Target has a lot of merchandise sitting around, and they want some help getting it out of stores and into shoppers’ carts. Who are they asking to help? Suppliers say that the discount retailer is asking them to take on more of the costs of marketing products, which cuts into their own profit margins and is an expense that suppliers hadn’t counted on.
Even though Target’s idea of what the word “sale” means is sometimes a little shaky, they still generally work like other retailers do, putting items on sale or offering deals like two-for-$5 when they want to sell more of something. If they’re stuck with an item, it goes on clearance, and that’s exactly what the company reportedly wants to avoid this quarter.
While the company wouldn’t discuss the situation with Reuters, the wire service talked to “a dozen” suppliers, which understandably didn’t want to be identified.
“They want to get this unsold stock out of their stores in the next three months,” a representative of one unnamed supplier told Reuters, noting that the retailer “is not leaving a lot of room for negotiation.”
Suppliers normally budget between 10% and 30% of the cost of an item on store promotions, depending on what the item is. Paper towels might be at the lower end of that scale, while clothing would be at the higher end. Sources told Reuters that Target is asking them to add an extra 3-5% to that figure.
Target charges suppliers more to help offload unsold inventory [Reuters]
by Laura Northrup via Consumerist
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