retail news in context, analysis with attitude

Got the following email about P&G's decision to delay payments to its suppliers:

Kevin,  the audiences’ that gets hurt the most with lengthening in invoice payments are the service providers, particularly the small, entrepreneurial types. These 1-3 person companies whom devote a large percentage of their time to complete a project and write only one invoice  / month to the CPG’s can get into some cash flow issues.  It’s easy to say “well, raise your price” and sometimes that can be done, particularly if you’re a new or prospective supplier. If you are a supplier already performing services, this is less likely to happen.

As one who fits the small 1-3 person service provider category, I can tell you it’s difficult to get the likes of P&G, GSK, Reckitt-Benckiser, Mondelez and others who have already moved to use longer payables, to change their “global terms” because it often involves exception sign-off from CFO. Shockingly, no one wants to go to their CFO for that type of exception because it often involves more work (or credibility issues) for that individual personally. Advocating for faster payment terms is “unpaid work” for small service provider companies.  (Ironic in all of this is that part of the work that small service companies perform was work that these CPG’s used to have full-time headcount assigned to perform not that long ago.)
 
What’s even worse, however, are that some major CPG’s that are now charging an annual fee for “prompt invoice payment”.  Whomever in your community said that these CPG’s are learning from the worst-practice retailers is absolutely correct.
 
What the CPG’s whom have made this change have forgotten is that “one size doesn’t fit all”. The more progressive thinkers understand that suppliers who deliver commodities several times a month have different cashflow needs than those whom devote a significant percentage of their month to deliver a single CPG’s project - and they will go to bat for small service companies to be paid monthly if the story makes sense.


I feel your pain. I fall into the category of 1-3 person company, too.




Regarding the possibility that Amazon could get into the bricks-and-mortar store business, an idea about which I expressed considerable skepticism, MNB user Ken Wagar wrote:

I surely understand your point here and agree with it if we decide to think about retail in traditional ways but THAT may be a serious mistake when one speaks of Amazon and Bezos. It could be a transformational type of store unlike anything we have experienced and a new iteration of retail as yet unseen. While I wouldn’t bet the farm it is going to happen, I also wouldn’t bet the farm that Bezos can’t make a significant impact in a new type of fixed position retail emporium. I find it unlike KC to be closed minded to the possibilities.

I'm trying not to be closed-minded, and I concede, cheerfully, that Jeff bezos is a lot smarter about such things than I am.

But I don't think it makes me resistant to change when I point out that Amazon's advantages have all been tied to its ability to be nimble, which is itself tied to an operation where legacy issues don;t exist and where disruption is part of the culture. That's simply harder to do, I believe, in a bricks-and-mortar environment. Not impossible, but harder.




We wrote yesterday about Walmart's new "Made in America" initiatives, which prompted one MNB user to write:

Remember when Mr. Sam was alive and in their ads, he was touting that Walmart was proud to feature made in America products. Somehow after Mr. Sam was not here, Walmart made a conscious choice to have most of their goods made in China and other countries. The Walmart board made this choice and what they got in return was an entry for them to open Walmart stores in the world’s most populous country. What did China get in return? They got the biggest retailers commitment to have the goods they wanted to sell in the USA to be made in China.  Every other Big Box retailer in the USA followed suit to remain competitive with Walmart costing and pricing. I wonder where the American made jobs ended up?

I guess they've seen the light in Bentonville...
KC's View: