Beauty & Fitness Product Retailers Face Tighter Supplier Compliance Mandates

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Peak season is now upon us as retailers and other businesses alike prepare for the back-to-school rush as well as the holiday season. For the beauty and fitness products retail categories, there’s no holding back.

Market research firm, IBIS World, estimates the US cosmetic & beauty products manufacturing group is valued at about $48.2 billion and grew at 1.1% from 2011 to 2016. Meanwhile, US consumer retail dollar sales of sporting goods equipment, athletic footwear and athletic apparel increased 4% in 2015 to over $64 billion according to the National Sporting Goods Association.

Growth for Beauty & Fitness Remains Healthy!

While growth remains healthy for both retail categories, businesses in each category are facing increasing online competition as well as competition for space on the shelves of large retail stores.

Amazon has often been described as “the elephant in the room” for many businesses across all industries and as it creeps closer and closer to the end consumer, retailers are tweaking their supply chains to match the online behemoth by adding their own last-mile capabilities, automating/expanding distribution centers as well as adding products to brick and mortar stores quicker.

Collaboration between all supply chain partners is more important than ever before however, it seems to be under pressure from large retailers who mandate restrictive Must Arrive by Date (MABD) rules. Target, one of the largest ‘big-box’ retailers, recently changed the rules of their MABD vendor compliance program on May 31, 2016. Previously, Target gave businesses a three-day window to deliver the product by the MABD with a charge-back of 3% of the invoice value. Now the delivery window is one day with a charge-back at 5% of the invoice value.

Target Under Fire Last Holiday Season.

Target is also one of several retailers that came under fire during past holiday seasons for not having enough products on its shelves. As a result, last year Target, as well other retailers such as Walmart increased inventory to assure customers that stores would have plenty of products in-stock as well as online. However, this strategy came at a price with too much inventory left over after the holiday season. Now Target has asked its suppliers to take on up to an extra 3% to 5% of the cost of promotions and price cuts to help reduce unsold inventory.

Make Sure to Know the Rules.

For suppliers, know the rules when working with larger retailers but also make sure the retailer is willing to collaborate. Participation from retailers benefits all supply chain partners and encourages creative problem solving as well as new product development – a plus in today’s retail environment.

 

 

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