Practical Sharing: Nine Traps and Countermeasures in Supermarket Negotiations

Sales Discount Trap
Sales discounts, also known as unconditional rebates and conditional rebates, are often overlooked by many suppliers during contract negotiations. Nominally, sales discounts are established to promote the supplier's product sales, but in reality, since they account for a relatively small proportion of the total contract costs, they hardly incentivize suppliers and instead become a direct price concession. From this perspective, we should try to avoid increases in sales discounts.
In negotiations over sales discounts, some supermarkets set a bigger trap for suppliers. Typically, supermarkets' true performance metric is gross profit amount, so purchasers preset their negotiation goals with gross profit amount as the ultimate objective. If purchasers anticipate a significant increase in a supplier's sales next year, they will still propose increasing sales discounts during negotiations. If the supplier concedes, the purchaser can exceed their gross profit expectations. Conversely, if purchasers anticipate that a supplier's sales will not grow or may even decline next year, they will try every means to increase sales discounts; otherwise, their profit targets will be hard to meet.
Countermeasure: After clarifying our product sales trends, we should negotiate with purchasers in a targeted manner and not give away the profits from sales growth to supermarkets. Of course, the impact of sales trends is exactly the same when negotiating overall contract deduction points proposed by supermarkets.
New Product Placement Trap
This problem exists in supermarkets where stores have significant power, or where management is relatively non-standardized. The main manifestation is: although we have negotiated with the supermarket headquarters' purchaser for new product placement, we find that individual stores delay ordering, and even if they order, our products are not visible on the shelves.
Countermeasure: During contract negotiations, it is best to work with the purchaser to develop a detailed schedule for ordering and shelf placement for each store, and send it to all stores as soon as possible. This will support the rapid placement of new products. Moreover, when introducing new products, we must communicate with the purchaser on how to urge each store to order and place products on shelves.
Poster Trap
Generally, during annual negotiations, we sign one or several poster promotions with supermarkets. Some supermarkets calculate poster fees as a percentage discount on sales and deduct them regularly from payments. In such cases, we must be extra cautious. If we do not effectively track each poster promotion throughout the year, we may find after a year that some poster promotions were not executed, or not executed in certain stores, but the poster fees were already deducted by the supermarket.
Countermeasure: It is best to sign a year's poster schedule with the purchaser during annual contract negotiations and provide the poster schedule plan to relevant personnel. Although the products and discounts for each poster cannot be determined in advance, it is necessary to confirm the timing of each poster in the annual negotiation.
End Cap or Floor Stack Trap
This problem mainly occurs in supermarkets where stores have significant power: we negotiate end cap or floor stack fees with the supermarket headquarters, but in daily operations, we find that many stores do not honor the headquarters' agreements. Either the end caps or floor stacks agreed with the store purchaser are not fulfilled, but the fees we paid are wasted.
Countermeasure: In annual negotiations, for supermarkets where stores have significant power, suppliers should be cautious when negotiating end caps or floor stacks. Even if end caps or floor stacks are agreed upon, prepare a record list and ask the purchaser to confirm it, serving as a basis for each store's execution.
Festival Fee Trap
Almost all supermarket contracts include various festival fees. During holidays, more customers indeed shop at supermarkets, so we should take advantage of these opportunities to boost sales and build brand image. However, supermarket contracts often only include festival fee clauses without corresponding promotional clauses.
Countermeasure: We should try to arrange promotions during these holidays to avoid paying fees without getting anything in return. During annual negotiations, try to schedule various promotional activities in the contract around holidays, fully integrating supermarket and distributor resources.
Logistics Condition Trap
Many supermarket contracts do not specify minimum order quantity for delivery or delivery cycle. Without these conditions, supermarkets can place orders at any time with no restrictions on order quantity. As a result, suppliers will significantly increase logistics costs and be overwhelmed by deliveries, and product stockouts may not even be reduced.
Countermeasure: In contract negotiations, suppliers must negotiate these two logistics conditions with supermarkets, and the final agreement must be within the distributor's logistics capabilities. This is because contracts include clear penalty clauses for delivery issues.
Product Price Adjustment Trap
Supermarket contracts generally include provisions for advance notice of price adjustments. Suppliers cannot guarantee knowing about price changes a month in advance, so it is difficult to notify supermarkets of price changes a month ahead.
Supermarkets have many "tricks" when adjusting prices that we need to watch out for. Some contracts do not specify when the supermarket will adjust prices after we notify them of a price reduction, leaving room for exploitation. For example, when we raise prices, the supermarket agrees to adjust the purchase price but may continue selling at the old retail price to achieve better sales, then ask suppliers for compensation for the difference, causing great trouble for our price adjustment work.
Countermeasure: During contract negotiations, we should fully communicate these details with supermarkets and not lose our interests carelessly.
Return and Exchange Trap
Supermarket contracts generally specify whether suppliers can return goods and the types of returns, such as defective product returns and full returns. There may be many variables in returns and exchanges. For instance, if suppliers agree to defective product returns, supermarkets may damage slow-moving products to make them defective and then request returns, undoubtedly increasing supplier losses.
Countermeasure: When considering returns and exchanges, we must combine the order management capabilities of both the supermarket and the supplier. When orders tend to be reasonable, offering full returns does not cause significant losses to suppliers and may appear to give supermarkets greater support. Conversely, if both parties have poor order management, suppliers should avoid promising full returns.
Promotional Staff Trap
During holidays, we hope to place promotional staff in supermarket stores. Supermarkets also benefit by charging fees for promotional staff, so it is mutually agreeable. However, in some stores, promotional staff are often assigned many other tasks, meaning supermarkets use our staff as their own employees. The promotional staff cannot serve our products, so we not only fail to achieve brand promotion and sales growth but also lose promotional management fees and wages.
Countermeasure: When considering providing promotional staff to supermarkets, first understand the supermarket's management style for promotional staff and whether it aligns with our purpose. Strengthen communication with the supermarket to avoid assigning non-promotional tasks to our staff. ●●●******** This article is reposted from the WeChat public account: Yuanjing Consulting. -END- Content Selection Click the title below to read directly: [Line Sales Representative Practical Operation Guide (with full PPT download attached)