While typing this I am yet again on a plane heading to another city to meet with suppliers to talk about the end of 2019 selling year. I am in-between two fellow travelers, one with a pillow in hand (will never understand that) and one that is dressing like the destination not the originating city (also will never understand). My conversations will end in talking about 2020 and the new opportunities that will arrive.
Sure, it is still 2019 and there are 5 weeks left in the year, but from a buying perspective and selling perspective it is over. We are in the end of distributor load in period and the beginning of reserving cash period for accounts both on and off premise. This affects accounts and suppliers alike.
What does it all mean?
Distributor Loan In
This glorious term we coined because all the big players in the business are sweating out the EOM and EOY goals set and agreed on by their large suppliers. This is when all the bull shit KPI’s come home to roost. If you could be a fly on the wall in a GSM meeting this time of year it is a lot of the following….
- I need X cases on Y
- Do what it takes to get POD’s
- Offer what you need to place brand X
- Tiny wink at rules / just get cases depleted
This time of year, this glorious time of year, is when goals are realized, renegotiated, adjusted and begged for. Retailers have more power this time of year than at any other time and deals are the best at this time of year. There is a hard stop on purchasing roughly on December 15th, or least there should be for sure.
Reserving Cash Period
Much of the business, our glorious liquor business, is based on cash flow. Inventory management is the most critical part of cash flow. Buy too much and sell too little and there is a problem. Buy too little and sell too much there is a problem as well. The stores and restaurants/bars that “win” holiday time are the ones that manage cash flow the best, not sell the most.
If you are a 30 days net state than December 15th, 2020 is likely when you will be writing large checks to your distributors. That money will come from sales between December 15-31, 2019. The way it works is that stores need to sell as much as they can to generate as much as they can to: a) remain off the “no buy” list or the COD list or b) have enough inventory to manage thru the 1st quarter while not over extending in terms of inventory commitments.
So really the year is done! I am not a pessimist and in fact, rather the opposite but you cannot teach experience. Experience is only earned with experience. This post is written with experience having gone through 20 holiday seasons at Sam’s. With all this said, I would recommend selling as much old/dead SKU’s as possible in the next 40 days. This is for both suppliers and accounts. I would make gift sets, promotion pricing and deal to move goods. I would also recommend, where legal, adjusting your price to trade to a more favorable amount. As soon as New Year’s Eve comes, your vintage, whatever it is, is one year older in the eye of the consumer.
2020 is another chance to sail the ship to a port and your attention should shortly switch to that endeavor. 2020 will be my 35th year in the booze business and you cannot teach the mistakes I have made; you can only benefit from them.
Happy selling season and let’s go get after it!
Three Tier Talk
by Brian Rosen, www.BevStrat.com
Brian Rosen is Former CEO of America’s #1 Retailer, Sam’s Wines in Chicago, Former Partner at PricewaterhouseCoopers in Retail and sought after retailer consultant.
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