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How Distributors Help Dealers

Distributors take steps to stop margin erosion

April 7, 2011 By Nancy Klosek
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We recently asked some of the industry’s top distributors what they’re doing to help their dealers overcome some of their biggest challenges. Read the full interviews in April’s /Dealerscope/. Here’s what they had to say:

Dealerscope: What’s the most pressing problem your retail customers face, and what’s the most effective thing you’re doing to help them?

Dean Cornacchia, Executive Director, Product Management, WYNIT:Profitability and margin erosion continue to plague retail outlets that display products and hold inventory. Ironically, the brutal reality of 21st Century retail is consumer adoption of the advanced communication technology products sold by consumer electronics retailers. Anyone with a smartphone and the right app can find the lowest price on any item in real time, while physically standing in front of its retail display. When consumers buy on price alone, and have the immediate means to locate the lowest price, retailers are no longer rewarded for having knowledgeable salespeople or a wide selection of products in stock.

The most effective things we can do as distributors are to educate and mentor manufacturers on the ramifications of their pricing policies; continually monitor the market to identify problem areas; and proactively seek out product opportunities from manufacturers that have a commitment to margin integrity.

Brian Swanke, President, CWR Electronics:Margin. We are working hard to leverage our buying power to get the retailer the most margin they can get.

Rob P. Kalman, Vice President, U.S. & Corporate Marketing, SED International:The ability to compete on value versus price. Retailers have to use the advantages of physical selling (face-to-face interaction, demo products, environment, etc.) and stand out from the big boxes by offering distinctive solutions and creative ideas. We are helping the retailer by providing tools such as a full-featured website; a wide-ranging product mix, including consumer electronics, computing and small appliances; unique and hot new products; and consultative support in the form of dedicated account representatives who help our dealers with suggestions to grow their business, increase margins, and stand out from the crowd.

Dealerscope: What’s the single-most important initiative you’re executing in 2011 that will help retailers make more money?

Stephen M. Bodnarchuk, Associate Vice President/National Sales, M. Rothman:Our most important initiative for 2011 is to offer products such as tablets and tablet accessories that will allow dealers to enter new categories and make money. Offering bundles, value-added product and unique derivatives also separates us from our competition and helps enhance overall margins.
 
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Most Recent Comments:
GLEN LESLIE - Posted on April 08, 2011
WHAT A LOAD OF CRAP!!!!! THE PROBLEM DESCRIBED EXISTS BECAUSE THE INDUSTRY HAS AN UNLEVEL PLAYING FIELD. WHEN "WHOLESALE" FROM MY VENDOR IS $35.00 MORE THAN WHAT THINGS ARE SELLING FOR AT RETAIL AT BEST BUY, BECUASE THEY BUY A TRUCKLOAD OF PRODUCT AND MY VENDOR THAT SELLS TO ME AT A PHANTOM, [WHOLESALE PRICE] ONLY BUYS A FEW PIECES, THE INDUSTRY HAS NO ONE ELSE TO BLAME BUT ITSELF.

UNTIL THIS PRACTICE CHANGES, CONSUMERS WILL STAND IN A MALL AND SEARCH THE WEB FOR THE CHEAPEST PRICE AND BUY THAT PRICE. THE MONEY THAT THE RETAILER SPENDS FOR HIS STOREFRONT, TRAINING HIS EMPLOYEES AND ADVERTISING IS ALL GOING DOWN THE DRAIN.

WHY IS CIRCUIT CITY, LECHMERE ETC. ALL OUT OF BUSINESS? THE RACE TO THE BOTTOM SPURRED ON BY MANUFACTURERS THAT DO BACK ROOM DEALS WITH BEST BUY AND OTHERS, AND THEN TELL US INSTALLERS SOME PHONEY "WHOLESALE" PRICE, IS THE REASON THIS WHOLE ISSUE EXISTS.

AND WE ALL KNOW IT, AND NOBODY IS GOING TO DO ANYTHING ABOUT IT.
Click here to view archived comments...
Archived Comments:
GLEN LESLIE - Posted on April 08, 2011
WHAT A LOAD OF CRAP!!!!! THE PROBLEM DESCRIBED EXISTS BECAUSE THE INDUSTRY HAS AN UNLEVEL PLAYING FIELD. WHEN "WHOLESALE" FROM MY VENDOR IS $35.00 MORE THAN WHAT THINGS ARE SELLING FOR AT RETAIL AT BEST BUY, BECUASE THEY BUY A TRUCKLOAD OF PRODUCT AND MY VENDOR THAT SELLS TO ME AT A PHANTOM, [WHOLESALE PRICE] ONLY BUYS A FEW PIECES, THE INDUSTRY HAS NO ONE ELSE TO BLAME BUT ITSELF.

UNTIL THIS PRACTICE CHANGES, CONSUMERS WILL STAND IN A MALL AND SEARCH THE WEB FOR THE CHEAPEST PRICE AND BUY THAT PRICE. THE MONEY THAT THE RETAILER SPENDS FOR HIS STOREFRONT, TRAINING HIS EMPLOYEES AND ADVERTISING IS ALL GOING DOWN THE DRAIN.

WHY IS CIRCUIT CITY, LECHMERE ETC. ALL OUT OF BUSINESS? THE RACE TO THE BOTTOM SPURRED ON BY MANUFACTURERS THAT DO BACK ROOM DEALS WITH BEST BUY AND OTHERS, AND THEN TELL US INSTALLERS SOME PHONEY "WHOLESALE" PRICE, IS THE REASON THIS WHOLE ISSUE EXISTS.

AND WE ALL KNOW IT, AND NOBODY IS GOING TO DO ANYTHING ABOUT IT.