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Retailer Insight: Making sense of declining wholesale relationships

Elizabeth Hanley, owner of independent store Magpie’s Nest in Stalybridge, Cheshire, explains how she has identified a significant shift in wholesale relationships and brand loyalty.

I opened Magpie’s Nest in 2013 as a small independent handbag, gift and accessory shop. I wanted to have a branded offering to get customers through the door, and to gain and develop a customer base. I wanted to stock brands people had heard of, as I knew that they would help my business have a point of difference to other shops our size locally.

Initially, we made contact with the brands we wanted to stock and, over the years, have built a good trading relationship with them. As with many other retailers, we keep in regular contact with the account managers, with them visiting the store and meeting up at buying fairs and events. As the business has grown, many of the companies I work with have supported me on my retail journey.

I honestly felt I had been developing a good two-way relationship with the brands we stock: I kept our accounts in order, I ordered regularly, and I followed brand guidelines. In return, many accounts said they would offer exclusivity, and if it wasn’t in the terms of trade it was always agreed that they wouldn’t open or start to trade with new accounts in close proximity to our shop. It was all going so well, and then, in the last couple of years, there has been a noticeable shift in my once lovely, loyal relationships with these branded accounts.

It started with subtle things such as more frequent visits from reps, and more deals being available. Then the accounts departments started to be inflexible in their approach to the shop.

When I opened a second store in 2017, most of the brands we stocked applied a sensible credit limit to our account, as it was obvious our spend would increase. However, one brand’s accounts department refused any increase and wanted us to pay up front for any orders over our existing limit. There was nothing I could do. It was this brand’s prerogative: if we wanted to stock them, these were the terms on offer to us. This was a big shock for me, as up until this point I would have said I had a good relationship with the brand in question and had always been good at keeping the accounts side of the business in order.

It seems the wholesale branded accounts are now more interested in offloading stock with anyone

Other changes have been in the area around exclusivity – it’s fair game now to open accounts in the same area. The get-out clause tends to be, “Don’t worry, they won’t stock the same lines as you,” which, in my experience, never works out – the same products start to appear everywhere.

One new sales representative opened an account across the road from my shop and told me her boss had made her do it, as the new account had approached her at a buying fair in front of her boss. Now we both currently have the same products in our shops. This surely isn’t a good situation for anyone. As a retailer it’s frustrating, as it seems the wholesale branded accounts are now more interested in offloading stock with anyone, rather than having solid relationships with stores.

I have to pre-order stock months in advance with many accounts, which is challenging for most buyers. In the last year one big brand couldn’t give us a straight answer as to whether we could stock their brand in our new store – they literally changed their mind on a daily basis for weeks. Eventually they agreed we could stock the brand in my second location.

It’s not all doom and gloom, and not all our branded accounts behave like this

Even then, it wasn’t easy: they lost my orders and told me I hadn’t placed orders in the time frames needed. They forget to send out stock to me, and then make me take it all in one hit. It’s crazy, and it’s a totally inflexible attitude towards your customer. My background is sales and I used to manage accounts: the aim of the game was always to value your customer and look after them. Yes, you needed to hit sales targets, but it was usually achieved by building good relationships with your customers.

It’s not all doom and gloom, and not all our branded accounts behave like this: we have a great relationship with most. These brands have taken a different approach and really support small shops like mine. They understand I will buy differently from a large multiple and can’t take huge volume all at once – the size of our shop makes this a struggle. They have never made me feel like our spend isn’t good enough. They know I work really hard to stick to their brand guidelines and I have honest open relationships with their sales and accounts teams. They value my business, which I know is a drop in the ocean compared with what other wholesale accounts spend, but it doesn’t matter.

One brand is coming into the shop in next month to do some training and product knowledge with our staff. This is a simple gesture and has no cost for the brand other than time, but is something the staff are really excited about. This will help us sell more of their product, which will lead us to order more stock from them – it’s that simple. Another branded account sent us a handwritten note from their chief operating officer, thanking me for my continued support of their brand! I am sure his PA wrote it, but the sentiment and notion behind it made a positive impression on me, more so than the accounts who demand I come and visit them in London to place an order.

I wonder now if with Brexit looming and so many high-profile stores closing is this attitude towards smaller retailers from wholesalers going to change?

I think that as the high street struggles with increased overheads and a decline in footfall, brands needs wholesale customers – regardless of the size of their shop. Good, loyal customers are hard to find, and when you do have them, in my opinion, its good practice to look after them as they will look after you.

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