19 Apr Managing Retailer Relationships

As an independent dyer, pattern designer, or manufacturer of craft tools, you need to manage your relationships with your retailers in a way that keeps them happy while benefiting your bottom line. The challenges of making this a profitable relationship for both ends are shifting as e-commerce make direct-to-consumer sales an easier option at the creator’s end, leaving a smaller slice of the sales pie for the retailer. If that’s a direction you’re interested in exploring, we can help you with that, but right now we want to look at the familiar supplier/retailer relationship from the supplier’s perspective and offer some tips for keeping it healthy and functional.

Expectations on the Supply Side

The most important thing you want from your retailers is sales. If your company is only big enough to supply your product to a limited number of retailers, it’s in your best interest to choose those retailers carefully and periodically evaluate whether they are meeting your expectations. You have to be willing to break off an unprofitable relationship in order to expand elsewhere. How can you do that?

• Set a time limit on restocks. If your retailer hasn’t reordered product in a year, it’s clearly not selling well. They are probably as eager to sever this relationship as you are. It might be a little harder to make that determination at six months. Maybe you want to brainstorm with them and figure out ways that they can promote your products and give it another six months. But have a policy to fall back on that gives you an out.
• Set your minimum order limit higher. Again, as the supplier, you can set policies that protect you and bend them if you think the situation warrants it. But requiring a retailer to stock the entire line or entire color range, rather than cherry-picking specific products, should allow you to filter out the retailer who can’t afford to market and support your products. It’s a starting point. Over time you can work with the retailer to determine which colors, weights or designs sell best and customize the inventory to match their sales.
• Pace your expansion. As a company with a unique product, you don’t want to saturate a given market. Determine what the geographical limits are to “the market” and figure out which retailers within those limits run a store whose clientele are likely to buy your product. You can do a lot of this research online before you even approach a personal contact; it is also likely that potential retailers may have been looking at your stockist list and see an opening for their store, so they may approach you.

Expectations on the Retail Side

What do retailers expect from their suppliers? A product of consistent, reliable quality that performs as described. Beyond that, product support in the form of samples, technique tutorials or patterns that help them sell your product to their customers. Collaboration is key here–the marketing ideas can flow both ways.

• Exclusivity. Retailers differentiate their stores by the products they carry. You can’t put your line in every store in a 60-mile radius of a given city and expect them all to sell it well. You need to give your retailers a chance to grow with your company and attract customers by being the exclusive source for your product. Again, discernment is important. We recently saw a yarn company pick a stockist in a state, then eight months later, expand into a store only 45 minutes away from the first stockist. The second store closed within four months of the yarn company’s arrival in stock. The yarn company cannibalized their sales at the original store and ended up with a smaller presence rather than a larger one. The relationship with the first stockist is still being repaired.
• Fair pricing. There’s nothing wrong with offering volume discounts, but you have to decide how that affects where you want your product to be found. If your goal is to be stocked by the big box craft stores, chances are very good that you will price yourself out of the mom and pop shops. They don’t have the cash flow to order your product at the volume that offers the lowest price. Rather than trying to compete with the low price at the big box or online retailer and losing money, they will choose to phase out your product line and find a reasonable substitute at a price they can sustain. If that model works for your business, great. But if you’re aiming at a different clientele, it can hurt you.
• Transparency. Give your retailers the information they need to plan for your product line in the long run. If there’s a price increase on the horizon, let them know in advance and offer the opportunity to restock at current prices before the increase. That way they can adjust their budgets for the next season. If you’re discontinuing a particular product or publication, alert them and help them find a substitute. Craft publications like patterns have a life long after the yarn or fabric originally specified has disappeared. If you see your retailers continue to order Pattern Book X designed for Yarn Q, even after you ceased production of Yarn Q, ask them what their customers are using instead. You hope it’s one of your yarns, but if it isn’t, consider what your line has that would work and share that pairing with your retailers. It keeps your company relevant even as you make changes to your offerings.
• Stand behind your product. Quality-control issues happen. Make sure you have a way for your retailers to accept returns for defective products that gives them credit and satisfies their customers. You will lose your shelf space if you make your retailers take the loss on your manufacturing mistakes. If you have a reputation for making it right, you can look forward to expanding your company’s presence.

• Support your products with marketing content. Make sure your retailers have good photos of your products and patterns. Offer shop samples or reimburse your retailers for the yarn they use making samples for the shop. Send a trunk show that includes a variety of different projects and the products needed to make them. And do this uniformly across your retailers–don’t play favorites with certain stores and neglect others. You want to grow your business.

Craft supplies and products generally have that “must see, must touch” aspect that keeps a physical retail model current. Specialty craft retailers continue to be the best way for your company to reach its intended market. Nurturing the relationships with your retailers will pay off for both of you. Contact leanne@stitchcraftmarketing.com for more ideas about building relationships in the craft industry.