Yes, it's there...

I love metaphors, similes, and other creative turns of phrase. It allows us to boil complex issues down to something most everyone can understand and/or tie to. So, here's Today's Metaphor, in a visual presentation:





And the identity of said Pachyderm is--The Supply Chain. Welcome to Chapter 2 of the Feast/Famine cycle that this space predicted in 2008. You remember, don't you? The "feast" of overstocks caused by the downturn would be followed by the "famine" of tighter inventories and the eventual (if not inevitable) uptick in retail sales?

The first half of 2010 was a banner one for retailers. Depending on who you are, your sales might be up 30% over the admittedly crappy 2009 figures. But in 2009, we had inventory out the ying-yang, and we spent most of the year trying to get rid of it. In 2010, the demand might be there, but the product isn't, at least at the levels it was last year.

And our business, which lives by the "slop" in the inventory forecast, is suffering the consequences. Got a big order? Fabulous! Now, can you get the product? Not so much. This is a Serious Thing for our channel, since our ability to forecast (zero) and our companies' willingness to hold large quantities for our business (almost zero) create challenges.

And guess what? It's gonna get worse before it gets better, assuming it actually GETS better. You see, corporations are seeking more inventory turns, which by definition requires less product on the shelf (or dramatically higher sales, and who really think THAT'S coming?). This impacts the "one-off" segment of our channel the most, and it creates stress on all parties.

We're heading for that point where if it's not in the forecast, it sure ain't gonna be in the warehouse. And even forecasted product might not be there because of the "issues" the Supply Chain faces. To wit:

There's a labor shortage in China (if that can be imagined).
The domestic market in China is growing, so production capacity that might be used for exporting product is now being used for the home folks.
Freight is a nightmare, as there are fewer container vessels, and higher costs for those that remain.
Costs are going up.

The Cardinal Rule of Sales is "Don't sell what the customer wants--sell what we've got". "What we've got" will continue to be challenged, especially in high quantity. Please check the security of your seat belt--it's about to get bumpy...


Pete

What a few days away can do for you

I'm on my way back from a week in Bermuda. Never been there until last week, always wanted to go. And the operative word was "go"--very little interaction with the business or any of the players in it.

Time out of the country, and away from the dull roar of the Everyday can often be illuminating. It was for me. I did a little thinking about the market and I have come home with some thoughts. To wit:

*Merchandise suppliers are becoming marginalized, if they aren't already. We're being reduced to purveyors of "stuff" and this is not a good thing. Between databases with tens of thousands of items to reverse auctions with multiple suppliers quoting the exact same items, those of us on the Merch side are under fire from all sides.

*The Reseller is King. Forget all this blather about how end-users are going to go direct and bypass the reseller--it's not gonna happen any time soon. There are too many relationships that need to be cultivated for the end-user to do it. And the Reseller now has options they never dreamed of having only a few years ago, whether it's retail sites, or "category killers" willing to grant access to their assortments.

*The "recovery" is on hold for 2010. The cold, hard reality is that budgets, the lifeblood of our business, were established last fall when things were really crappy. It's highly unlikely that we will see any significant opening up of the purse strings in mid year.

*The Supply Chain is under duress. There are all sorts of "issues" with getting product from the Far East. Prices are going up. Delivery times are extended. And freight is more expensive than ever. This will not go away in the next few months, if then. There's so much going on in China (currency, labor shortages, increases in domestic demand) that we will see more and more pressure on our ability to deliver product.

*"Experiences" are the New Black. It's no longer good enough to offer product. You now must offer an "experience" that mimics (or exceeds) that offered by retailers. It will get worse.

More later...


Pete

I hate it when that happens...

As a card-carrying member of AARP I have first-hand knowledge of the whole "you're obsolete" thing. Whether it's my increasing discomfort with technology (slow, but insidious), or commiserating with friends about aches and pains, I get it--I'm the past, and others are the future.

But today has been a milestone. It seems like every time I turn around, I'm hearing that my view of the market, or the very market itself, is out of touch and destined for the scrap heap. Geez, and I was just getting the hang of the "email" thing...

There are multiple entities attempting to fill the void left by Amazon's departure from the fulfillment business. I've heard that my model of selling customers is no longer important--what is important is to be listed with master distribution and let them include me amongst the thousands of items in a given program.

Otherwise, I'm an Endangered Species-soon to be irrelevant and left behind as the Prosperity Express moves out to sea.

Then, I read an article I found on the Google News home page. The title was ominous--"Forget Green Stamps: The New Loyalty Marketing". The article presents a new way of thinking--not to just incentivize the most important clients, but EVERY client through the use of CRM and other analysis. OK, I'm down with that, but then came the hammer:

New loyalty platforms work in the now by giving customers incremental incentives (discounts, coupons, special offers, inside information) on a continual basis, encouraging them to make regular purchases — instead of requiring customers to collect points in hopes of collecting an incentive in the future.

Whoa there, Sparky. You're talking about my market there--you know, the one where I and others derive our living? I felt my lumbago acting up, right after my gallbladder started pulsing.

And both of these "new" ideas were presented with the bravado of all "new" ideas--that we're right, you're wrong, and if you persist in clinging to your ways you will be as useful as a submarine with screen doors. Change now or perish. Follow us. Trust us.

Was I this way 20 years ago? Did I walk up to established markets and say "Here I am--make way or else I'll use the Force to destroy you"? God I hope not.

My favorite saying of all time is "it depends". There's no doubt that both of these concepts can find a place under our Big Tent. But nothing is the "do-all and be-all"--nothing. I'm reminded of a line attributed to Dwight Eisenhower--"if everything is a high priority, then nothing is". You cannot make every customer the most important. Mr. Pareto is still right.

So today I got old. Real old. I'm completely off base on how to find a way to be relevant to the Amazon-replacement wannabes, and the entire loyalty business is about to go to Hell in a handbasket.

Don't touch my Social Security...


Pete