Extraordinary Genius - Chapter 675
Chapter 675 – Suppliers’ headaches (Part 1 of 2)
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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 forretailers because it was the end of the year the following money. Everyone wasworking hard to complete their annual tasks and did not have time to goshopping.
Someone said that it was because everyone had overspentduring the National Day holidays and the Mid-autumn festival and did not havespare cash to shop.
There were also people who said that November was the startof the Winter season and people were not willing to go out. All of them prefersto stay indoors to avoid the cold.
These excuses did not apply to Tai Hua Supermarkets.
Even when the weather was cold and the Northeast regionswere snowing, it did not stop people from wanting to shop at Tai HuaSupermarkets. There were many reasons. One of them was because the productssold at Tai Hua Supermarkets were cheaper.
Another reason was that the shopping cards that werereceived on 1st October will be expiring. The duration was only 50days. If the consumers still did not use the cards, it will be expired. Tai HuaSupermarkets were also warm, and even if the shoppers were there for windowshopping, the store assistants would not chase them away. The store assistantswill still greet them nicely, and the shoppers felt good. The shoppers had onlywanted to spend some time at the supermarkets, but they will end up buyingsomething.
Tai Hua Supermarkets’ suppliers were also excited. Tai HuaSupermarket only had 20 branches, but how come the sales were so good?
Initially, Tai Hua Supermarkets offered harsh terms to thesuppliers, and the suppliers were unhappy. Tai Hua Supermarket wanted creditterms and demanded deposits. The suppliers still had to pay for promotions andlet Tai Hua Supermarket manage them. They even had to pay for the printing ofleaflets.
If Tai Hua Supermarket did not guarantee that their productswill be selling fast and gave them a good price, they would definitely agreewith those terms.
But now, all the suppliers felt they had made the rightchoice 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 thesupermarkets, they saw their products packed neatly on the shelves. It increasesthe attractiveness of their products to shoppers. Look at the way other mallsand shops displayed their products. It was messy and dirty. There was even duston the shelves, and the attitude of the shop assistants was terrible. No othershops could compare to Tai Hua Supermarkets.
At the end of the month, Tai Hua Supermarkets settled thecredit terms with the suppliers. There were no delays at all.
This was not the end. The orders for the second month wasmore than the first month. Tai Hua Supermarkets still wanted them to delivertheir products once a week. There was no reason for the suppliers to rejectthis request. They do not mind sending goods every day if the sales of theirproducts were excellent. The more goods they delivered, the more money theyearn.
Many other brands noticed that if this growth continued, bynext year, Tai Hua Supermarket’s sales volume would be more than their previousyear’s annual sales. They also received more orders from smaller retailers.
At first, the suppliers also did not know the reason for thesudden spike in orders by the other retailers. Their salesmen went to askaround and found out the cause. It was because the customers had bought theirproducts from Tai Hua Supermarkets before and they felt the product was notbad. For instance, toilet rolls or a bottle of fruit juice. But when thecustomers suddenly ran out of the products, they might not have the time totravel 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 HuaSupermarkets must be good brands and good products.
The supermarkets were meant for the masses, but many peopletreated Tai Hua Supermarkets as high-end markets. Even Feng Yu had not expectedthis.
But from the cleanliness and tidiness of Tai HuaSupermarkets, it was way ahead from other malls and shops. There were manyjanitors at Tai Hua Supermarkets.
So, the suppliers who had signed short-term contracts withTai Hua Supermarkets wanted to extend their contracts. They wanted a long-termcontract with Tai Hua Supermarket. Tai Hua Supermarkets were their bestretailer.
But now, it was not Tai Hua Supermarkets that went to lookfor them to place their products in the supermarkets. Tai Hua Supermarkets nolonger needs to make use of their connections to get the suppliers to supplytheir products. Now, it was Tai Hua Supermarket that calls the shot. Thepositions 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 themonth. You also have to abide by our rules. If we ask you to pay, you all mustpay. Shouldn’t the supplier prices be lowered? Although the prices you alloffered were low, it was about the same as those the Provincial suppliers.
We, Tai Hua Supermarket, have branches in more than a dozencities. We have already established our presences in almost half of the citiesin China. Is this rate the lowest you can offer? No other retailers will beable to place such a big order with you.
Before, Tai Hua Supermarket had been paying the suppliers ata slightly lower rate compared to the other malls and shops in the cities. Ifit wasn’t for the imported goods, Tai Hua Supermarket might not have highprofits.
But after the new contracts, Tai Hua Supermarket got the lowestsupplier 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 productsunder 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’tneed you.
Also, Tai Hua Supermarket was good at marketing. After thesuppliers’ products entered the supermarket, their brand image, and valueincreases.
Philips, Wind and Rain brand, Aiwa, The Little Tyrant,Lehaha, and all the famous Chinese brands had signed long-term contracts withTai Hua Supermarket. Some smaller local brands gritted their teeth and acceptedthe harsh terms issued by Tai Hua Supermarkets and signed the contracts.
Although the terms were harsh, the sales volume wassignificant, 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 signthe new contracts. Those brands that did not have replacements can remain.Their short-term contracts were not up anyway. Those brands that could bereplaced will be replaced when the short-term contract ends!
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