We take for granted that both retailers and vendors want to sell
products profitably. But with so much to do, itís easy to lose track of
Retailers spend an enormous sum of money—theirs plus vendor co-op—on
advertising. The goal is to draw shoppers into the stores. Itís wasteful
to make that investment and then not have adequate stock on hand.
Although itís the responsibility of vendors to maintain basic stocking
levels (BSLs), stock-outs translate into lost sales for retailers and
frustration for customers—who often vent their anger on retailers. By
providing accurate and timely sell-through data to vendors, retailers
can help them measure how much product they can expect to sell in each
retail store. By giving vendors such information, retailers also gain
some leverage with them.
At large chains, not all stores move the same volume so BSLs will vary
by store location. It hurts everyone to have one store overstocked on a
certain product and another with none on the shelves. If chains supply
monthly sell-through information to vendors by individual store
locations, vendors can help ensure that each store gets the right
number. This is crucial for chains that require vendors to drop ship to
Most computer product vendors employ a merchandising services firm to
visit stores, set up merchandising materials, and check the stock on the
shelves.Sometimes they find that the shelves are bereft of the SKU for
which they are putting up all that expensive POP material.
Having adequate stock on hand is especially important when a vendor is
running a special promotion and/or has purchased an end-cap. For a
popular product, stocking levels should be doubled when there is a
special promotion. Since many retailers charge a fee for end-caps itís
unfair to both the vendor and shoppers (who might have come to a store
after reading an ad for the product) to have empty end-caps.
Merchandising support firms cannot be in every store every day to make
sure the product is on an end-cap or shelf. Retailers might consider
having personnel patrolling the end-caps. Or, if retailers feel they
lose control of their shelves by having different merchandising firms in
and out all week, they might consider hiring one themselves.
Achieving the right BSL can also eliminate overstocking of slow moving
products. Retailers will not incur unnecessary inventory costs and can
avoid the shipping fees of returning overstocked products. A retailer
that is stuck holding excess inventory and has been helpful to a vendor
by supplying accurate reports may have the leverage to return the items
outside a regular stock rotation.
Keeping track of sell-through can increase the effectiveness of any
automatic replenishment system a retailer might employ. Retailers should
allocate shelf space to any one vendor in any category commensurate with
that vendor's unit sales. If a vendor sells 40 percent of the word
processing category, it should represent 40 percent of shelf space.
Maintaining a good relationship with the account representative can help
get the products that are in short supply. A retailer with a cooperative
attitude gets new products before the uncooperative ones. Remember,
maintaining a good relationship with vendors creates a win/win
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