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  • Writer's pictureBruce

How the Pressure for Sales Growth undermines Future Sales!

Updated: May 21, 2020

Ambitious Sales Growth

In the drive to deliver boardroom good cheer, the ambitious team seek likewise ambitious sales forecasts. The undermining process has likely just begun!

As with all my articles, having spent 35 year in sales and operations, I have seen it, done it and got a wardrobe of T Shirts. This article like all my articles are always based upon real events and due to confidentiality must be slightly adapted.

A Change in Ambition Going for Growth

This brand arrived from overseas few decades ago. They are by nature a cautious company, steady as she goes, type business. The MD set his course many decades earlier and was not about to change it. However, he retired and feeling they needed new blood brought in a new MD.

Sales pace started to gather in certain territories and questions where being asked of those who were steadily building their sales territories where being challenged to be like those others putting on 25% Like for Like sales growth. It is not hard as we all know to double your sales from zero base.

At the next sales meeting, all the sales manager where gathered and ambitious sales growth plans where revealed with some exciting stories of how one reseller in the UK was being innovative and driving double digit growth. The sales managers arrived back and set to being ambitious in driving new doors and roots to market to mirror the expectations.

The Tipping Points

So, a few seasons came and went, and sales growth was to plan for the company as the bases where all very low. However, they reached a tipping point! A point when the sheer weight of sell-in exceeded demand as they had not marketed the brand with any great vigour and where relying purely on incremental growth. What this sales manager did not know was the reality about to reveal itself.

We all know that retail has been up and down for the past decade and this along with rainy days, cold snaps etc all impact the day to day masked what was happening.

They, like many companies, have showrooms where buying is done 6 months prior to the season starting.

This started as a trickle and grew at pace.

Out of Stocks, they had oversold production, so their resellers had no core sizes in stock within 8 weeks of the season starting.

Known past Best sellers where snapped up and the warehouse was empty by week 4

Online Sellers, there were many by this stage started a price war with the stock they had as they were all trying to sell to a very small pool of customers.

The sales manager felt it was a bit of teething trouble and that it would settle down for the next season, it did not

The day arrived when their biggest UK innovative reseller was booked into the showroom for the day. The day was always enjoyable, and lunch was served during the buying process.

The buyer arrived with the team and after the usual initial settling down, the buyer asked the sales manager about the problems from the last few seasons and what actions had been put in place, the sales manager responded and the meeting got underway with sales actual v forecast for the previous year. Flat and no growth across any core category.

"OK, so I can see some challenges, so what are you forecasting this coming season, based on your plans?" asked the sales manager. "Nothing" came the reply! "Nothing on last year?" No nothing, we are delisting your brand as our forecast for your brand will be 50% down on the previous season and gross sales margin will be 6 percentage points lower and this is not sustainable for our business.

At that point, the meeting ended. The company had just lost one of their key accounts! The impact for the company was huge as they had all the OPEX in place to support the growth that they could not sustain and they slowly over the last 3 years, undermined their own core resellers.

Be close to your resellers and be aware of their world

The comment I heard back from the sales manager was that they wished they had listened to their core customers a bit more and understood but, for them the two reasons for losing this account was they were out of stock and that the resellers had not got core sizes to sell so no replenishment, a challenge all round! So still in denial about the true problem of why they lost their biggest account in South East England

Talking to the reseller about what had just happened it was so interesting. “ We told him, several times, last year the year before, He was always on the case, saying it was a challenge to manage all their dealers, pricing they could do nothing about as it was illegal to Cartel pricing and they really trying!” Selling into another dealer in the same catchment area, they had 12 online sellers on Google Shopping and on Marketplaces. Well its too late for them with us, it is not sustainable for my business, I need our suppliers to be partners that understand how to be sustainable”

A PC screen showing a Coloured  Graph showing a downward trend
PC Screen with Downward Trending Graph Image

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