Theme nights, T-shirts and posters are among the perks to raise supplier profile.
Ask independent merchants which incentive most influences them to order one product line over another, or increase an order about to be placed, chances are you will hear it is the best, lowest price on volume orders.
Having come through the recession, hard-nosed Canadian merchants give short shrift to incentives from offers of holidays to gifts that do not directly relate to their business.
Efficiency
Instead, they want inventory supplied with maximum efficiency at minimum prices. They want longer payment terms and a fast turnround on product orders. They want hassles removed, their life made easier.
To fulfill these expectations, new and innovative tactics are being employed by Canadian manufacturers and suppliers to woo increased orders from independent merchants.
Breweries, for example, have their sales representatives frequent restaurants and bars and offer to hold theme nights complete with contests and prizes.
Promote brands
The hosted events, closely regulated by provincial liquor control boards, are not meant to push sales, but rather to promote brands. Of course, sales may well go up as a result of the promotion, prompting higher future orders for brand products.
For bar and restaurant owners, theme nights bring patrons in on quiet evenings when business requires a lift. And parties are held at no cost to the establishment, except insofar as managers have to generate interest among staff.
How do the theme nights work?
Kinmond Smith, former manager of Toronto sports bar Bert N’ Ernie’s Fun Food Eatery, and now manager of an upscale restaurant in the city’s west end, explains that notice of the theme nights is typically given to patrons two weeks to a month in advance.
Breweries supply ‘tent cards,’ or free-standing cards for tables, and posters announcing the date and time of the next event.
Staff also receive T-shirts with the brand name on front, the restaurant name on back and ‘staff’ emblazoned on the sleeves, Smith says.
On the night, brewery reps hand out tickets for prize draws. If the theme night aims at launching a new product, tickets are distributed as particular brands are ordered. So the more of that brand ordered, the more chances party-goers have to win.
The number of tickets available depends on the evening’s importance to the brewery and brand popularity, but, typically, 500 to 1,000 tickets are handed out on the night.
Prizes
Of that total, between 20 and 30 tickets will net prizes ranging from T-shirts and sweatshirts to sport bags. The grand prize might be a limousine ride and dinner for two.
As respective sponsors of sport teams, Molson Breweries and Labatt Breweries of Canada hand out tickets to Toronto Maple Leafs and Toronto Blue Jays games.
Smith recalls brand ‘launch parties’ held by Labatt and Molson as they introduced their respective Genuine Draft products.
Labatt was first out of the blocks, holding its party at Bert N’ Ernie’s about a month earlier than the evening held by Molson.
Smith says, inevitably, spring time brings reps in with patio umbrellas under their arm. That allows them to push brands in bright, sunny locations.
‘Brewery reps were always vying with each other to see who could get their umbrellas at the front rails,’ says Smith, adding that patrons who were unsure about what brand to order often decided by pointing to a tent card on their table, a poster on the wall, or an umbrella on the patio.
Music companies, likewise, tout their best-selling product artists and albums by having sales representatives visit stores regularly to supply managers with posters and other sales-driving displays.
Stores generally feature point-of-purchase material in high traffic areas beside cash registers or in main foyers.
Exposure
After all, music companies are eager that point-of-purchase material be seen by the greatest number of customers and get the most exposure for a record-selling artist.
Bruce Burgess, manager of the Madrigal Classical Record Shop, which sells recordings of classical, jazz and New Age music in North York, Ont., says in-store displays of artists are generally timed to coincide with new cd releases or concert dates.
Burgess says point-of-purchase material of artists, to spur sales, is less important with classical music, where keeping an all-round stock of artists and composers on hand is more important than spotlighting top-40 artists.
Visiting artist
At the same time, only larger music retail outlets enjoy the benefits of a visit by a well-known artist to meet their fans.
Record company product managers generally arrange such visits with local store managers, all of which helps to gain maximum exposure for a product in highest traffic outlets.
Of course, breweries and music companies with large marketing budgets can afford to offer incentives such as brand merchandise and point-of-purchase marketing splashes.
Other manufacturers are less ambitious, especially in current hard times.
Ed Johnson, owner and manager of Bloor Vacuum Cleaners in Toronto, which provides sales and service to a number of brand name vacuum cleaners, says he receives few offers of gifts or holidays from wholesale suppliers.
Thumbs down
What is more, Johnson turns his thumbs down to all of them. For him, securing inventory from suppliers at the lowest price is all important.
