Getting merchandise into department stores is becoming more challenging, according to Jay Heidhues, president of Fire’s jeans division. The trick to showing department store buyers that your small business can stand out from the competition is establishing brand recognition and assuring them that you can meet demand.
“It’s getting more challenging for brands to enter department stores because the department store base is getting smaller and smaller. Another challenge is that the department stores have a matrix system, which means you essentially have to get through a committee to be brought in as a new vendor.
“They must feel your product is viable and that it’s a product they could bring into the store with continuity. That’s what it’s about having continuity and knowing that the consumer can identify with your product and always find it. The department store wants to bring in people who will maximize business, and it will want companies who have a product with label recognition and who can offer the product at the fair price.
“If you have achieved a branded status if there is label recognition for your product clearly it’s easier to get into department stores than if you’re not recognized as a brand.
“Second, companies must work with department stores to assure them of profitability. Most of what you would call branded companies, which are significantly sized companies, make a handshake sort of agreement with the department stores about meeting gross margins. Rarely is there a document the department store is going to have you sign that says, ‘Our plan gross margin is 44, and if you don’t achieve that, we expect you to provide us with the marked-down money that we need to get to that gross margin.’
“There are other things they can’t control in assuring profitability, such as ensuring that placement on the floor will give the product aisle exposure. The time of the year, the weather, the traffic within the stores and the look of the product all can determine how profitable you can be.
“You need to get out in the stores and see where your product is placed. We have to be priced correctly for department stores to be able to make their markup at a price the consumer can identify with. It is on us to make that happen.
“Finally, the company must reliably produce and deliver their products. So much of production is import-driven and there are challenges in different parts of the world based on quotas, embargoes, and so forth. If you have the production capabilities based throughout the world, the retailer will more likely commit to a product that they believe they’ll receive.”