Londis retailer Atul Sodha says one of his strategies for managing the transition to the National Living Wage is growing his business with honesty and integrity, so customers trust it’s a great place to shop.
He gives the example of tobacco margins and a pricemarked product that earns him a 3.6% margin. Another retailer suggested he switch to a non-pricemarked version and earn 12%. Atul’s view is this is a short-term fix. He could get his 12% payday once or twice, but would probably end up losing this customer in the long-term.
Nobody has an automatic right to have products or services appear in stores, no matter how big their brands are. They must earn it
Warren Buffett built his investment conglomerate Berkshire Hathaway to $300bn by investing in businesses that shared his personal values, and they chime with Atul’s. In his book Berkshire Beyond Buffet, Lawrence Cunningham wrote: “A business known for integrity – treating suppliers, employees and customers as the business would like to be treated – will usually win more interest and cooperation among such groups than rivals who are chiselers.”
This theory also applies to the companies you choose to work with: suppliers you can trust and those not just after a short-term win.
Over the past week, you have voted in your hundreds for your star suppliers and products of 2015 as part of our Retailer Choice Awards. There is a clear correlation between your winners (see page 24) and those who work in collaboration with retailers for the benefit of the category.
In contrast, RN also regularly features examples of the opposite approach – suppliers chiseling away at margins to make a short-term profit at the expense of their network of retailers.
Nobody has an automatic right to have products or services appear in stores, no matter how big their brands are. They must earn it, or risk retailers choosing those who match their own integrity over the chiselers.