DIY Trade News November 2013
38
NEWS
SPOTLIGHT
FEATURE
COMPANY
PROFILE
REPORT
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OPINION
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SPORT
The
keys to
successful
rebates
In a world in the grip of an
economic crunch, pressures
to survive affect every kind
of business. In the DIY
industry, the survival strategy
inevitably involves discussions
over confidential rebates,
the reimbursements offered to
retailers, usually dependent on
their business volumes. Maggie
Monsieur reports.
It is generally accepted that the purpose of rebates is to cover the backoffice support that retailers offer in terms of advertising, shelf space and
listings, and the general running costs of a head office. The concept of rebates
is not unusual, and most large manufacturers today in the consumer goods
market accept that rebates generally form part of a retailer’s margin. In fact,
according to a report by the Food Pricing and Monitoring Committee, many
manufacturers believe that the current practice of rebates is both sound and
ethical and should not be tampered with.
It can also be argued that rebates ultimately become part of the value chain,
and that if an industry were to take away rebates, retailers would compensate
for their loss by taking higher profit margins on their products. Although hard
bargaining often characterises the negotiations between manufacturers
and their retailers and wholesalers, according to at least three suppliers
and one retailer we spoke to, the keys to successful rebate negotiations are
communication, transparency and consistency.
This article does not claim to provide a comprehensive overview of all the
issues involved, and merely provides feedback on the responses received.
Overall, they agreed that rebates play an important role in keeping the DIY
industry alive and profitable.
Shane Weeden, MD of Cedar Paint, told DIY Trade News that rebates play
an important role to keep a head office running efficiently. “Retailers have to
run their head offices and management structures and I see no problem in
that. From the manufacturer’s point of view, it is more efficient to deal with a
head office that can pump out orders for multitudes of stores than to deal with
orders from multiple stores, and get payment from them,” he points out.
This streamlining and resultant cost savings are good reasons to justify