Chapter 676 – Suppliers’ headaches Part 2 of 2
“Eh, have you all heard the news? Qinwang Jelly has been taken off the shelves and is replaced by a Strong Group Jelly. Have you all heard of this brand?”
“Ah? Why? Qinwang Jelly has been doing well. Why are they being replaced? Is this a big brand? An imported brand?”
“What imported brand? It is a small factory in Guangdong. But I heard this Strong Group have strong connections. They seem to be related to Lehaha.”
“Oh…… Lehaha’s products have been selling well. They are one of the earliest companies who had signed a long-term contract with Tai Hua Supermarket. But I heard that it was Qinwang Jelly who had refused to give Tai Hua Supermarket a lower supplier rate.”
“Huh? You are saying that Qinwang is kicked out of Tai Hua Supermarket because their rates are higher? That Strong Group is their replacement?”
“This is possible. Tai Hua Supermarket had notified us to sign a new contract with them. They demanded a lower rate, and we are now stalling the signing. Do you think they are using Qinwang Jelly as an example?”
Some suppliers of Tai Hua Supermarket were sitting together discussing the new contracts. They were invited over by Tai Hua Supermarket and had wanted to stall for more time. But now, it seems that they cannot wait any longer.
One supplier was taken off shelves. That means there will be other suppliers’ products that will be kicked out. All the suppliers there were not the only suppliers in the market. They could be replaced easily like Qinwang Jelly. If this happened to them, their companies would suffer massive losses.
Although Tai Hua Supermarket wanted a new supplier price and the suppliers will make lesser profits, but lower profits are still profits. If they were kicked out, then there will be zero profits. Because of their sales were increasing due to the success of Tai Hua Supermarkets, all the suppliers had increased their production. If they were kicked out suddenly, they would be left with lots of stocks.
If they do not want their stocks to remain in their warehouses, they have to lower their prices to clear their stocks. If that’s the case, they might as well sign the new contract with Tai Hua Supermarket. They will be able to increase their brand awareness because of Tai Hua Supermarket.
……
“Manager Guo, the prices they wanted is too low. I know the price quoted by another company is real, but can their quality be compared to us? Regardless of packaging, taste, and quality, they are lower than us. Our cost is higher than them. The prices you wanted is really very low.”
“We did not lower the rates unreasonably. This new rate is based on our calculations. Look at this figure. This should be your cost, right? The rates we wanted includes your profits. Think about it. After you work with us, Tai Hua Supermarket, how much did your sales increase? Just the sales from Tai Hua Supermarkets alone is more than your previous 6 months sales. Are you telling me that this is not due to our Tai Hua Supermarket’s management?” Manager Guo crossed his arms and asked calmly.
“But Manager Guo, your supermarkets should also be selling quality products. You can price our products higher and let the customers more choices.”
“This is not up to you to decide. We will consider it. Also, this product is not only produced by two companies. There are still many brands out there who wanted to enter our Tai Hua Supermarket.” Manager Guo arrogantly replied.
There should be a variety of products. Different brands will have different pricing. Tai Hua Supermarkets wanted to offer a wide range of products to their shoppers. Two brands for a product was not sufficient. There should be at least more than 5 brands.
“Manager Guo, please increase the prices slightly. Just increase by 10 RMB per item will do. If you increase, I will sign the contract immediately.”
Manager Guo looked at the person beside him and discussed softly. Then Manager Guo said: “I will increase 5 RMB per item. This is the maximum I can offer. If you don’t sign, then we will not work with your company in the future.”
“Sign! I will sign the contract now!”
……
“Manager Fu, I heard that you went to the south. When did you return?”
“Tai Hua Supermarket is going to renew the contracts with the suppliers. There is a shortage of hands, and all of us returned to help out. This is the new contract we have prepared for you. Here.” Fu Guangzheng passed a document over.
“Manager Fu, is there something wrong with this contract? How come the prices are so low?”
“This is the new rates we offered. If you accept the new rates, then we will sign the contract. If you disagree, then forget it.” Fu Guangzheng replied.
“What do you mean? If we don’t accept this rate, you all will not buy our stocks?”
“You can see it that way.”
“Our contract duration is one year. You all are breaking the contract!”
“Look at No.3 and No.4 conditions in your contract. It is stated clearly that if we cannot accept the pricing, we can terminate the contract anytime. We had explained this condition to you before you signed this contract. I remembered that I was the one who explained it to you, personally.” Business is all about profits. If your pricing is higher than others, why should we buy your products?
“Manager Fu, what you are doing now is not right. Our products are selling well, and you should know it. Based on the market share, we owned the second biggest market share.”
“You also said that you all are only the second. China’s No.1 had already signed a contract with us. We don’t really need you.”
What’s so great about having the second biggest market share in China? Lots of the world’s number one brands are selling their products in our supermarkets!
“You all better, don’t regret this!”
“Seems like you do not want to sign the new contract. Then I’m sorry. Tomorrow is the last day we sell your products in our supermarkets. Thank you. You can leave now. Please call Manager Wang from Dafai Company in.”
……
These few days, Tai Hua Supermarket’s suppliers saw Tai Hua Supermarket’s firm stance on the new pricing. The new pricing was very low. But the sales volume of Tai Hua Supermarkets were more substantial than all other retailers. If the suppliers agree to the new pricing, then Tai Hua Supermarket will offer some concessions in the future.
But if the suppliers disagree, they can still negotiate. But if the suppliers chose to fall out with Tai Hua Supermarkets, then sorry. Tai Hua Supermarket will ask the supplier to get out immediately!
Especially Feng Yu. He was ruthless and never negotiate with the suppliers. The suppliers had to follow whatever rates he set, and if they disagree, Feng Yu would ask them to get out immediately.
This was the current situation. There were too many brands that wanted to sell their products in Tai Hua Supermarkets. Tai Hua Supermarket still had to choose the suppliers and did not sign contracts with all the suppliers. This was because there were not enough shelves in Tai Hua Supermarkets.
Tai Hua Supermarket set the conditions and those who were willing to sign the new contract, will be able to carry on their partnership. Those that refused to sign will see their products having a huge discount the next day. Tai Hua Supermarket will try to sell off all their existing stocks that day and then remove them from the shelves altogether. The following day, there will be a new brand of the same product on the shelves.
Even if it was an unknown brand, but once it was sold in Tai Hua Supermarkets, shoppers will think that it was a good product. Tai Hua Supermarkets had promised their customers that if they discover any expired or lower quality products, they will compensate the customer 10 times the amount.
The renewal of the contracts was completed in a week. At least 10% of the brands had disappeared from Tai Hua Supermarket, and they were replaced by new and more brands. Consumers had a wider range of choices than before.