by Bill Crawford
Or even what you deserve. You get what you negotiate. So, anything you can do to learn effective negotiation techniques is a good investment of your time. In this column, I am going to focus on the concept of negotiating about carrying a line of products in your store. You certainly can—and should—negotiate with vendors on other topics.
Before beginning a negotiation, be sure you want the products being presented to you. Many times, we look at new lines because we have a good relationship with the person representing the line. The rapport that the rep has created with you is a good thing, but you need to be sure you want what he or she is selling today. Do you really need another vitamin “so and so,” another product to help with “insert condition here,” another fat-free/low-salt/low-carb/gluten-free whatever? The best advice I have heard about this came from Rick Moller, Tree of Life’s director of natural and organic category management, during a seminar he presented at Natural Products Expo East last year. He gave a great talk, covering the difference between having variety on your shelves and having redundancy. (If you missed his presentation at the show, you can hear it online at: www.newhope.com/cluster/exposites/30/audiofiles/EE07_09_OnTheFrontLines_SalesMerchandising.mp3.
Another pre-negotiation step is to be sure you are confident in the line—is it a quality product? Is the research valid? Does the company source quality raw materials? Is it marketed in a style and tone with which you are comfortable?
If you want to consider a line, many factors can be negotiated: initial set terms (do you want a free fill—when you get the initial order of product free—or a deep initial discount?), ongoing pricing discount (including growing a discount or receiving rebates as volume increases), freight conditions (free freight at a certain dollar or unit amount), minimum orders, co-op ad support, payment terms, display fixtures, consumer literature and staff training. While price (or discount) should always be a major consideration, don’t limit yourself to price negotiations alone. If you only get a good price—and have no viable options for advertising, merchandising or staff training—how will you sell this new line? A good deal is only a good deal after you make a sale.
Let’s cover two major strategies of negotiation. The first is “distributive,” or win-lose, and it deals with the distribution of fixed resources. In this negotiation, you are willing to walk away if you don’t get the terms and conditions that you want. You should walk into this type of negotiation with an idea of what you will ask for as well as what you will accept in a worst-case scenario. If that worst-case scenario can’t be met, you need to walk away.
The second kind of negotiation is called “integrative.” In this negotiation, you want to integrate a win-win outcome—one in which both parties are pleased with the results. While your goal can’t be the other party’s satisfaction with the terms and conditions, you are committed to finding a way to make this negotiation work for both parties. This is the strategy to use when you are working on a new line that you have to have—you know there is demand for the line from your customers and that your store will lose its competitive edge by not having it. In this kind of negotiation, you need to keep at it and stay creative until you get a deal and program that will work for you—even if it is a bit out of the norm.
I’ll be presenting a seminar, “Marketing to Draw and Cultivate New Customers,” at the Natural Products Association’s Natural Marketplace 2008 in Las Vegas later this month. The seminar is at noon on Thursday, July 17. I’d love to see you there.
Bill Crawford, director of retail custom programs at New Hope Natural Media, spent 12 years on the management team of a major natural products chain. Contact him at bill.craw[email protected]
Natural Foods Merchandiser volume XXVIII/number 7/p. 20