You are here
RIDGEWOOD, N.J. - Retail buyers need to be better prepared for meetings with vendors, according to a new study by consultancy MOHR Access here. Buyers not only often enter into negotiations without clarifying their objectives, the study found, but also become distracted by secondary issues.
MOHR Access based its findings on data gathered from 125 buyers during training conducted by the firm.
According to MOHR Access president Michael Patrick, failure to prepare surrenders the initiative to vendors and guarantees that during the negotiation buyer will be able to act just tactically, not strategically.
"Buyers are almost always willing to accept a vendor's invitation to meet and go into a negotiation without a specific objective or purpose in mind," Patrick said. "Negotiating in such a way isn't just undisciplined, it's also irresponsible."
The pressures on retail buyers are significant, observed Patrick. "Add to the mix the ever-changing direction or priorities from top management about how to gain market share from competitors, and it's understandable that buyers find it difficult to be in the driver's seat. So it's not surprising that many buyers wing it during a negotiation."
MOHR Access concluded that:
-- Buyers should write down key goals and issues that are likely to arise in advance of a meeting. They ought to be prepared to ask the vendor for a range of options to consider.
-- Buyers should find out what is happening at the vendor's business and think about how their own objectives might be positioned in light of the vendor's needs.
-- The buyer's team should work out its strategy beforehand. Determine who is to be the lead in the negotiation and who is the decision-maker as well as what everyone else's role will be. The team should review the plan together, and agree on objectives and areas to be pursued.
-- If another executive is to take part in the meeting, there is even greater need for everyone to stay on the same page during the negotiation. If a superior is present, his or her role at all times should be to support the lead negotiator, and not to be played against that individual, which is a not infrequent vendor tactic.
-- No member of the buyer's team should make a proposal during the negotiation without prior clearance. Each team member needs to defer to the leader...and not come up with "bright ideas" once the negotiation has begun.
-- When buyers do not prepare, they have a pervasive tendency to want to dominate every interaction. Without a plan, being on the offensive is often the strategy they rely on. The negotiation naturally brings out such an orientation, but it also seems that by nature retail buyers have a high need for dominance.
-- Buyers may press on price, terms, or margins, but fail to develop a relationship with the vendor. And they may not pursue a particular vision or work toward any longer-term objective. It becomes difficult to achieve a full range of goals and strengthen the vendor relationship when normal negotiation tension is exacerbated by an overly aggressive approach.
-- Being purely offensive has clear drawbacks, since even if a buyer gets the price sought the vendor is typically going to work up the price in some other way in order to protect the profit.
-- Buyers tend to live up to their aggressive reputation and rush through a negotiation. They may ask focused, close-ended questions in order to achieve a desired price. Combative behavior might deliver tactical advantage, but will prevent the buyer from knowing what else might have been learned or achieved because the buyer does not listen enough. And close-ended questions have a way of giving away more information than is obtained.
Patrick warned that the true objective of a negotiation is not to enter into a contest with the vendor but to build a solid partnership and together explore ways to add consumer value. "One DMM told me: 'Buyers frequently get caught up in negotiation for negotiation's sake. What they really ought to be focusing on is what can differentiate their store in the marketplace and what can add value to the customer's purchase.'"