Q I am a local, independent retailer trying to compete with the larger chains, big-box stores and department stores that are taking over the retail market. How can I offer customers competitive prices when I have little or no negotiating power when I buy my goods?
A This is an age-old problem. If you are a buyer of anything — whether you're a businessperson buying office supplies for a small accounting practice, a homeowner buying tools for the house or a small retailer buying goods for a store — the fact is that small quantities often equal a higher price.
One way to secure better prices may be by joining a buying consortium or organization. There may be a small membership fee to join, but the benefits should outweigh the initial cost. Buying together brings the advantages of higher-volume prices when lower volumes are combined or leveraged.
People are also reading…
Collaborative purchasing among independent organizations is not a new idea. For many decades, farmers have established "co-ops" with the goal of combining their individual needs to gain purchasing power. Today, buying consortiums have been formed to enable members' survival against the powerful purchasing and marketing power of larger organizations.
A good example of this is the Independent Jewelers Organization (IJO). The largest jewelry-buying group in the world, IJO has helped local, independent jewelry stores nationwide stay competitive with the chain, discount and department stores.
According to Jeff Roberts, president and CEO of IJO, "We find that due to the strength of our numbers, we can negotiate the same or similar price on goods as a volume buyer plus have the purchasing leverage to negotiate the best value, quality and fashion designs from our industry's top suppliers. These savings are passed directly on to consumers."
For more information, visit www.masterjeweler.com.