[dropcap]B[/dropcap]etween the rising cost of lighting products imported from China and backlash over manufacturers who consistently ignore IMAP, there might be a shake-up in lighting showroom loyalties regarding sourcing in the year ahead.
Many brick-and-mortar retailers are actively re-evaluating the companies they buy from in 2019, and the reasons range from avoiding price increases caused by the tariffs to expressing dissatisfaction with vendors who extensively white label virtually the same products sold via the showroom channel to the online sellers, thus eroding margins by causing lowball price matching.
Remember newscaster Howard Beale’s famous line in the Oscar®-winning movie Network, “I’m mad as hell, and I’m not going to take this anymore!” That could easily be the brick-and-mortar mantra today. Now, what can they do about it? Take action.
Over the past several months, there has been much discussion at conferences, markets, and on forums about the struggle to remain profitable and successful in a digital world that offers free shipping, two-day delivery, and deep discount pricing.
The answer for many retailers is to change vendors. In order to avoid paying and charging more for lighting imported from China, some are seeking out factories that manufacture in parts of the world not affected by tariffs. Others are frustrated by losing interior designer business amid reports that designers can buy direct from the same manufacturers for less. And then there are the many who are fed up with consumers coming into their stores with print-outs of absurdly low prices from online dealers for fixtures identical to those on display.
Granted, this is easier said than done. Deep discounting and white labeling have been around for decades, but it’s only recently with the transparency of the internet that these practices are receiving greater exposure.
At the ALA Conference, I sat at the networking table assigned the topic of White Labeling — and the conversation got heated. A manufacturer asked if it was fair for brick-and-mortar dealers who hold minimal inventory to request that a vendor close off a profitable avenue of distribution (that sells more of those SKUs than brick-and-mortar could) when the goal for everyone in the industry is to be profitable.
The upcoming January Markets will be key for the brick-and-mortar retailers assessing their existing partnerships to have frank discussions with their vendors about these issues, and to make changes if necessary. On top of these channel debates, there is another challenge facing physical retail stores in every category, and that has to do with changing the retail environment to one that is more “immersive” for the consumer. There are several stories in this issue addressing this trend, and I hope you will find them helpful when planning for success in 2019.
