Are We Going to have to Kiss Terms Goodbye?

I know after reading all these posts I am almost afraid to ask...but I have a small retail jewelry shop and I am looking for a diamond and gemstone jewelry supplier.I would be willing to check up on all memo goods every 3 months and pay for what i have sold!!!I will pay.I am located in the Great Smokey Mountains of Tennessee.In the pigeon forge and sevierville area,it's a tourism town.If anyone knows of someone who might give me some terms and take a chance I would be willing to work with them and do my part to move the pieces,I will advertise and I do have jewelry experience.Thank You my telephone is 865-566-8500

I was speaking the other day to a LONG time friend/manufacturer about a somewhat sticky situation(new sale). He said he was willing to accomodate my special request but could not afford to lose money on the deal. I told him we are here to make money for each other. He replied "that's why we like you Neil, you understand us". Good grief, we had better understand our suppliers at least as much as we (try to) understand our customers. I'm still getting generous terms from most of my suppliers. Why do you suppose that is? Oh and this IS my real (trade) name.

The retailer thinks with returns they are doing a mfr a favor, right just give them there goods back and we all will be happy. With all the gold buying right now Mr Jeweler are you giving those customers there retail purchase price or scrap value??

On the return/exchange problem. If the retailer thinks a supplietr can just exchange old merchandise for new on a 1:1 or even a 2:1, please think this through. He takes back a product that the retailer has some responsibility for, he orederd it. He now must spend more money producing a new item, while the returned item is just that, not money. The returned item doesn't turn into money until it can be sold AND paid for. Plus he has the cost of handling and refinishing the return. The new item also isn't money until it is paid for, sometimes many months down the road. It's a death spiral.Doesn't the manufacturer wish he could just return it for his cost and be done?

On the subject of stock balance, yes the goods that have been returned can be re-sold, after handling, cleaning and inspection which has its costs, also this resell is just a transfer of money for the vendor, this should have been a new sale.

Concerned continued: "Offer a REASONABLE EXCHANGE policy. Because, if you are contending it is the retailer's fault a product is not moving, then I contend that said product must be moving SOMEWHERE. If that is the case, save yourself the labor, accept the product back and deploy it where it will move. This annimosity that I see in the industry is directly due to a bull-headedness and a desire to screw over and not be screwed over. The financial markets may have crashed because of a lack of trust, but this industry has not seen trust for quite some time. So wake up, we are in this game together and really need to look at what our roles in this world are." OK, HOW do you expect the manufacturer to just take back goods and re-distribute the inventory elsewhere? WHERE?? It's easy to make the suggestion, but since you are in this industry, please explain HOW the manufacturer will know exactly where to place the merchandise that isn't selling in one store, but yet should sell in another? Since retailers don't share their sales data with the suppliers, how will the supplier know what's needed in which store or market. We do have lots of problems, but until we all sit around the table, hold hands and sing Kum-Bay-Yah, these issues will remain. Stop blaming each party, we ARE in this together... for better or worse and we had better figure out how to work on it.. together.

Concerned continued: "Want to fix this business? Make retailers pay cash on reorders. Make vendors take the risk for new products. Mandate retailers invest in TRAINING to further improve their ability to move a VENDOR'S product. On inventory swaps, I have heard enough BS on 3 for 1s. As a manufacturer YOU KNOW what moves, why are you stuffing the channel of the retailer forcing them to finance your design screw ups/test pilots? If you counter the swap point saying "we don't control how the customer is treated", then consider this: Offer a REASONABLE EXCHANGE policy. Because, if you are contending it is the retailer's fault a product is not moving, then I contend that said product must be moving SOMEWHERE. If that is the case, save yourself the labor, accept the product back and deploy it where it will move." In a perfect world, the retailer would be able to pay cash for everything, but that's not possible. The reason is they have way too much non-performing inventory that has sucked up all of their cash flow. The expectation that this can be fixed by just demanding they pay cash for reorders isn't addressing the real problem... the BILLIONS of dollars of inventory that is currently sitting in stores across the country. You mentioned that manufacturers KNOW what sells... that is completely false. Manufactures know SELL-TO, but not SELL-THROUGH... The overwhelming majority of them have no idea what the stores are selling, how long the merchandise takes to sell, or how much the product sold for. What we need is cooperation among all stakeholders and transparency. PS. It would be really nice if you guys used your real names on these posts.

