J. Carmody of Serenity Studios in Sydney, Australia saw Lane Brown's questions on mass merchant competition (see 'Lane Brown of The Sword and Grail on Mass Merchant Competition') and offered this response:

 

Major retailers, depending upon the quantity of stock purchased may obtain sizable discounts and/or advance release of new releases.  You ask why this is so?  The simple answer is what you already mentioned, the buying power of the retail chain.

 

But it is not simply the amount that the retail chain buys of the item in question.  Through negotiation, the retail chain may promise to buy other items, forgoing the additional discount they would otherwise receive for the quantity they order in exchange for earlier access to certain items.  It may also be tied into previous agreements.

 

Even if you offered the same deal, your buying power over the entire year fails to match the buying power of the chain on a given day.  Then there is the simple fact that in the eyes of the supplier, to have their product on display in a major retail chain makes good economic sense by promoting the goods to the public that would otherwise not be aware of the existence of the item in question.  Retail chains are aware of this fact and may offer better promotional space, in catalogs, display ends, website promotion, newspaper/magazine/TV advertising or shop windows.

 

In some cases, the supplier may even foot some of the bill for advertising, believing that such promotion will expand the fan base (which is good for you if you can somehow attract the attention of the new fans).  This may also come about by having their product linked, at least visually, to a more popular item that may cover a similar area of interest, but may not otherwise be available via the smaller stores (i.e. comic/game stores)

 

It should be noted that not all retail chains gain an extra discount.  Some may simply drop the price to attract customers into their stores in the hopes of selling higher priced items, thereby covering the cost of the loss.  Loss leaders tend not to work though, as dropping a price must not only take into account the cost of the product, but the time it takes to unpack, price and display it.  Then there is the cost of floor space as far as rent is concerned.  Retail chains manage to survive because of their size and wide range of stock; if you try it, you risk losing money in a big way so be warned.

 

Of course, sometimes retail chains getting their stock earlier than you has nothing to do with their having an agreement with the supplier.  It may simply have to do with quantity in the order.

 

If for instance, you had 10 customers all wanting 1 copy of a comic and the 11th customer wants 100 copies of the same comic, chances are your going to pack the big order first and ship it off, dealing with the other 10 customers when you get the chance.  Profit and ease of shipping tends to play an important part.  You want the 100 copy customer to be happy so that they buy more from you and you will be prepared to risk a day delay to the other 10 customers.  You have your bills to pay, so does the supplier... and of course, as far as the supplier is concerned, having their product on display in a major shop front/retail chain means better chance of it being seen... and of course selling (not always the case).

 

Sometimes this works for them, sometimes it works well... sometimes it works against them and they should have focused on supporting the small stores that may be the backbone of the particular product.

 

Is it fair?  Not to the small store, but then, you can't worry about each and every customer you deal with either.

 

The opinions expressed in this Talk Back article are solely those of the writer, and do not reflect the views of the editorial staff of ICv2.com.