Page 169 - DMGT554_RETAIL_BUYING

Retail Buying

Notes Or the vendor may give the retailer a discount for preferred product placement within the retail
store. Vendors give retailers slotting allowances to get their products and/or services on the
retailer’s shelves on in choice locations in its retailer’s stores. About $9 billion a year is paid out
in slotting fees to supermarket retailers.
In addition, many vendors provide the retailer with display materials for certain products or
with other types of promotional materials. Slotting allowances can be extremely expensive for
vendors – often costing $25,000 or more to get shelf space for new products - making it difficult
for small vendors to introduce their products in larger chains. Slotting allowances have generated
some controversy because some view this practice as a bribe paid by suppliers to retailers to get
the best shelf position. Retailers support slotting fees as insurance for taking the risk of carrying
new products, most of which fail. Vendors sometimes provide retailers with free merchandise
in exchange for the performance of some channel function such as advertising or sales promotion.
In addition to the various types of discounts and allowances, the vendor-retailer negotiation
process includes coming to agreement about the transportation of merchandise. Who pays for
the freight charges – the retailer or the vendor? In addition, the retailer and vendor need to
negotiate where the title to the merchandise changes hands, who must file claims on lost or
damaged merchandise, and who is responsible for obsolete or damaged merchandise.
In the vendor-buyer relationship, almost everything is negotiable. Good retail negotiators can
save their organizations a great deal of money, time, and responsibility if they are practiced at
the art of negotiation. Finally, the retail buyer must establish a method for buying the products
and for the receiving and handling of all merchandise. This function is often referred to as
merchandise logistics. The following section deals with the logistics necessary to get merchandise
into the store and out to the customers.

11.3.3 Principles of Negotiation

Dealing with conflict and differences is hardly ever an easy task. Barriers to creative negotiation
can be numerous and are often the saboteurs of a potential sale. Remember: your goal is to reach
win-win-win-win settlements with competent customers. To that end, there are five principles
of creative sales negotiation:
Attitude First

Creating an optimistic mindset involves basic attitudinal characteristics, which become the
building blocks for successful negotiation. Attitudes and skills must work in harmony. Attitudinal
characteristics of negotiation include self-awareness, self-belief, and openness to other
viewpoints. Salespeople frequently overlook the significance of preparing themselves mentally.
Attitude—how we deal with others when negotiating—drives the relationship. Develop a
win-win-win-win attitude toward negotiation, and don’t be satisfied until all parties are satisfied
with the solution.

Planning and Preparation
For many of us, planning is boring and monotonous, easily put off in favor of leaping into
action quickly. However, devoting insufficient time to planning frequently results in failure to
negotiate a mutually beneficial agreement, and raises feelings of antagonism and frustration.
The cornerstone to effective, imaginative negotiation is a carefully designed blueprint outlining
specifically desired results for both you and your customer. The first step is to clearly articulate
your position—know what your objectives are. Know the issues that are not negotiable and the
issues that are negotiable. Must-have issues are predetermined prior to negotiation and are

164 LOVELY PROFESSIONAL UNIVERSITY