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Control vs. Support in the Manufacturer-Retailer Relationship

March 4, 2013

Let me focus on manufacturers for this post, because I deeply feel that these industry leaders need to enact change in their relationships with retailers. Up until now, brands command the table when it comes to getting their products disbursed to retail channels, but then they back off and let the retailer do their thing without much help or support.

On a large scale, this model may seem to work just fine; products are still selling, right? But, then why is our industry unraveling at the seams? While it's not easy or fun to admit, it's in large part due to the unsupportive role manufacturers have taken in their retailer partnerships.


Dan and I called this blog "Crunch Time" because we've recognized that it's time for the home décor industry to change, whether it's ready or not. It's time for brands to change their style. It's time to go from their ‘Command & Control' model to one that has more of an ‘Enable & Facilitate' practice when it comes to their retail partners.

An ‘Enable & Facilitate' relationship between manufacturer and retailer requires more than just a change in model (see my article about the Integrated Model in Retailer Now), it's a change in attitude. That attitude change is a transition from asking, "how many units is my dealer buying?" to "how can I help my dealer get more exposure with my brand?"

To start, manufacturers need to get their hands a little dirty with the actual retailing process, because retailing has drastically changed over the past several years as consumers have turned to online platforms as they start their buying process. Manufacturers have to get their products online, one way or another. Doing so will enable their brick-and-mortar partners to compete effectively with online retailing.

Next, manufacturers should work to facilitate their retailers' success in competition and integration with online commerce through strict monitoring of the sanctioned and unsanctioned sales of the brand's products.

It's no longer enough, no longer effective for manufacturers to limit their supervision and support to the backend of home décor product sales. Simply commanding the design and manufacturing of the products themselves, then controlling the process to getting them out on the market is no longer sufficient. If manufacturers continue to stop at such an early threshold, we will continue to see the faltering and failing of the retail ecosystem. And that damaging prospect is something that will directly affect the manufacturers' ability to get ahead and succeed in our changing marketplace.

Posted by Barry Abraham on March 4, 2013 | Comments (4)

March 12, 2013
In response to: Control vs. Support in the Manufacturer-Retailer Relationship
Barry commented:

Thom,
First of all, as you'll note in my previous response, manufacturers need to do a better job of managing and promoting their brand. Frankly, I want the brand names on every product we sell to be permanently attached. If they had done so over the years, then they would not be competing against their own retailers' brands. When the 800-number retailers started taking sales away from local channels, most manufacturers buried their heads in the sand. This continues today in several ways, with online retailers taking deals from brick and mortar stores. So, who can blame the retailer from pulling your brand from the product — manufacturers don't care about their brand anyway ~ right?
Second, the complete integration of all sales channels is the only way to bring harmony and balance to those trying to bring a customer solution to the market. While many industries have learned their lesson, the home furnishing space is rife with those who have yet to learn it. Manufacturers must bring their catalogs online because of the drastic change in consumer buying behavior. However, those online platforms must encourage brick and mortar retailers to join and enter the flow of online commerce by giving them an equal chance at the consumer, such as the platform on purehome.com.
Frankly, the tax issue is a non-issue, which I will address in an upcoming post. The fact remains, the local retailer holds the cards because they are "local." However, they have got to be willing to change the way they do business; quit trying to control (read: restrict) the uncontrollable buying behavior of the consumer as manufacturers start to manage their brands. This includes the giving the consumer easy access in the showroom to see who made that beautiful product. Yes, she will tap on her smartphone to see if she is being given a fair and reasonable deal, only to find the same product online is nearly, if not the same price she is offered in the store ~ price parity.
By integrating these channels, everybody can say "bye-bye" to showrooming. Let's work together instead of against each other and give the consumer a breakthrough buying experience — finally.


March 12, 2013
In response to: Control vs. Support in the Manufacturer-Retailer Relationship
Barry commented:

Ken,
Simply, WELL SAID!!! That was the point of the post — manufacturers not managing their Brands especially online. Many manufacturers have the attitude that they don't have the means to stop unsanctioned online vendors who sell their products at cut-rate prices. In reality, they can stop this practice - a practice that places all of us retailers at risk overnight - but they choose to duck their responsibilities. Simply said, they choose to let others define their brand. This is not to say "all" manufacturers do this. Pure Home works with many outstanding manufacturers who pledge to and uphold a minimum advertising price (MAP) policy with those sites that they sanction to sell their goods, while sending cease and desist letters to those rogues that are poaching in your territory. As long as these manufacturers continue to monitor and enforce their policies (read: control their Brands), the negative connotations to the term "Showrooming" will loose its sting. Both the brick and mortars and online retailers will be aligned and integrated. I can assure you, with the amount of research we have combed through, it is statistically reputable to say that 90% of consumers who start their buying process online, if given the option, will buy locally - even if the product is as much as 8% to 10% cheaper online. Retailers, you are still the preferred channel by consumers. My question to you is: Are you merchandising better than the competition? Are you getting in front of her where she is starting her buying process?


March 6, 2013
In response to: Control vs. Support in the Manufacturer-Retailer Relationship
Ken Starr commented:

Here we go again.....use brick and mortar for selection and the internet to buy it....I am getting sick and tired of greedy manufacturers working both sides of the fence...and you wonder why nearly 80% of the stores have closed...choose your method of distribution...if the internet is so good tell us so we don't waste space showing your product. Maybe then you can build and man your own showrooms to support the guy selling from his spare bedroom.


March 5, 2013
In response to: Control vs. Support in the Manufacturer-Retailer Relationship
THOM commented:

Barry,
How do we as manufacturers support retailers that do not support our name brands because of the internet? MAP and strict internet policies alone has now stopped many retailers from "branding" their product as their own. Consumers have the retailers and manufacturers climbing over each other for every possible sale. It is a "consumer" market with just a couple of taps on their smart phones. I look forward to the day when sales tax is implemented on the web, manufacturers support retailers through strict policies and retailers adhere to those rules...

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