March 14, 2013
It’s Vendors Awards Time!
While not matching the glitz of the Oscars, many major retailers and regionals often take the early months of the year to honor their top suppliers.
Some do it publicly with press releases and big gala events with drinks and speeches. Others do it privately and focus on a few select honorees.
A particular focus for winning appears to be service issues, whether timely delivery or quality control. Sales performance, whether for the past year or for an extended period, also appears to be a critical measure. Other issues important to the store, such as community service or sustainability, are also honored.
Walmart appears to hand out several awards across categories. In a press release earlier this week, Intradeco Apparel touted that it received a 2012 supplier of the year award from Walmart in recognition of its efforts "in execution, social compliance, merchandising, quality, environmental responsibility, and sustainable business model to bring the best value to the consumer."
REI is among retailers handing out a single, coveted "Vendor Partner of the Year" award each year. For 2012, the honor went to Brooks, the running footwear brand. Said Lee Fromson, SVP, REI merchandising, in a statement, "Aside from providing ongoing program support and aligning with REI’s mission, they’ve brought our customers new ways to experience lightweight running and new products they love."
The outdoor retailer’s vendor awards program was established in 1993 and retail associates vote on the slate of nominees. Awards also salute one vendor across its three merchandising divisions — camp/travel, actionsports and outdoorwear — "for their efforts to build a strategic and successful relationship focused on meeting member and customer needs, and bring quality, innovation, outdoor stewardship and performance to the industry."
Skullcandy, the lifestyle headphones supplier that has recently seen its sales slow and CEO exit, appears to now have a mixed view around such award wins. In April 2012, it bragged about being named "Vendor of the Year" by Target, Toys"R"Us and Fred Meyer. Target’s was the second in four years.
On its recent fourth-quarter conference call, Rick Alden, founder and interim CEO, joked that in the firm’s earlier years, "We didn’t even know retailers had words like ‘Vendor of the Year’ until we started stacking trophies on the shelf."
But he implied that many of the awards stemmed from an intensified focus on quality control, sourcing and delivery that may have taken management’s eyes off the marketing and product innovation that first established the brand in the marketplace. He added, "Some of the products, branding and demand creation elements of the business were less of a focus at the sacrifice of continuing to build a best-in-class, operationally bulletproof-proof company."
- REI Announces Vendor Partner Awards – REI
- Intradeco Apparel has Been Awarded Wal-Mart’s Supplier of the Year 2012 – Intradeco Apparel
- Skullcandy’s Fourth Quarter Conference Call – Seeking Alpha
- Wine.com Hosts Third Annual Industry Growth Summit – Wine.com
- Sherwin-Williams Announces 2012 Vendors of the Year – Sherwin Williams
- Skullcandy Wins Multiple "Vendor of the Year" Awards – Skullcandy
Discussion Questions
Are you a fan of ’Vendor Of The Year’ awards? Are they overly-skewed toward honoring service excellence? What should a retailer’s criteria be for honoring their vendors?
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I am a fan. If a retailer tells its vendors they are doing a great job, then the vendor knows to continue the good work. More importantly, if the vendor is not doing so well, tell them and give the vendor the opportunity to improve.
I like a rating system best to know what criteria is used and to be able to have annual or six month reviews. If the vendor does not know they are being graded for their service performance, how can they take the steps to improve?
Definitely a fan. Since there are no standardized scorecards, retailers must rely on their own definitions. Often this is limited to compliance with the retailer’s vendor guidelines. I think that is certainly important, but should be the ante for a supplier to be considered.
The most important qualifications will be how well the supplier has improved the supply chain, inventory management, retail efficiency, etc. Again, this will vary by retailer, depending on where the opportunities for improvement sit in the supply chain.
First off, the retailer should have a solid reason for conferring awards. From that evolves the criteria. Retailers want their vendors to be part of what influences a positive revenue stream.
It’s a simple concept and helps focus the relationship between vendor and retailer. In that context awards confirm the vendor’s value. The criteria have to do with what influences revenue. I do believe vendor awards should relate to the top line. Profitability is too complicated a factor.
Retailers should recognize that the individuals who represent the vendors benefit from the award…in terms of internal recognition, performance reviews, compensation, etc. So the rewards criteria should be somewhat in the control of the individuals. It’s those individuals who will work hard for the retailer knowing that what they do for the retailer will be observed, acknowledged and pay off for them.
With that foundation all vendors will be encouraged to put forward the best their company can produce…in product, service, pricing, deadlines, etc. And of course the retailer is the big winner…no matter which vendor receives the award.
Vendor of the Year awards should recognize innovators, market disrupters, and companies that place brands on the shelves with high productivity. In other words, the small brands that bring the high ticket customers to the stores. The mouse that saves the lion. The entrepreneurs, the family businesses, the ones that had to mortgage their homes to pay the slotting allowances.
While I believe they can serve a purpose, I am not sure that all vendor of the year awards are based on defined objectives. If a company is going have this type of program, all of its vendors should be aware of the criteria. If and when the criteria changes, all should be notified. I agree with Frank that periodic revenues should be held to let the vendor know how they are doing against the selection criteria.
Every retailer I know has their own vendor of the year, and I’ll bet the small independents will choose differently than the large mega retailers. I depend on a relationship more so with excellent regional wholesalers than the big CPG companies, who do not give us a competitive deal.
The criteria will differ among retailers, but I have my personal favorites, and will continue to nourish the relationship in order to have a win/win for both of us.
Best in class retailers are those with overarching objectives that link all internal brand shareholders. Otherwise there is a distorted brand experience. Vendors—external resources with links into those objectives, aka skin in the game—complete the delivery of brand promise.
Awards can be a very helpful tool for a retailer. The challenge for brands is how to balance being retailer-centric with being consumer-centric.
Being right for each retailer could risk confusing consumers and eroding brand equity. Conversely, too much consumer power for a brand could translate to more leverage and perceived arrogance in the eyes of the retailer. I guess it’s what makes it fun!
I am definitely a fan. This is a great way for retailers to share what they think is most valuable to their business with their vendors. For that reason the criteria will change from retailer to retailer.
The retailer has to be a communicator for the awards to be meaningful. The qualifiers have to be clearly spelled out. Customer Service has to be a strong, meaningful piece of the equation. I am reminded of a client who had loose qualifiers, and poor communicators, thus a meaningless award.
Service, sales, and increasingly, logistics, are all key, but criteria (which should be spelled out) can and should vary depending on the retailer’s priorities. Might be best to have an award for each of these. Although these awards programs are imperfect, I’m a fan. And if vendors take their eye off the ball to focus on a particular criteria, blame the vendors, not the awards programs.