Swift Electrical’s commercial director, Malcolm Scott, gives retailers his top tips for getting the stock they need when they want it
Underlying structural changes in the appliance sector are fundamentally changing the nature of what stock is available, who gets it and when.
These changes are not unique to any specific brand, they are occurring because the ‘pecking order’ of specific retailers is gradually changing, as some sectors of the market find it relatively simple to provide suppliers with forward orders. Put simply, the chance of getting exactly what you want, exactly when you want it, depends on many different factors.
Looking specifically at Swift, we sell 180,000 appliances a year, 34,000 sinks and 31,000 taps from a stock base of 20,000 appliances and 9,000 sinks and taps. At any one time, over 33% of our total stock is allocated. So what does this mean?
This means that where customers order from Swift six to eight weeks before a job starts, as about half of our customers do, compared with the other half who often give as little as 48 hours’ notice, the likelihood of getting a complete set of sink, tap and appliances increases from about 85% to about 98%.
Most distributors allocate stock from the day of order, but most manufacturers do not. So even when you give a long period of notice to a manufacturer, that may not increase your chances of getting a full delivery. It very much depends how the specific supplier’s system works.
For example, if the manufacturer has a seven-day allocation window, stock ordered well in advance will not actually be allocated until seven days before the requested date of delivery.
Some brands have separate ‘stock pots’ for different types of customers, where the just-in-time pot might be reserved for a specific key account or for the internet channel. Other brands give priority to the kitchen channel – it really depends on the brand.
The larger internet traders and the multiples have a wider customer base and find it quite simple to give manufacturers orders months in advance, as their sales patterns are normally quite stable. And so, when there is a shortage, the ‘oldest order first’ principle kicks in and they have stock when no one else has.
There are also occasions when multiple retailers negotiate ‘profit loss’ clauses in their supplier agreements, which state that if sales are lost due to supply issues, the manufacturer must pay them a loss of profit fee. These customers always get priority.
Distributors do not get involved in these types of ‘profit loss’ agreements and therefore are far less likely to support a specific multiple where there are stock shortages.
In short, if you order early, you are far more likely to get what you want and you should be asking suppliers what their stockholding and allocation policy is. While, as an employee of a distributor, I am biased, it seems clear to me that placing an order in advance and via a distributor who will ‘hold and reserve’ the stock offers the single most likely chance of getting what you want when you want it.