Chapter 675 – Suppliers’ headaches Part 1 of 2
The National Day holidays were over, and it was November. This period was the down period for retail.
Someone had said that November was a lousy month for retailers because it was the end of the year the following money. Everyone was working hard to complete their annual tasks and did not have time to go shopping.
Someone said that it was because everyone had overspent during the National Day holidays and the Mid-autumn festival and did not have spare cash to shop.
There were also people who said that November was the start of the Winter season and people were not willing to go out. All of them prefers to stay indoors to avoid the cold.
These excuses did not apply to Tai Hua Supermarkets.
Even when the weather was cold and the Northeast regions were snowing, it did not stop people from wanting to shop at Tai Hua Supermarkets. There were many reasons. One of them was because the products sold at Tai Hua Supermarkets were cheaper.
Another reason was that the shopping cards that were received on 1st October will be expiring. The duration was only 50 days. If the consumers still did not use the cards, it will be expired. Tai Hua Supermarkets were also warm, and even if the shoppers were there for window shopping, the store assistants would not chase them away. The store assistants will still greet them nicely, and the shoppers felt good. The shoppers had only wanted to spend some time at the supermarkets, but they will end up buying something.
Tai Hua Supermarkets’ suppliers were also excited. Tai Hua Supermarket only had 20 branches, but how come the sales were so good?
Initially, Tai Hua Supermarkets offered harsh terms to the suppliers, and the suppliers were unhappy. Tai Hua Supermarket wanted credit terms and demanded deposits. The suppliers still had to pay for promotions and let Tai Hua Supermarket manage them. They even had to pay for the printing of leaflets.
If Tai Hua Supermarket did not guarantee that their products will be selling fast and gave them a good price, they would definitely agree with those terms.
But now, all the suppliers felt they had made the right choice by signing the contract with Tai Hua Supermarket. The volume was high, and it was good for their branding.
When the suppliers went to check on their products at the supermarkets, they saw their products packed neatly on the shelves. It increases the attractiveness of their products to shoppers. Look at the way other malls and shops displayed their products. It was messy and dirty. There was even dust on the shelves, and the attitude of the shop assistants was terrible. No other shops could compare to Tai Hua Supermarkets.
At the end of the month, Tai Hua Supermarkets settled the credit terms with the suppliers. There were no delays at all.
This was not the end. The orders for the second month was more than the first month. Tai Hua Supermarkets still wanted them to deliver their products once a week. There was no reason for the suppliers to reject this request. They do not mind sending goods every day if the sales of their products were excellent. The more goods they delivered, the more money they earn.
Many other brands noticed that if this growth continued, by next year, Tai Hua Supermarket’s sales volume would be more than their previous year’s annual sales. They also received more orders from smaller retailers.
At first, the suppliers also did not know the reason for the sudden spike in orders by the other retailers. Their salesmen went to ask around and found out the cause. It was because the customers had bought their products from Tai Hua Supermarkets before and they felt the product was not bad. For instance, toilet rolls or a bottle of fruit juice. But when the customers suddenly ran out of the products, they might not have the time to travel to Tai Hua Supermarkets.
So, they would just go to the nearest retail stores to buy. Their first choice would be the products they saw at Tai Hua Supermarkets.
Everyone felt that the brands that were sold in Tai Hua Supermarkets must be good brands and good products.
The supermarkets were meant for the masses, but many people treated Tai Hua Supermarkets as high-end markets. Even Feng Yu had not expected this.
But from the cleanliness and tidiness of Tai Hua Supermarkets, it was way ahead from other malls and shops. There were many janitors at Tai Hua Supermarkets.
So, the suppliers who had signed short-term contracts with Tai Hua Supermarkets wanted to extend their contracts. They wanted a long-term contract with Tai Hua Supermarket. Tai Hua Supermarkets were their best retailer.
But now, it was not Tai Hua Supermarkets that went to look for them to place their products in the supermarkets. Tai Hua Supermarkets no longer needs to make use of their connections to get the suppliers to supply their products. Now, it was Tai Hua Supermarket that calls the shot. The positions of Tai Hua Supermarkets and the suppliers had changed.
Now you want to sign a long-term contract? No problem. Supply us with your products, and we will settle the payment at the end of the month. You also have to abide by our rules. If we ask you to pay, you all must pay. Shouldn’t the supplier prices be lowered? Although the prices you all offered were low, it was about the same as those the Provincial suppliers.
We, Tai Hua Supermarket, have branches in more than a dozen cities. We have already established our presences in almost half of the cities in China. Is this rate the lowest you can offer? No other retailers will be able to place such a big order with you.
Before, Tai Hua Supermarket had been paying the suppliers at a slightly lower rate compared to the other malls and shops in the cities. If it wasn’t for the imported goods, Tai Hua Supermarket might not have high profits.
But after the new contracts, Tai Hua Supermarket got the lowest supplier rates in China. You are not willing to give us a better price? Fine. When all the existing stocks were sold out, we will not order any products under your brand. You are not the only company that produces such products. Suppliers all over China were waiting to sell their products to us. We don’t need you.
Also, Tai Hua Supermarket was good at marketing. After the suppliers’ products entered the supermarket, their brand image, and value increases.
Philips, Wind and Rain brand, Aiwa, The Little Tyrant, Lehaha, and all the famous Chinese brands had signed long-term contracts with Tai Hua Supermarket. Some smaller local brands gritted their teeth and accepted the harsh terms issued by Tai Hua Supermarkets and signed the contracts.
Although the terms were harsh, the sales volume was significant, and the companies were still able to make money.
Some of the other brands still had a “wait and see” attitude, and some gave in to the pressure and chose to sign the contract.
Feng Yu looked at the list of companies that did not sign the new contracts. Those brands that did not have replacements can remain. Their short-term contracts were not up anyway. Those brands that could be replaced will be replaced when the short-term contract ends!