DSN exclusive: the future of vendor/retailer partnerships

Discount Store News, March 3, 1997 by Tony Lisanti

In so many ways, the retailer and vendor partnership hasn't changed since the early days of civilization when, if you could imagine, a Fred Flintstone look-alike purchased a product from some Barney Rubble look-alike and sold it to someone who probably fit the demographics of Wilma and Betty.

Perhaps the only difference in the perennial tug of war between those who buy goods and those who sell them is that in the sophisticated decade of the '90s, today's observers have applied the fancy terms of modern management and political correctness to describe the frustrating and difficult process.

Recently, the term "exclusivity" has become the word of choice among retailers that are so desperately trying to differentiate their chains from the competition. It's another way to describe the ideal product that every consumer wants but can only be purchased at one "lucky" retail chain. It's also a great term to use as a key example of how the supplier and retail partnership works.

In fact, Toys "R" Us chairman Michael Goldstein has used the word extensively since he first touted "exclusivity" as a key strategy for the superstore chain during its annual meeting in June 1995. Since then, I have heard dozens of retailers and suppliers use the term. Consider the recent exclusivity agreements including: Costco Cos. and Kodak; Kmart and Sesame Street; and Kmart and White/Westinghouse.

So what's all the hoopla about exclusivity? Exactly that: hoopla. Exclusivity doesn't guarantee the product will be in stock. It doesn't guarantee a competitive price. It doesn't guarantee an increase in customer traffic. It doesn't guarantee incremental sales. And it certainly doesn't guarantee better service.

But it sure does sound good, especially when an announcement is made by two companies that have just signed an exclusivity agreement. It's interesting, positive and promising. But to average Americans, it doesn't mean a thing because they just don't care about some mega corporate marriage. Rod Tidwell, the character played by actor Cuba Gooding Jr., said it concisely in his line of the year in the hit movie "Jerry Maguire." The average consumer wants a retailer to: "Show me the value. Show me the bargain. Or show me the door."

The reality of today's vendor and retailer relationship is simple. The vendor is being held more accountable in all areas than ever before. The vendor is being challenged by retailers to help them better merchandise products, manage inventory and drive sales.

This sentiment was probably best exemplified and expressed recently by Wal-Mart's top merchandising exec Lee Scott. His key points regarding the vendor community:

* Value, not price, must drive purchasing decision;

* Develop a kinder, gentler attitude

* More input on forecasting and managing inventory;

* Better merchandise presentations;

* Focus on creating new products, not just line extensions.

So what's really changed in the vendor/retailer relationship? Is it just the same old rhetoric, different decade? Does the customer really care? Does this tenuous relationship really matter to the shareholders?

The vendor/retailer relationship makes for a great debate, but ultimately as Rod Tidwell might say, "show me the results!"