Concerned: There are an awful lot of holes in your post. I'll pick a few to comment on. "A retailer exists as a CHANNEL to SELL a manufacturer's product to the PUBLIC. A manufacturer exists to CREATE and MANAUFACTURE products that the public will find APPEALING and will BUY." Please tell us where the manufacturer has done his homework? If the manufacturer exists to create products for the public will buy, does the manufacturer expect that he or she KNOWS what the buying public wants? Where is the market research? Where are the focus groups? The reality is that MOST manufacturers design and create what they like without regard for consumer tastes. However, the same can be said for MOST retailers who buy what they like, without regard to their consumer's life style or life stage. As someone who analyzes these things in great detail, we see this pattern over and over again. Stores filled with merchandise that isn't selling, but was supposed to be GREAT according to the sales rep. The real issue is we're not working together on these decisions and no one will invest the money to do the research.

To Concerned: What world do you live in? "The retailers job is to sell, not own." What are you? A commissioned rep? You are "bankrolling" the manufacturer? We suppliers pay on the spot for gold, labor, DESIGNERS, Trade Shows (including your expenses at certain shows), and our cost of money. How about "partnering" some of those Keystone and 1/2 markups? Retailers in the past have gotten "dating" terms that to the retailer today are simply suggestions. The suppliers uphold every part of the deal. The retailers take whatever time they want (sometimes 6 months or more) to pay. They get over the top mad when we even try to charge interest on over due payments. Where else can you get "free" money for months on end? Does your bank "partner" give you money for free? Other times they complain that they still have the merchadise in stock so they just send it back. That's memo, not a sale. So we have increased our inventories (the real killer) with items the retailers have picked. Thanks alot! When will the retailers realize that every piece of jewelry has TWO parents. If you didn't like it, why did you order it? If you considered it an "experiment," why did you want it in your store? Then keep it in you cases for months. Extended terms are indeed a thing of the past.

This is the only country that operates business like this. I purchase my rough stones with my cash and give my rough to my cutters who cut my stones, which I pay a very generous salary. Then I take goods which I own and have to give to retailers /designers who think I need to finance there business and listen to there B.S., nastiness and rudeness. Granted only a small few are like this. Even with those few I often wonder if this is worth this crap. Then I meet up with my next customer who is a great business person and respects the vendor/customer relationship. It is a two way street. If I'm going to give you goods that I have paid for and own and I need to act like a bank for your company I need alittle respect. Not to be abused verbally and mentally. Respect is the name of the game .I give it to you when I sell to you and I really appreciate your business , but business is only finished when the payment is made.

Turnabout is fair play. How many retailers need to go out of business/go chapter 11 before the manufacturers quit gambling on the retailers dime? Gamble with your own money, not house money. The industry is a partnership. If you don't like being in a partnership, become vertically integrated and give it a shot moving merchandise whose designs have no market.

You are either terribly naive or you haven't been reading the JCK for the past six months. How many manufacturers and designer have to go out of business before you realize that they can't continue to finance your business? Who do you think is paying for you to have exended terms and return priviledges? What are the vendores supposed to do with items that you couldn't sell in the past year? How many "handshakes" have turned in Chapter 11 filings? Everytime a retailer refers to his "vendor/partners" I have to laugh. They are not his partners, they are his bank!

