – the role and relationship with suppliers! There has been extensive coverage about this in the media whether it is about what price per pint dairy farmers get, payment terms being extended out to over 90 days or administration fees being charged by retailers to service an invoice.

Clearly without suppliers we would have no retailers. Managing suppliers is a critical process in a world of ‘just enough just in time’. Increasingly with social media and other channels the awareness around our food chain and supply chain is very much in the public eye. 2013 will be remembered for the terrible death toll in a clothing factory that supplied Primark and Matalan. Over 400 people lost their lives. In less extreme cases we hear of businesses failing to get credit insurance, invoices going unpaid by big companies and livelihoods lost. All of us who operate businesses have seen and experienced this. Is it right? Is it acceptable? I leave you to your own conclusions suffice to say that for me integrity and respect are key when doing business – do as you would be done by!

The supply chain for supermarkets is massive so I can understand that less is more when it comes to dealing with suppliers but again less also equates to more control if that supplier allows a majority of its business to be beholden to one client. Looking back at results it was interesting to read about Thorntons. Thorntons is fairly unique in that it is a manufacturer and a retailer. Its factory in Alfreton, Derbyshire is incredibly efficient and productive which one might think is good to hear. Not, however, if you have loss making shops which in part are underperforming because the same chocolate can be bought in the supermarket or convenience store next door. Tough times lie ahead for Thorntons and it begs the question of can you be a manufacturer of the scale that Thorntons is and also be a successful retailer?

The other interesting results came from Dixons Carphone who swim in a very competitive pond that got even more ruthless in 2014 when Black Friday and Cyber Monday showed their might. Don’t we all buy everything digital online so why have stores so people can come along have a look and then buy elsewhere? This was the view 2-3 years ago but as Seb James (CEO Dixons Carphone) has shown it is about more than just price but if you have your supply chain prepared and have already pre-agreed pricing then you can enter the ring with Amazon and come out on top.

The final group of retailers who were of interest to me were the ones who did not enter the Black Friday and Cyber Monday frenzy and held their prices and nerve. Two good examples are Next and White Stuff who still delivered some good results when you exclude the lack of cold weather equation. This shows that you don’t have to follow the crowd and perhaps consumers, in part, quite like that!

The final thing I would say is that in such a fast moving world where consumers demand more for less then the relationship with your suppliers is key and having a detailed understanding and shared goal is critical. Whether it is the ability to deliver to store or direct at increased volumes or whether it is lost sales due to your website going down then there needs to be genuine partnership built on trust and mutual benefit. How you deal with a container ship running aground in the Channel is one I shall leave to you and perhaps relates to the old military saying of ‘no plan survives contact with the enemy’!

Image credit: Loudge

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