Retail Observer

June 2017

The Retail Observer is an industry leading magazine for INDEPENDENT RETAILERS in Major Appliances, Consumer Electronics and Home Furnishings

Issue link:

Contents of this Issue


Page 39 of 67

RETAILOBSERVER.COM JUNE 2017 40 Y ears ago, my friend and mentor Jerry Kalov told me about his company winning Walmart's Vendor of the Year award. He was invited to Bentonville to be recognized at a company meeting and sing the Walmart anthem with Sam Walton. His excitement faded quickly when he realized what the win really meant. Out of the hundreds, if not thousands, of companies represented on Walmart shelves what had his small consumer electronics business done to earn the vendor of the year distinction? Jerry soon learned that more than half of his sales were to Walmart and Sam's Club. Instead of instilling pride, that statistic created fear. Jerry called his team together and explained the crisis they faced by having grown their business so much with just this one big retail giant. Although their loyalty to Walmart had been a boom for them, Walmart owed them no loyalty in return. For a few cents, half of their sales could disappear. He never wanted to be anyone's vendor of the year again. I recently heard that an advertising agency I'd done business with had folded. Over the years, they had moved almost their entire portfolio to one large client. The client never expressed anything but satisfaction with them, but slowly moved some of their business to another agency. Over time, the new agency took over the account completely leaving their original agency out in the cold. They'd had no need to market themselves for fifteen years or so; their one client kept them busy and profitable. When that business evaporated, so did they. We hear about the need for diversification all the time. Is your investment portfolio diversified? Do you have a mix of equities and bonds? Are all your assets tied up in your business? Similarly, how diversified is your business? Do you have too many of your eggs in too few baskets? I've written before about my star sales associate Kerry. Not only was Kerry our biggest volume writer, there were times when she sold almost a quarter of her store's volume herself — leaving the balance split among the other ten or so associates on the floor with her. I could easily tell when she was on vacation because our sales dropped. I didn't need her to sell less, I needed to find more people with her skills. Is there someone on your floor so good that he's indispensable? Are you so reliant on one or two good associates that they can create havoc, break rules, and shun authority without consequence? They may be great for building volume but not for building a team. Similarly, are you wedded to one or two builders, designers, or architects for a big chunk of your business? We've seen before what can happen when the housing industry slows. You would spread your risk by establishing relationships with a number of small custom builders even though they would each only build a home or two or year. A broader client list would be helpful in managing cash flow as well. It's also easy to be too dependent on one vendor. As we have seen with the consolidation in the home appliance industry, things change. Management changes. Strategies shift. Companies that once relied on independents to bring new products and technology to market have become wed to the chains they once shunned. Manufacturers are focused on their bottom lines, not yours. Trying to manage your business based on whose volume rebate might be biggest is a dangerous game. Some independent dealers have found success in diversifying the product categories they sell. Many appliance dealers have been successful in adding bedding to their mix. Others have started merchandising patio furniture with their outdoor kitchens. Connected home technology is going to be the next wave for some tech savvy dealers. And there's also an opportunity for demographic diversity. Is your business attractive to first-time homeowners or just luxury appliance purchasers? Are you still attracting the same aging customers that your father brought in forty years ago? Can you market to the growing Latino and Asian populations and get a share of their rapidly increasing buying power? Your business needs a broad base, just as your retirement portfolio needs to be balanced and diversified. You need a full stable of supportive vendors and a variety of customers and commercial clients. You need a full complement of committed associates. Merchandising several product categories can help stabilize seasonal business cycles. Make sure you don't have all your eggs in one basket. Elly Valas is an author, speaker and retail consultant. She can be reached at or 303-316-7568. Elly Valas Retail Views RO HOW MANY EGGS ARE IN YOUR BASKET?

Articles in this issue

Links on this page

Archives of this issue

view archives of Retail Observer - June 2017