'INFLATION' IS NO EXCUSE!

The takeaway: Retailers not accustomed to dealing with food inflation can find a nasty surprise dealing with its impacts.

BY RHONDA RETAILER

Listen Vinnie, now that we’re seeing serious inflation in food prices, don’t think you can start playing fast and loose with how you dole out your trade support. Lately, I see my dollar sales holding much better than your trade funding. So what’s up with that?  

Sure, all of a sudden there are categories where dollar sales growth rates are way higher than units, and sometimes we’re seeing a real erosion in units because of higher prices. That’s new, and I didn’t create this recession. But don’t let your bean counters try to use this as an excuse to cut my trade support so you can give it to my competitors or pad your own numbers.

Have to admit, Vinnie, I never could fathom how you calculate your trade payments. Tied to algorithms and astrology charts, I believe. But I do figure that if my units go down, your volume-related support for things like accruals and scan-based discounts will follow and stay pretty much on an even keel. At the same time, I know about your ROI “guardrails” and “one-bucket” funding approaches you use to play games with your flat fees for ads and such. You figure you’re going to use that to play favorites, don’t you, Vinnie? Don’t lie to me! Ever hear of “fair and equitable support” under Robinson-Patman? Or, to cut to the chase, have you ever heard of “more private label” or “delisting all your products tomorrow?”

Rhonda Retailer is a pseudonym for a group of retailers eager for industry improvement. Write to Rhonda at thayerw@bnpmedia.com.

SUING ME FOR 'NON-SUPPORT?'

The takeaway: Some retailers need to make their operations more worthy of trade support from vendors.

BY VINNIE VENDOR

Thank heaven all my retail accounts aren’t like you, Rhonda. What are you going to do, sue me for non-support? This baby’s not mine, Rhonda. You’ve created this monster all by yourself.

So you don’t know how my trade spending program works? Don’t you think it’s incumbent on you to figure that out, since the vendor support line in your P&L so often equals or exceeds your annual pre-tax profits? Don’t you think it’s wise to get a clue as to where you stack up against your competitors in terms of the profitability you provide to your trading partners?

We allocate support based on unit volume growth and customer profitability, as well as cash returns that we can reinvest in top performers. This is not only legal, it’s more efficient and effective than the old way of measuring “fair and equitable support.” Our best accounts collaborate with us, and see the benefits in reducing costs both for us and for them. It’s called “win-win,” Rhonda.

You need to start setting annual goals for sales, volume and support dollars at the vendor level, and learn how vendors allocate their funds. Work toward mutual goals that include increased support, and review progress on a regular basis. Threats, by the way, only demean you. There’s a good lesson on all this if you’ll just go to www.willardbishop.com and click on “press” and then “Competitive Edge.” You’ll want to see the April issue. Tell ‘em Vinnie sent you.

Vinnie Vendor is a pseudonym for a group of manufacturers eager for industry improvement. Write to Vinnie at thayerw@bnpmedia.com.