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Do Vendor Backed Promotions Work?

March 31, 2009

Business last weekend (March 27 and 29) was unexpectedly good, especially our special order business (which we don’t count in sales until the merchandise arrives). We wrote huge business with Brown Jordan all because of their “unprecedented sale” promotion. We advertised this event heavily on television and it paid off.

We also got notification from Summer Classics regarding their “Promotional Coupon” program. Essentially, they will give the retailer a $100 rebate on any custom order worth over $1,000. All we need to do is send in our logo and contact info and they will create a printable coupon we can mail out to customers. Since I had such success with the Brown Jordan program, I think we will advertise this through television rather than using direct mail. Since the rebate is $100 in wholesale value, we are going to make it a $200 rebate for our customers. We will advertise that discounts could be as high as 20%.

The weather has been up and down for the past two weeks. For a day or two, it is in the high 70’s and low 80’s. Then we get pouring rain and the temp drops into the 60’s. This last Saturday it was in the 40’s when I got up. I thought it would destroy business that day. However, it got into the 60’s turned sunny and everyone and their mother was out to redo their outdoor spaces. However, today it is overcast with a 100% chance of rain. Because of last week’s rain, this could cause some flooding in areas that are part of our trade area but still about 50 miles away. Just that threat seems to be keeping customers away today.

Who would have thought it just a few weeks ago, but our inventory is starting to get low. We haven’t lost any sales because due to “out-of-stock” situations, but consumers are more willing to wait for custom orders in the early part of spring than in summer. So, now I have the conundrum of whether to restock now or not. If I do, I won’t get dating on these orders and they will become due just as our early buys become due. Normally, I wouldn’t worry about that, but in these times, who knows if the money will be there to pay for everything when it is time to pay the piper!

Has anyone had problems competing against Restoration Hardware? They have a great catalog. If only my showroom could look as good as the beauty shots included in their catalog or web site. The designs are good, too. One of our customers was trying to decide whether to buy teak from them or us; so, I took the opportunity to shop their local store.

The furniture even looks good in person but there are some not-so-obvious differences between what they sell and what we sell. First of all, their cushions are made in China and most are spun polyester. They don’t stock any of their furniture and they don’t sell what is on their floor. Everything has to be ordered out of their “warehouse.” If you order out of the catalog shipping and set up are not included. I don’t know what their policy is for merchandise purchased through their store. All of their furniture is private labeled. Makes you wonder who will handle warranty problems.

You could tell from the spacing of the growth rings that some of their teak is younger growth. None of their aluminum is cast; it all appears to be hollow. I couldn’t inspect it closely enough to tell whether it is tubular or extruded. If any of you can answer that, I would be happy to hear from you.

As I said, most of the differences are so subtle; it would be hard for anyone but the most professional of buyers to pick them out. Plus, even though everything is private label, they have styles that look like many of our major vendors including Summer Classics, Cast Classics, and Rock Wood. Unless those vendors are actually supplying them, I wish they would do a competitive analysis for us specialty guys. Even though the furniture was well displayed, they only have a few sets on their floor. I don’t understand why a customer would make such a big investment in furniture from a company that obviously doesn’t specialize in the product. Go figure!

Yours in confused retailing, Bruce