Can an industry-wide initiative solve core ranging problems? asks Mike McGee
There are a few aspects of our trade that I just don’t understand. Chief amongst them, right now, is the whole issue of retail advice and, in particular, core range recommendations.
In a misty-eyed world, it would be wonderful for the sector to have agreement on the best layout and the right range for a selected geographical area and store format. I don’t think anyone can deny that the independent sector continues to be under severe pressure and it is in everybody’s interest that retailers operate to the highest possible standards.
In this ideal world is something similar to the old Federation of Wholesale Distributors (FWD)-licensed initiative, Blue Print, in which all the main wholesalers and suppliers took part to deliver an industry-standard range for all categories. There is a science to this and although one can always disagree around the periphery, it is quite possible for an independent industry body to produce a ‘best practice’ store layout with range recommendations.
Retailers could enter their postcodes and vital store statistics online, and download recommended ranges – something that is available through many wholesalers’ and suppliers’ websites, but produced using a variety of rules.
In this ideal scenario, there would still be room for a competitive element amongst wholesalers. This would come from the quality of service, pricing (who could forget that?), technology support, marketing provision, own-brand and so on. All the industry-standard site would provide is totally unbiased range advice, relevant to whichever wholesaler a customer deals with. The site would be updated regularly, not specify a particular own-label and have space for retailer-chosen products where appropriate.
Although it was half-tried before – and it may well be unrealistic – with retail customer numbers still shrinking and the sector struggling for growth, just maybe it is time for a bit of strategic, blue-sky thinking to secure the best possible future for the sector.
Volume or value?
I would contrast this with what is currently happening, which is due to a widely differing set of motivations, varying resources and results. Suppliers clearly bring a certain perspective to their range suggestions. For example, where there is an option between basing ranges on sales volume or value, they will inevitably tend to choose the one that favours them.
Wholesalers, again, bring varying amounts of expertise and tools to the party, and many will rely, to some degree, on supplier input. Carefully vetted, this process has a place in the current environment.
I do not believe it is common, but what I do find very disturbing is when the establishment of a core range is seen as another part of the trading negotiation and suppliers are invited to pay for lines to be included.
Wholesalers and multiples are adept at negotiating with suppliers at every ‘touch point’ of the Buying relationship. However, this is one bridge too far and it doesn’t take much imagination to see where it could ultimately lead – lines becoming core based on financial incentive rather than consumer demand. Where will that leave the trade?
Although it is a fine line, I would suggest that it is helpful if retailers are given incentives to stock the core range, especially if they maintain a good layout, rather than stocking a myriad lines that happen to include the core range. However, this core range should be based on a piece of initial, unbiased, consumer-led research.
An industry initiative to help secure the prosperity of the independent retail sector by having, at the very least, an agreed set of measures to define a core range line would be helpful.
Even better, merge wholesale electronic point-of-sale data anonymously using an independent secure body to identify what retailers are really buying (and therefore hopefully selling) across the industry. The sheer size of the population will even out inconsistencies and remove ongoing debates about data sample size and so on.
In the meantime, though, can we concentrate on what is the optimum range for the retailer rather than spending time and resources just narrowing competitive advantage?