A Kaffe Klatsch Discussion
GDA Staff -- Gifts and Dec, 10/21/2010 5:24:09 AM
An interactive Retailer to Retailer Breakfast Seminar hosted by the Gift and Home Trade Association (GHTA) during this summer's Atlanta International Gift and Home Furnishings Market gave leading independent retailers the opportunity to get together to discuss key market trends, professional development and industry best practices.
Two key issues generated much talk among participants: credit terms and credit card security.
Independent Retailers talk about credit issue concerns
Retailers can't survive without credit terms, observed several participants. Traditionally, vendors have allowed retailers to order products without extending payment up front. This process allowed retailers to increase product offerings within their stores and better service consumers. Over the past few years, however, it has become common practice for vendors to require payment upon purchase, as vendors have no opportunity to collect payment from retailers who go out of business.
"Due to a variety of economic factors, vendors are requiring retailers to pay for merchandise up front with credit cards, as an alternative to offering extended credit terms," says Carl Sallese, owner of Baltimore, MD-based Ann Marie's Hallmark. "But we can't finance our business with credit cards. It's impossible. Many retailers have spent years establishing their businesses and earning good credit."
Reduction of credit terms by vendors significantly increases risk to retailers, as they are essentially being asked to finance a suppliers' business. If a vendor business fails, retailers face financial loss. Additionally, reducing credit terms interrupts the standard "open-to-buy" system and almost guarantees higher product costs and business failure.
CONTROLLING CREDIT
Another issue of concern raised by the retailers at this seminar is credit card security. More and more, vendors are requesting credit cards for payment, and retailers are pushing back. "Most vendors preserve credit card information in their files and believe that, once the number is in their possession, the cards have been authorized for all shipments," says Melissa Haberstroh, owner of Boerne, TX-based Burlap Horse. "We believe, however, that we have the right to determine how and when our credit cards are used and have, therefore, established strict policies in our stores."
Retailers can't survive without credit terms, though more frequently retailers are being required to pay for merchandise up front.
Independent retailers use well- defined credit card policies to ensure their success, often reporting unauthorized charges as fraudulent. While suppliers who provide product to big box and mass merchant retailers are accustomed to retailer policy and procedures, those who are unaccustomed often have difficulty making a successful sell.
"We're all interested in creating long term partnerships with our vendors," says Haberstroh, "That requires we're all on the same page. By opening up communication and addressing these issues, we're taking significant steps in that direction."
As a result of this discussion, the GHTA will include a breakout session on credit issues at its November conference in New Orleans.
"The health of the independent retailer [...] has always been an indicator of a local economy's success," says Benno Duenkelsbuehler, principal of (re)ALIGN and director of the GHTA's Retail Advisory Board. "Talking with independent retailers in this setting - hearing their day-to- day triumphs and struggles - is incredibly revealing. We recognize that the single-store is the backbone of each economy, so sharing innovative practices and ideas are essential to success and economic growth."
GHTA Connect is a forum of the Gift and Home Trade Assn. For more information visit www.giftandhome.org or call 877.600.4872.
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