Second on his shopping list is quality control.
‘I want a good product,’ Johnson says. ‘I don’t want my customer buying something from me that will last for a week and break down. I want products to last for as long as possible. Short of that, I will lose that customer for good.’
Best product
Paul Winegarten, owner and manager of Public Tire in Toronto, which sells and services a host of automobile tires, is typical of retailers looking to sell the best product possible to customers, and looking for product suppliers to help his company do that.
Winegarten says financial incentives from suppliers in the form of price discounts on its orders matter most to him.
But close behind is what type of warranty tire manufacturers are offering customers.
After all, Winegarten wants to concentrate on sales and service volume in his business, and not get bogged down in customer complaints.
‘If a tire maker offers road hazard protection, then when I sell that product, I feel confident the customer will not likely return to me with problems, and I do not have to worry about them,’ he says.
‘If I buy tires without a full warranty, I may pay less for them, but I still have a worry on my hands for the customer.’
Drop prices
On pricing, Winegarten prefers manufacturers that are quick to drop their prices in response to competitive pressures.
Discounted pricing on products also has appeal for Don Graham, owner of the Toy Shop in downtown Toronto.
Graham prefers suppliers that offer better terms and special discounts on orders.
Better than 30 days
Anything better than 30 days for payment on orders would be, for him, an incentive. Likewise, a regular 40% discount on a particular toy line might be bumped up to 45% as an incentive.
But, for the most part, Graham says the toy industry is ‘staid and basic’ when it comes to incentives.
Companies might throw in displays to go with toy lines, along with some free goods, but more exotic offers are rare.
Receiving point-of-purchase material to promote products in stores is important in the pharmacy trade.
Claude Gauthier, manager of a branch of the Jean Coutu Group pharmacy chain in Montreal, says manufacturers must pay for space, whether on counters or in store aisles, to spotlight their wares with custom-made displays.
This is done in much the same way an outdoor advertising company rents property to put up outdoor facings.
In addition, sales representatives can place coupons and miniature notices in the aisles, pinned to store shelves, to alert consumers of product brands as they do their shopping rounds.
Nerses Fesdekjian, manager of Brimorton Drugs in Scarborough, recently featured an in-store display of Cadbury Easter eggs.
The product came with a banner flagging its presence, an added incentive Fesdekjian negotiated with the Cadbury sales representative responsible for his territory.
Doug Kane, part-owner and manager of County Appliances in North Toronto, which sells big-ticket home appliances, says most appliance suppliers no longer offer gifts or holidays as incentives.
Write off
Kane says, at one time, companies such as his own could write off holidays or gifts received as incentives.
But no longer. The government has taken away tax breaks to suppliers or merchants who offer or take the holidays.
‘There is no use in some supplier taking you somewhere you don’t really want to go, and then finding the government is taxing you for the trip,’ Kane says.
He adds most companies instead offer longer credit as incentives to order their products. County Appliances might now get 90 days to pay for goods, rather than 30 days.
Better for business
‘Price being equal, the longer you have to pay for goods, the better for the business,’ Kane says.
He says other perks from suppliers include ready response for special orders, and fast turnaround on all orders.
Of course, size counts for much in price negotiations.
Jim Varvakis owns and operates Phoenix Auto Radio in Scarborough, Ont., which sells and services car stereos and automobile alarm systems.
Varvakis says prices for products are falling steeply as a price war in the electronics industry continues to take shape.
At the same time, a business like his own with an annual turnover of slightly more than $200,000 has little leverage to earn greater incentives from manufacturers and suppliers.
‘Companies will offer holidays to store owners if they buy, say, $100,000 worth of goods,’ Varvakis says. ‘But I come nowhere near that size.’
Hardware
Price discounts figure large in the retail hardware business.
Yun Ki, manager of a Home Hardware outlet in west Toronto, says discounts range from 10% to 20%, depending on the type and size of orders.
Ki puts stock in up-to-the-minute information received from suppliers on the status of orders, pointing out this aids his cash flow and offers maximum control over his inventory.
He earns extra discounts for large-volume purchases, and also receives annual volume and cash discounts, since his suppliers profit from inventory purchases.
Promotional aids
As well, some products come with promotional aids and information for sales staff on particular products.
The hope, Ki says, is salespeople who know products well will sell them more ably, and serving customer needs properly will bring them back to the store.
