We're On the Same Team Part One: One Oar at a Time

October 10, 2012

Manufacturers and retailers of the home décor industry are stuck due to ineffective and sometimes harmful habits in their dealings with one another. It's not just the struggles of the economy that's causing this disparate relationship, either. Like a rowboat that's not going anywhere fast, the home décor industry's two primary ‘oars' - manufacturers and retailers - are working one oar at a time, floundering in the waters of opportunity for an unproductive and useless expenditure of energy.

In the current model, the retailer and manufacturer each act without thought or care to the effect on the other party. Retailers might give prominent showroom space to one brand over the other, causing the underexposed product to suffer in sales. Retailers are claiming that some manufacturers are allowing anybody with a business license or fly-by-night e-commerce site to ‘sell' their products, happy to make an extra buck, while their retailer partners lose business to price slashing. Unless they come together and row in tandem, they'll continue to spin in circles until they waste away from their directionless exertion.

Are better days ahead if they can put their oars in the water simultaneously and work together?

Potentially, yes. But first, they must both recognize that they can't survive or be successful without the other. Manufacturers need to understand that due to the consumer's changed buying behavior, their control over their brand online is crucial to their retailer partners' survival. They can't allow just anyone to sell their products; they must maintain stricter discipline and discernment, sanctioning only those retailers who best represent their brand. Retailers need to protect and promote the value of their brand partners to the end customer via better merchandising.

Second, they need to work together to maintain the integrity of the market - starting with pricing. Pricing should conform to an equitable policy from all elements of the trade - retail online and offline - using a strategy such as Minimally Advertised Price (MAP) that is governed carefully on all retail platforms. Manufacturers should set and oversee these policies, while retailer partners should uphold them and support their implementation efforts (reporting violators and unsanctioned retailers).

These elements can only be achieved through a collaborative effort that promotes accountability - something I'll address in more detail in my next post. Manufacturers and retailers who work in tandem, rowing together toward the mutual goal of sustainability in our industry's future, will experience durable growth and success over others who are lacking discipline in controlling their brands.

Posted by Barry Abraham on October 10, 2012 | Comments (5)

Industries: Furniture Retailing

January 7, 2013

In response to: We're On the Same Team Part One: One Oar at a Time
Toshiaki commented:

I’d be inclined to give green light with you on this. Which is not soimtheng I typically do! I enjoy reading a post that will make people think. Also, thanks for allowing me to speak my mind!

January 7, 2013

In response to: We're On the Same Team Part One: One Oar at a Time
Johan commented:

Good point (how can Quebec-based businesses suceced on the Internet).I would not worry so much about e-tailing, which is just a very small fration of retailing (less than 3%) and will be capped, in all likelihood, at low levels. And add that it is not clear who should worry about what.I would, worry more about emerging industries. The three significant upstarts of the past few years (google, youTube and -- arguably -- Facebook) are not likely at all to have significant "local" equivalents. Just as Archambault will never call the shots in front of Amazon/iTunes.Maybe we could think of two paths to success. One is to partner with others in global, large scale alliances. The other is to build niches and deploy worldwide.It happened in retailing: large groups and franchises dominate the landscape. Small specialty shops still prosper.

October 22, 2012

In response to: We're On the Same Team Part One: One Oar at a Time
Barry Abraham commented:

JFS, I appreciate you letting Furniture Today readers know about the integrity of Ekornes. Manufacturers who support their dealers will always get a shout-out from us at the Crunch Time blog. But I have a question for you: Do you give your manufacturers the same respect they show you by promoting their brand, leaving the tags on their products, and allowing/promoting the Showrooming of their products while the customer is in your store? You don't need to respond, as this is a rhetorical question, but it does get to the heart of the conversation that transparency of information is here to stay and therefore we need to work together to create the best experience for the customer. The tide is quickly changing and dealers who understand these fundamental changes and embrace this new era in retailing will thrive. I hope you are one of them, since you already know what to look for in a mutually accountable manufacturing partnership. Good luck and thanks for the comment.

October 11, 2012

In response to: We're On the Same Team Part One: One Oar at a Time
noi that gia dinh commented:

noi that gia đinh chuyen cung cap thong tin cua cac mat hang noi that gia dinh cao cap the city

October 11, 2012

In response to: We're On the Same Team Part One: One Oar at a Time
jfs commented:

If I am going to display a brand in a nice showroom, educate my sales staff on the merchandise and spend money advertising it, I refuse to lose sales to online drop-shippers with a price list. So I only display brands that are partners. Also if brands keep undercutting themselves and many now are sourcing companies from china, what will prevent larger retailers from just sourcing direct?

Ekornes is one that sticks out in terms of working with brick and mortar, they treat their dealers excellently, with MAP pricing, exclusive territories and advertising support, while helping to provide staff training. It is the model of the future for manufactures.