Niche Retailers Fight to be Heard

Is the smaller retailer's voice being lost in the shouting as category-killing retailers draw more of the vendors' attention? It may not be the intention, but it tends to be the result unless those retailers find a way to regain that attention through combined clout with others, a unique niche or some other retail strategy. "There are some very successful small independents in the market," says Pam Gianpicolo, marketing assistant at Husqvarna, Charlotte, N.C. "They have established a niche and can thrive because they've looked at trends in the market and their capabilities and found a way to succeed."In most cases, she notes, service is what sets them apart, which is why Husqvarna focuses a lot of attention on them. The company requires any retailer that sells its products to also service them, which cuts out some of the major chains. That drives the company to create displays for smaller retailers in modular formats to fit a variety of situations. Husqvarna's salespeople work closely with each retailer to create the best format and display presentation.Suppliers who rely on independent retailers try to keep their programs flexible and work with stores in a one-to-one relationship. That's more labor-intensive, but it can pay off. For instance, Kawasaki Motor Corp. U.S.A., Irvine, Calif., makers of motorcycles, jet skis and off-road vehicles, partners with a sales agency that coordinates its national dealer program, working with each retailer to mix-and-match the proper materials.There's no way to know what will work, says Joanne Goulding, Kawasaki's national advertising and merchandising coordinator, because everyone likes different pieces.Some dealers want window clings to attract attention; others don't want customers' view of the motorcycles to be blocked. Some like hang tags; some don't like material hanging into the display space. And with so many small, independent shops, the company often doesn't have the budget to create floorstands."We do a lot of feature/benefit signage, especially posters and banners," she says. "Each of our retailers is an independent business person, so we can't dictate what they use, and their support varies."Kawasaki's new program is geared toward shortening the communication gap between the manufacturer and that diverse national dealer base, notes Sharon Lund, vice president at the Falls Agency, which coordinates Kawasaki's advertising. The company integrates any national advertising program with local dealer advertising, P-O-P displays, in-store promotions and sales incentives to tie them together under one thematic umbrella.Once a dealer signs onto the program, the agency works one-on-one to integrate all elements. "Dealerships are a very diverse group," Lund says. "Some require more help than others, but by coordinating the national media campaign with regional and dealership advertising, merchandising and in-store displays, we're able to reach consumers at all levels."Since the program began five years ago, she notes, sales have increased incrementally. Last year, participating dealers saw sales rise 20 percent, the company estimates. The program also improves the way dealers do business and builds a stronger dealer network, Lund says. "In our view, the building blocks are communication, involvement and encouragement at every level of dealership."But with service and manufacturing costs rising, most vendors are not putting as much effort into servicing smaller retailers' specific needs, says consultant Milton Merl. "Small guys seldom pay back the costs, but they still must be serviced," he says. "Vendors are very focused on ensuring their cost to serve an account is being paid back through better sales. Ultimately, that's bound to hurt the smaller guys."At the same time, more and more large chains are refusing programs altogether or cutting back on placements. "Little guys are usually happy to take well-thought-out programs of any type," says Merl. "So there are big opportunities in that area, with retailers who could care less about directing the specifics and whether there's national consistency."Even when smaller retailers band together to gain clout, their voices aren't heard as loudly. Ace Hardware Corp. and TruServ Corp. (owners of True Value, Coast to Coast and ServiStar), the two largest retail hardware co-ops, agree that their needs often aren't met."When possible, we like to have input, but we don't get it a lot," says Russ Goerlitz, regional visual merchandising supervisor for Oak Brook, Ill.-based Ace. Adds Jay Agosta, TruServ general manager of retail store development, "We try to work with marketers as closely as possible to modify their P-O-P for our stores, or at least scale it down to our members' store sizes. But a lot of times, frankly, they won't do it."That can create major problems, even when the retailer really wants to use the pieces. "In some cases, we have no choice but to use the pieces they supply, but neither of us gets what we want from it," says Agosta. For instance, cabinet-hardware displays the store was using were created so deep that they stick out too far into the aisle for most of its members' stores.The co-op's planogrammers had no choice but to stick the category at the far back of the aisle, where it was less intrusive. "So a category we'd like to have up front and very visible winds up at the back of the aisle just so we don't create the look of a closed-in aisle," Agosta explains.To alleviate that type of problem, TruServ has developed its own merchandising laboratory, where interested vendors can set up prototypes for the line they're suggesting and go over it with TruServ merchandisers prior to producing or shipping the units. "We can then review it and ask for the changes or modifications we need," Agosta says. If it doesn't work, and the vendor doesn't want to adapt, the pieces are rejected. "Our top goal is to have a solid planogram to give our members," he stresses. "We sit down with the vendors and say, 'Here's our plan. Will you help support it?'"Ace has gone even further, instituting a separate department-level program called the Discovery Process. That department surveys techniques used by the co-op's highest-producing members in each category to create a group of Best Practices for other stores to follow. The Discovery staff also works with suppliers to enhance every aspect of its retail approach including merchandising, invoicing, shipments, etc., based on the best approaches of member stores.Personnel at General Cable Co. rave about the program and how it's helped meet the needs of smaller hardware stores. "It's as much a program for fine-tuning listening skills and focusing on what really goes into an Ace plan in a very in-depth way," says Bobbie Dumelle, regional sales manager for the Highland Heights, Ky.-based wire and cable company. "It was the most input we've ever had for small stores, and it produced our most successful display. The Best Practices approach allowed us to key into what actually was working in each store size, and what we learned here can be applied in some ways to other stores as well."Ironically, smaller retailers are gaining some clout through the actions of category-killer chains. How? Home Depot and Wal-Mart are developing models to produce smaller stores for smaller markets. If they can create stores in the 40,000-square-foot range, they can continue their expansion programs once they've saturated the market for 100,000-square-foot big boxes.As a result, notes consultant Merl, "Chains are beginning to ask for A-and B-size programs for their two different sizes of stores. They are realizing they can't invest the same amount of space or inventory in every size store." That creates more problems for vendors, as retailers still want consistency even in different sizes -- and something has to give. "Chains always want consistency, but they have different looks, formats and productivity ratios in different markets and sizes of stores," Merl points out. "It means vendors have to be more flexible, but it also helps move them more toward helping the little guys."At least some vendors are seeing the impact a closer relationship can have and the resulting sales jump. "Getting our feedback is becoming a trend with more suppliers," says Ace's Goerlitz. "Many of them are receptive to constructive criticism on how to be more effective with their message and logistics. They see their product is selling better when they consider these options. And we are putting together sales numbers to prove that the displays are making a difference."Adds General Cable's Dumelle, "Smaller stores are finding ways to take existing displays and do it on their own, mixing it up to meet their needs. They don't need special logos or brands. They want informational displays. If that logo doesn't help them sell, then the merchandiser isn't buying. P-O-P today has to be user-friendly and consumer-guided, no matter what size the store."

Niche Retailers Fight to be Heard

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