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May 22, 2008
Coping With Wholesale Price Increases
There's no doubt about it - the rising cost of better goods combined with a lack of new trends is taking its toll on better retailers. The price of European goods has risen 10% a season over the last few years and Chinese manufacturers are bumping up their costs as well.
The price hikes mean that as sales have slowed unit presentations have dropped off, further hurting sales lines. This problem is being agitated by the fact that there are no new trends on the horizon and retailers are playing it safe by investing in old standbys instead of fresh styles.
So, what should we do about it? First, we need to accept that this is a dilemma that is unlikely to change anytime soon. We need to take bold steps to correct the problem, and that may mean getting out of your comfort zone.
It's time to reevaluate your vendor structure and make some key changes. We need to replace the vendors that we can no longer afford to buy from with new vendors that offer a fresh style perspective. By doing this we not only increase our presentations (which are key in meeting customer demand), we also inject new trends into our mix.
These changes may require some rebranding since most stores are built around the images of their old brands. Marketing and merchandise go hand-in-hand so when you change your product you also need to change you message.
Ask yourself: "What kind of store do I want to become?" I know it's sometimes frightening to change the way we do things, but in this case it may just be necessary. After all, the kind of store you want to become is no doubt a profitable one.
Posted by Steve Pruitt at May 22, 2008 10:28 PM
