follow us

Early Buys, An Idea Whose Time Has Gone

February 10, 2009

I sense a change in the "early buy" wind.  In the past, vendors gave retailers reason to load up our warehouses with merchandise in exchange for large early buy discounts and dating. Supposedly this kept their factories busy and they wouldn’t have to lay off hard-to-replace skilled workers during the slow season. But at what risk? All of the merchandise they pushed out of their doors in the winter wouldn’t be paid for till April, May, June, and July. If spring and summer were late in coming or, heaven forbid, there was an economic downturn, retailers might not do enough business to pay off their early buys. In times like that, vendors who hadn’t insured their early buy paper were left out in the cold.

The system worked for years. Sure, there were cold and rainy summers where some retailers were left with stock, but, for the most part, retailers and vendors were able to survive. That is until the past few years. We have had season after season of bad weather. Several big retailers were not able to (excuse the pun) “weather the storm!” Add to that the economic downturn and vendors are starting to lower their risk by promoting “just-in-time” strategies rather than big early buys.

Gloster was one of the first vendors I knew who articulated and practiced this new philosophy. Instead of requiring large early buys, they asked only for floor placement. In exchange, they promised they would inventory enough merchandise in their own warehouses to back up our custom orders. As we all know, they got off to a rough start. They were able to stock frames just fine, but they couldn’t get cushions in a timely manner. They have taken steps, including producing cushions in-house, which now allows them to meet their promises more often than not.

Brown Jordan saw the light two or three years ago. They realized their designs and price points made them a designer product. As such, clients almost always wanted to customize their order rather than take what a retailer happened to stock. They still had early buy programs, but they lowered their buy-in levels. Like Gloster, they required retail floor space but little, if any, warehouse commitment. In return, they promised fast delivery. Well, fast for them. Unlike Gloster, they lived up to their delivery promises from the get go.

This year, Brown Jordan decided to implement the same philosophy in their Winston division. In years past, not only did you have to meet a high buy-in level, best discounts were based on increasing that buy-in from year to year. This was when Winston was priced in the “bread and butter” extruded aluminum category. Now that their designs and prices are at the high end, Winston has gone to an early buy model similar to Brown Jordan’s. They have always been famous for quick deliveries. It will be interesting to see how that works for them this year.

Summer Classics has created a hybrid early buy program. They still have a high enough buy so that you can’t avoid bringing merchandise into your warehouse. But, they made a commitment to back retailers up with at least eight designs fully stocked in their warehouse. Even their cushions, which they make in Alabama, are coming out faster than ever.

I am the first to admit I am resistant to change. Because of that, I have not questioned whether early buys should change. They have been around since my dad started this business in the 50’s. Except for hurricanes, which actually increased our business dramatically, weather has never been much of a problem here. Until this new economic havoc, New Orleans has even been sheltered from economic ups and downs. So, my philosophy has been, “Early buys aren’t broke; so, why fix ‘em?” 

But I have been luckier than most which has sheltered me from seeing how really broken the early buy system is. It doesn’t take much to cause the "tried and true" system of early buys to fail catastrophically. Witness the closing or bankruptcy of Fortunoff’s, Treasure Island, and Seasonal Specialty, big players all.

I am still trying to put my head around how smaller early buys will affect our markets and industry. With regard to markets, we have been arguing the merits of two markets for years. If vendors change their philosophy and emphasis floor placement over filling warehouses, I think that would lead to one market. After all, the idea of a pre-market is to tie up a retailer’s dollar before another manufacturer does. If I don’t have to warehouse that much, getting to me early isn’t as important as it used to be.

So we go to one market, but I think smaller early buys would cause a sea change in the casual industry. Having a one big market at the same time every year restricts change in any industry. Manufacturers have to gear their new introductions around the date of the market. Retailers set their floors for twelve months after market with no room for changes in the interim. Think about it for a minute. . . if our retail warehouses are no longer chocked full of goods from before the season through our end-of-season sales, we have nothing to lose by bringing in new introductions in the middle of the season. Or, whenever we wanted for that matter. Big boxes and warehouse clubs would never be able to do that; another reason for a consumer to patronize their local casual speciatly store.

That is not to say we will all go around with empty warehouses in the future. We will still need to warehouse our bread and butter merchandise. Since they have become commodity products, we can’t have stock-out situations in them. But think about how flexible you could be with less of the high end merchandise clogging up your warehouse. As long as we can show it and get it in within a reasonable time, we are to the better.

It will be tough for importers to accommodate this strategy. The overseas factories they deal with are still working on the old early buy model. This will give manufacturers with on-shore manufacturing facilities an advantage; something they haven’t had for a long time. Their turn around time on a custom order will always be less than an importer’s. Plus, they can stop production of a dog on a dime while starting up production of a new product in a matter of days.

I applaud Gloster, Brown Jordan, Winston, and Summer Classics for their foresight. Whether or not it was the poor economy that caused them to change their strategy, they have started something we have needed for a long time. I hope I am prepared for the big impact their decision could have on all of us!

Yours in confused retailing, Bruce