PMA Magazine – Connecting the Imaging Communities - July-August 2009
Smart buying
Stay smart in the current market
By Bonnie Gretzner
In the current challenging economic environment, it is more important than ever for retailers to make smart buying decisions. That means stocking the right amount of the right product at the right price.
Easier said than done, right? Experienced retailers and business experts say the best ways to accomplish these objectives are researching the merchandise, working with vendors and, perhaps most important, belonging to a buying group.
Retailer Brian Wood, who runs Salem, Ore.-based Photovision (www.photovsn.com), implements all three basics into his business. He also believes retailers need to make decisions more quickly than previously.
“I’ve changed in that I make my decisions sooner rather than later,” he says. “Five years ago, we staffed extra people, waiting for the season to start. We don’t do that anymore. If we have to let someone go, we do that. We also have to analyze our investments more closely than ever.”
Stocking smart
First, experts say it is critical for retailers to carry a wide assortment of in-demand products – but not so much they overwhelm the customer.
“The temptation to stock countless models and options is high. It feels like you’re helping your customers, and the pressure from manufacturers to take their products is always high,” says Cambridge, U.K.-based author Philip Graves (www.philipgraves.net). “Research, however, shows too many choices cause customers to put off making decisions.
“Provided the most popular brand is stocked, retailers can get a win-win from buying a smaller range. Stock holding and managing is easier, and customers are less likely to walk away from a choice that induces confusion,” Graves states.
Tom Shay, who runs Profits+Plus, (www.profitsplus.org) of St. Petersburg, Fla., agrees retailers need to look closely at their product lines.
“The key is knowing which inventory moves the fastest and being sure to have those products,” says Shay.
“A second component is looking at inventory from the perspective of ‘velocity coding.’ The fastest-moving products are referred to as ‘A’ items, and the slowest-moving are ‘E’ items. To acquire additional money, the ‘D’ and ‘E’ items are the best candidates for liquidating and getting that cash free to buy enough of the ‘A’ items,” Shay adds.
Retailers can take many steps to ensure they get the best prices and services from their suppliers. Augustin Manchon, founder and president of Manchon & Co., has 15 years of experience with retailers of all sizes in five countries. To establish a strong relationship with the supplier, he suggests retailers consider ways they can provide value to the vendor, such as advertising for the company, sponsorship, referral to other customers, advice on demand trends, and more. Other best practices he recommends include:
• Consider replacement effort and cost for the vendor to replace your total purchases if you don’t buy.
• Learn lessons from previous purchases (value, use, resell, alternative, and bundle versus individual).
• Consider internet alternatives and free access.
• Consider renting or leasing instead of buying.
• Gain competitive intelligence (prices paid by others, prices offered by other vendors, or similar types if products are unique).
• Leverage past loyalty, stressing to the vendor if you’ve bought for many years or have spent a lot of money.
• Ask if you really need that product now.
Consultant Nicole Thompson echoes that advice when it comes to working with suppliers. She is the founder and president of Ripe LLC (www.riperichmond.com), Richmond, Va., which helps retailers lower their inventory costs through negotiations. She offers five ways a retailer can lower inventory costs:
1. Concentrate on the commodities. Always negotiate harder with the vendors who offer the products available from more than one source.
2. Consider creating your own private label brand of accessories. “It’s cheaper than buying branded products, and retailers can increase their attachment rate by offering customers a lower price option,” she says.
3. Buy from local artisans for products such as photo bags, photo albums, and frames.
4. Increase your payment terms. “The longer you hold onto your money, the better,” she says.
5. Charge slotting fees. “If a vendor wants to be on your shelf, they need to pay for the shelf space,” she says.
Joining a buying group
Both retailers and experts say they can’t overemphasize the importance of belonging to a buying group. In the United States, the two leading photo buying groups are the Independent Photo Imagers (IPI), which started in 1982, and the Photographic Research Organization Inc. (PRO), which was founded in 1958. Both organizations offer reduced prices on goods, as well as numerous networking opportunities through conventions and online forums.
Murray Huppin, president of Huppin’s/OneCall, Spokane, Wash. (www.huppins.com) and a member of PRO, says joining a buying group “is the best decision I had ever made. The most important thing was the opportunity to learn from others. It is much easier to implement good ideas when you have a larger pool to draw from; otherwise, the only ideas you get are the ones you come up with yourself.”
There are approximately 130 PRO members in the United States. To join, a member must make a minimum of $1 million in sales. When they join, they initially pay $16,000, which includes dues, a one-time fee, and a $12,000 investment in stock in the group.
“They almost always make that back within a year,” says Bill McCurry, chairman of McCurry Associates (www.mccurryassoc.com), Princeton, N.J. McCurry works as a liaison with PRO and offers information to camera store owners.
There are 553 IPI members with 755 locations in the United States, Canada, Mexico, South Africa, and Australia. The membership process starts with an application, and generally is open to all in the image capture and image archiving industries.
“There is quite a bit of overlap between those two, and that’s certainly reflected in our members,” says Brent W. Bowyer, executive director and president. Members pay an initiation fee, as well as monthly dues of $100.
IPI members receive special pricing and special terms from IPI Supplying Partners. Other benefits include product discounts at the shows, an active online forum, an annual conference and trade show, and continuing education via webinars and the Innovative Imager publication.
Says retailer Kirk Sidley, who serves as chairman of the IPI board, “Our members also are able to share in well-thought-out marketing programs, complete with templates for advertising, and marketing materials at no additional cost. Our online forum is the most active in the industry. We consider it one of our ‘crown jewels.’”
PRO members receive similar benefits. The group holds a convention and trade show, and full members have access to an online forum. An affiliate program began testing in September 2005, where smaller retailers can pay $100 via automatic electronic transfer and have access to all products in the PRO warehouse. McCurry says there are 35 people in the program now, and 8 have gone from affiliate to full members.
Not only are PRO members able to buy from major manufacturers at a reduced price, they also have access to the PROMASTER-branded products. Says McCurry, “PROMASTER is a brand, not a private label. PRO has 1,600 SKUs of product, and 100 percent of product is shipped in 24 hours.”
Ultimately, says Mark Leonard, president of Dodd Camera, Cleveland, Ohio (www.doddcamera.com), making an investment in a buying group translates into smart buying. “When I look at the entire line of product I carry from the PRO office, I know I’m getting a far better deal than if I had to meet with 15 or 16 different vendors to procure the same products. I would need to hire a full-time buyer just to do what the PRO office does for me.”
Buying groups worldwide
Here is a look at the major photo industry buying groups from around the world, most of which either have their own warehouses or rely on distributor warehouses.
Australia
Camera House, www.camerahouse.com.au
Narta, www.narta.com.au
Leading Edge Group Ltd.
www.leadingedgegroup.com.au
Canada
Cantrex, www.cantrex.com
Foto Source Canada Inc., www.fotosource.com
Europe
France
Phox, www.phox.fr
Camara, www.sapc.fr
Germany
europa-foto, www.europafoto.de
Ringfoto, www.ringfoto.de
Scandinavia
Expert, www.acecam.com
United States
Independent Photo Imagers (IPI)
www.ipiphoto.com
Photographic Research Organization Inc. (PRO), www.promaster.com
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