10 Tips to Negotiate Prices in Retail
Bargaining Tips for Retailers
Negotiation is an age-old practice that is still common in the marketplace in many countries today. In the United States, most consumers want to avoid the haggle and will simply accept the price on the tag. It is the successful retailer that has learned how to play the game of give and take with their suppliers. Learn how to negotiate with vendors at a buying show or market to receive the best pricing and terms on products with these negotiation tips.
- Prepare Well. Being prepared and informed is the greatest advantage a retailer can have going into vendor negotiations. Learn as much about the supplier and its products as possible. How do their prices compare to the competition? What level of service do they provide their customers? Vendor negotiation preparation also includes setting goals to determine what you want and what you can live with.
- Always Tell the Truth. Deception tactics, such as bluffing or falsification, may do more damage than good in the vendor negotiation process. Lying is not only unethical, but it can be difficult to maintain. While being honest, be careful not to give away your bargaining power. It's not necessary to tell everything you know, but when you do tell; tell the truth.
- Show Your Potential. If you are meeting with a potential vendor for the first time, odds are he/she may know nothing about your company. Begin the negotiation with some history about your retail business. Explain any future expansion plans and let the vendor know how doing business with you will help them.
- Ask About Incentives. The whole idea behind negotiating with manufacturers and suppliers is to receive the best price, payment terms, advertising allowances and even exclusivity. Start by asking what incentives you qualify for and let the negotiations begin from there. Don't be afraid to ask for what you want. Make sure you get some dating on your invoices as well.
- Mention the Competition. It is okay to mention the vendor's competition in the negotiation process but don't disclose any pricing or other confidential details. There is nothing wrong with letting a supplier know their competitor is in a good position, whether it is real or perceived. In my stores, we often showed the vendor a report of the performance of the competition, so they know their potential in our stores.
- Find a Fair Compromise. Just like the retailer, the vendor must make a profit to stay in business. Vendor relations should be treated as a collaboration rather than conquest. As you negotiate a good deal for your retail business, consider the outcome for the supplier.
- Think Long Term. Establishing a solid, trustworthy relationship with a supplier can only help your retail business. Vendors, who feel the customer will be loyal, may concede to even more incentives to maintain a long-term partnership.
- Take Your Time. Never feel pressured to buy from a salesperson. If you're not satisfied with the negotiating process, ask for time to think about the offer.
- Get it in Writing. As the negotiation process comes to a close, make sure the offer is put to paper. Don't sign any sales contract unless it matches the verbal agreement.
- Practice. Drill. Rehearse. Not everyone is a natural negotiator. It takes time to learn when to speak, when to be silent and how to read body language. The more you negotiate and sharpen your skills, the better you'll get.
Create a Win Win
One bonus tip is to make sure it is a win - win for the retailer and the vendor. If the vendor feels like they had to do all the compromising and giving, the next time you sit down, they will be very inflexible.
Involve Your Customers
In my store, I had a customer advisory council that reviewed my buying decisions. I used to share a picture of them with my vendors and told them about their role in the decision process. in some cases, I would tell them I loved them (vendor) but love my customers more so could not do what the vendor was asking.