This industry is ridiculous. Take a step back and say to yourself, what are our jobs? A retailer exists as a CHANNEL to SELL a manufacturer's product to the PUBLIC. A manufacturer exists to CREATE and MANAUFACTURE products that the public will find APPEALING and will BUY. The retailer's role is to sell jewelry, not own it. It is not the retailer's job to bank roll a manufacturer. If a manufacturer wants to experiment with a new product, it quite simply should not be on the retailer's back. Conversely, retailers need to pay their damn bills. The sad state of the industry lies solely on the shoulders of the retailers for not saying no to the trade. Want to fix this business? Make retailers pay cash on reorders. Make vendors take the risk for new products. Mandate retailers invest in TRAINING to further improve their ability to move a VENDOR'S product. On inventory swaps, I have heard enough BS on 3 for 1s. As a manufacturer YOU KNOW what moves, why are you stuffing the channel of the retailer forcing them to finance your design screw ups/test pilots? If you counter the swap point saying "we don't control how the customer is treated", then consider this: Offer a REASONABLE EXCHANGE policy. Because, if you are contending it is the retailer's fault a product is not moving, then I contend that said product must be moving SOMEWHERE. If that is the case, save yourself the labor, accept the product back and deploy it where it will move. This annimosity that I see in the industry is directly due to a bull-headedness and a desire to screw over and not be screwed over. The financial markets may have crashed because of a lack of trust, but this industry has not seen trust for quite some time. So wake up, we are in this game together and really need to look at what our roles in this world are.

Now I know why our industry is is such bad shape with this type of retailer question, I want to buy a diamond take it today and pay for it in 6 months or maybe not i will just give it back. This is a joke.

Handshake deals were appropriate when the manufacturer’s profit matched the retailer’s commitment to pay. Last week, I was told of a retailer that offered to settle a $12,000 invoice for payments of $50.00 per week. Global competition, industry consolidation, and changes in consumer buying behaviors have reset the bar in manufacturer-retailer relationships. Manufacturers no longer have the margins to support retailers as an unacknowledged source of working capital. Retailers who can’t compete in today’s environment are taking an enormous toll on the supply side of the industry. Think of the tens of thousands of dollars of real money spent by jewelry manufacturers; money spent for the raw material like silver and gold and diamonds. Money spent transforming the raw materials into finished jewelry, taking the jewelry to market and supporting the infrastructure that makes it all happen. This is usually REAL money, not the bank’s money. And when the money runs out and banks get involved, cash flow becomes paramount. And when retailers don’t fulfill payment schedules, suppliers are pushed into failure mode. So you shouldn’t be surprised that new accounts are asked to “pay as they go”.

Yes, terms will be going away. The banks are not too happy with our industry. Long terms, memo goods, stock-balancing... these are seemingly unique to our industry. Name another one where you can spend $50K, get 6 months terms, get another $50K on consignment - to keep! - and then expect a 1:1 stock swap when the inventory doesn't sell after a year? Name just one. I wrote about this on October of 2006, the banking industry is going to force some changes the jewelery industry and frankly, it needs some changing. Given our declining margins, poor cash flow, over-inventoried stores, and nearly 50% of all inventory in stores being aged, these changes, while painful in the short term, will help us rebuild a healthier industry.

Shanu, The banks do not want to lend on jewelry PO's like in the past, it would give the mfr some up front working capitol. The majority of all current retail orders are financed from beginning to end by the mfr. We buy the material cash or very short terms, manufacture the product and pay the labor cash, then hope to get paid on time. I don't believe you will pay the price if we build in all the variables.Just remember we are running a business too.

I still offer my customers terms but payments are a real problem. Also these days with people claiming chapter 11 and just going out of business its scary. Upon my return from Sri Lanka in the spring at least 3 of my customers have gone out of business. Thankfully I had no credit bills with them but in the past I have been burnt. Retailers have to think how we give our goods with no money down and need to be respectful of it.Its a great risk. Do you know of any retailer who just give his goods(thousands of dollars worth) without any credit card, cheque or cash? Its a totally different business now and until the economy changes I don't see it changing. I think our industry is in for a real rough time.

YES, or until people start paying on time.