Retailers like guaranteed sale to reduce risk

June 1, 2023
/ SKUBlog
/ By Susan Sipos

At SKUFood we are all about helping suppliers create great working relationships with retailers and distributors. Part of building trust is speaking the same language. We will continue to define food and beverage industry terms in 2023. Guaranteed sale happens when a supplier agrees to buy back inventory from a retailer when it does not sell by an agreed upon date.

This practice reduces the risk for a retailer and sometimes is necessary for suppliers to gain access to the shelf. Guaranteed sale is more prevalent in specialty store environments than the larger stores.

Retailers like guaranteed sale to reduce risk

Retailers want to offer products that sell. They do not want to put more effort into generating sales on products than they have to. They see it as the supplier’s job to create demand. Yes, they create ads to drive traffic and sales, but they want to list items that deliver expected sales at regular retail. One fear of category managers is to list new items that do not deliver the anticipated sales.

When they can get a supplier to agree to guaranteed sale, they know the store will not lose. They will not have to reduce the retail to move through the inventory.

Unfortunately, guaranteed sale can lead to retailers not trying as hard to sell products. They are more likely to let it sit on the shelf and let consumers find it than they are to be proactive and drive sales. It can be frustrating for suppliers because the best relationships are where both parties contribute.

With this program in place retailers will invest in more inventory because the risk is less for them. This can help suppliers to gain a presence and get sales going. There should never be an out of stock with a guaranteed sales program in place.

How suppliers can take advantage of guaranteed sale

First suppliers should only agree to a guaranteed sale when it is the last option. Sometimes, it is the only way to get the product into the store and has to be done. It is more work, because you have to keep track of the inventory and probably do more to ensure sales happen.

It can be frustrating because you must prove your product sells. When it does sell, it can lead to more listings and the dependable sales you need to grow your business.

If you agree to guaranteed sale you should get some other parameters in place:

1. Your customer should confirm the space that you have on the shelf for the product. Push for more space as the risk is lower for them. Make sure everyone

Pick to zero is better when everyone does their job

It is difficult to argue the benefits of pick to zero. It does deliver fresher product to consumers and reduce costs in the system. It is more beneficial to retailers than suppliers but they will tell you fresher product sells better which means more cases for you.

Both suppliers and retailers need to be good at their role. It all starts with a sales forecast and accurate data integrity. When the forecast is created the system will review the level of inventory in the store and calculate the order. If the forecast is good and the inventory is accurate the order is the right amount. Then it is the responsibility of the supplier to have adequate product on hand, deliver good quality and at the right time. When these functions are all accurate and executed properly it is great. If there is a breakdown anywhere it will cost sales and the system cannot recover until the next store delivery.

If you have any questions about cents per unit profit, you can always send me an email peter@skufood.com or call me at (902) 489-2900.

Peter

Demand for PEI oysters stronger than ever

The food service industry continues to rebound. Sales are now at pre covid levels or stronger. Oysters have been over developed in food service. It is great to see the demand strong but a challenge for suppliers. The strong demand and an algae bloom are causing shortages in the supply chain.

Food and beverage continues to be a supply and demand industry. Expect to see more expensive oysters next time you want these tasty treats.