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The Right to Complain (Or Not!)

19 Oct, 2005 By: Jessica Wolf

OK, I am bracing myself for all the people who I undoubtedly will make cranky with this column, but there's something I really want to say about the whole independent retailers vs. Wal-Mart thing.

Here's where I am going to tick people off, I'm sure, but this is what I honestly believe: If you buy from Wal-Mart, if you make that decision to get part of your stock from that store's low first-week prices, you must live with that decision and move on with your life. The very fact that you engage in this practice forfeits your right to complain about the fact that you “have to” engage in it.

I understand the reasoning behind sideways buying from Wal-Mart. I understand that those who do it may not actually be happy about it but have decided this is something they must do to compete or simply stay alive. If that is the case, then in my mind, this practice should be viewed as part of your overall business strategy. You wouldn't complain about paying your employees or your electric bill. Those are things you have to do to maintain your business. If buying from Wal-Mart now unfortunately falls into that category, then you should view it as such and simply accept it or take a moral stand and quit doing it.

I got an email from an indie retailer after the story I recently wrote about the rental market from the indie perspective. He informed me that a large percent of product at the indies is coming from sideways buying. “I assure you that 90 percent of independent purchases are through mass merchants, not distributors,” he wrote.

That seems high to me, but let's go with that number for a little hypothetical here, using Wal-Mart as the mass merchant in question, since they claim to be the “low price leader.” (Before you get all “up in my grill” and blast my email inbox about this, please take a moment to reflect upon the definition of the word hypothetical. Thank you.)

Let's say an indie retailer buys six copies of the hottest title to come out every week. Let's say he buys five of those copies (90 percent) at Wal-Mart. Multiply that by four for the number of weeks of the month. Actually, let's multiply that by five, to throw a nod to weeks that have more than one good title streeting (What? It could happen!).

So, five copies of five titles each month would be 25 copies purchased at Wal-Mart. Multiply that by the 12 months of the year. That would be 300 units from Wal-Mart each year.

OK, multiply that 300 by let's say, 100 indie retailers to be conservative. For this hypothetical scenario, that would mean 30,000 of Wal-Mart's DVD unit sales in a year could be attributed to indie retailers' sideways buying. (And realistically, if what my emailer said is true, you could probably double or even triple that number.)

Now, 30,000, in the grand scheme of things, is not that huge of a number; even 60,000 is a drop in the bucket when you take into account all the Wal-Mart locations across the country and the sheer number of units this behemoth of a retailer pushes through to consumers.

But still, it's not insignificant either. Sideways buying from Wal-Mart and other mass merchants supports those merchants. It gives them money, Every single SKU, let alone tens of thousands of them, reinforces suppliers' belief in those stores' retailing superiority to the indie retailer.

Granted, like I said before, this practice may be distasteful to those who partake in it, but if it looks like their only means of survival, they must do it. That's fine. That's all well and good. You do what you have to. But make no mistake, it all adds up.

And I honestly think that every time you take a trip to another merchant to buy product for your store, you automatically relinquish any rights you have to complain about it.

So, let the complaining begin.

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