New trading horizons

29 October, 2010

Suppliers have embraced the new chains that have sprung up since First Quench collapsed, which have bought up empty shops to start their own businesses or expand existing ventures.

Fifty-eight per cent of suppliers OLN polled say they are supplying at least some of these businesses, with a further 16% reporting they are not supplying them at the moment, but they plan to in future.

But there are obstacles to this growth area, and half of suppliers say it is more difficult to trade with a large number of smaller chains than one big one.

Despite the trade being split over how difficult it is to deal with lots of different customers, it was generally agreed that it was better to do so.

“Yes it is harder, but we need more diversity, not less,” says one respondent. “It takes more time to gain distribution, but is financially healthier in the long run,” reports another, while a third adds: “It is better not to have all your business in one place.”?“Managing consistency across retailers in pricing can be a challenge, but the advantage of less reliance on one major listing is healthy,” comments one supplier.

Another says: “Logistically it is more expensive and time-consuming to set up, but it is better from the perspective of getting good compliance (in the main), and having more frequent and meaningful interaction with buyers.”?More staff and better credit insurance are the keys to making it easier for suppliers to trade with different retailers. Forty-one per cent say taking on more staff would help them, and the same number say retailers having credit insurance in place would improve things for them.

“If the retailers have no or very low credit we don’t tend to sell to them, as we can’t factor and can’t be sure if we will be paid,” says one respondent.

Some 35% say independents forming buying groups would aid them, while 29% report it would help to do more business with regional wholesalers.

Eighteen per cent say it would help to change their own business model, while 15% think retailers should change their business model. Just 3% say they needed more depots around the country, and none thought changing their own location would help their business.

“Central distribution, central negotiation, central execution,” says one supplier. Another adds: “In general, to have more independent retailers acquiring a number of ex-First Quench shops [would help], so one could get more return on a bespoke product, price and promotion proposition.”




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