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When business owners make their way to the negotiating table, preparation is the key to success. That preparation comes in a variety of forms, including identifying their top priorities, understanding the suppliers’ limitations and researching current retail prices. The best negotiators also know that working closely with their vendors can get them the best deals.

“There’s no one that gets the best deal every single time, but the more you collaborate with your vendor and the more you share information and your goals, the more powerful you make your vendor in the way that he or she can assist you,” said Darren Schulte, vice president of membership for NATSO. “If they understand what your goals are and what you need, they can help you develop particular programs and promotions to get where you need to go.”

Operators said that collaboration not only benefits them, but can help the vendors and the overall relationship as well.

“Everyone wants to get a good deal, but in order for the deal to be successful it must be a win-win between us, the customer and the vendor. If either party is unhappy with the negotiated deal, the business will suffer,” said Seth Miller, travel store manager at Petro Travel Store #53 in Portage, Wis.

Schulte advises operators to determine their priorities before entering a negotiation. “Understand what is really truly important to you. Is it service that’s important to you? Is it on-time delivery, selection, pricing? By understanding what is important to you, you can better negotiate to that point.”

Miller said he always prioritizes key items during the negotiation process. “For example, while price is always a hot topic in the negotiation, I am willing to pay a little more if the vendor provides services such as guaranteed sale of product and assistance with merchandising,” he explained. “Keep a list of deal-breakers or items that you can’t live without. Keep another list of bonus items that are your negotiating tools. A few bonus items I like to throw in the negotiation are discounts on invoices when paid within 10 days, rebates at the end of the year and specific days of the week delivery of product.”

Even if price is a key priority, Schulte advises operators to keep it in  perspective and focus on the categories that matter most. “Beating the soda vendor up on the pricing for soda when soda pricing isn’t important to you isn’t worth your time. Beating the apparel vendor up because you want to sell jeans for $9.99 but you only sell ten pairs a month probably isn’t worth your time,” he said.

Operators also need to ensure they don’t buy the wrong product at the right price. “The most important thing is you have to understand what your customer wants, who your customer is and what your customer is buying or not buying,” he explained. [See related story on Knowing Your Fuel Customer].

In negotiations, operators need to realize they can’t have it all, so there will be some trade offs. “You’re not going to get the best price if you have full-time service and you’re not going to get great full-time service if you want the biggest rebate. There are costs involved in service and product and returning product, so the customer has to prioritize what they want,” Schulte said.

When negotiating on price, operators can often gain more ground by entering the negotiation by asking the vendors what they need to make on certain products and working from there. “If you try to beat them up on one particular product price, they’ll try to make it up on another product,” Schulte said. “Vendors are open to the negotiation. The thing you have to remember is they have a cost to the product. The smart vendors know what the cost is and what they can and can’t offer.”

Len Chadwick, a long-time industry buyer, said being upfront with suppliers about the margins you need to meet can help them find solutions even if they can’t provide a certain margin on a particular product.

“As a buyer, you have margins you’re expected to meet,” Chadwick said. If the category has a goal of a 50 percent margin, but the vendor can only offer a price that allows a 30 percent margin, Chadwick suggests asking if the vendor can offer you another item with a higher margin—65 to 70 percent—so the average would help make the goal.

Schulte suggests operators also consider the vendor support they’d like to have. “Are they going to hang collateral for you, are they going to do any internet marketing? It is important to understand because all of that goes into the cost of product. If you get the lowest price but no marketing or collateral support, is that really good for your organization?”

Tom Panos, owner of L.G. Truckers City dba TA Wapakoneta in Wapakoneta, Ohio, said the way he negotiates varies by category. “How we negotiate in the c-store with the Frito Lay guy is a stark difference with how I negotiate with Bridgestone on tires or my fuel jobber,” he said.

When talking with vendors, Panos highlights the volume he is purchasing along with his flexible payment terms.

“As a truckstop, typically you have higher buying volumes than other individuals on that person’s route. When we negotiate, we leverage that a lot,” Panos said. “I say, ‘Here’s the price I need. I will be a busy location on your route, and we will pay on time and on your terms.’”

Chadwick said it is important to do your homework before a meeting by searching for the average retail price of an item for the time of year. “If you go into a meeting and you don’t know what the price should be, be honest and say you need some time to do your homework.”

To be better prepared, Miller advises operators to speak with several vendors in the same field if possible “to get a feel for what the markets are bearing in terms of services and material and inventory costs.” The 黑料社区Show exhibit hall is a great place meet with vendors.

In addition to checking out the average retail price, operators should also consider how much competition there is in the category. “The more competition there is in a particular category, there is certainly a lot more opportunity for negotiations and deals,” Schulte said.

While operators want to work towards the best deal, Chadwick suggests operators always be honest with vendors. “If you think it is a good deal, tell them; if you think it is high, tell them. Don’t lie and say, ‘So and so was in here yesterday and told me he could give it to me cheaper,’” he said.

Chadwick said he sets ground rules with vendors, particularly with space. “We discuss the limitations and tell them we can’t expand it. I tell them if they try to, they’ll jeopardize our relationship in the future,” he said.

To ensure everyone is on the same page, Chadwick recommends designing a planogram for each application that is shared with vendors, managers and sales staff.

Panos said he is quick to stop doing business with a vendor if he or she violates an agreement. “If a vendor tries to take up too much floor space without our authorization, we will literally pull the product and switch vendors,” he said, adding that the same applies to vendors who bring in unauthorized products or change pricing. “If it’s a product we have to carry, say Coke, we won’t order from the vendor and instead we’ll go to Sam’s Club and buy it.”

Some larger companies are more ridged when it comes to negotiating, often with a ‘take-it-or-leave-it approach,’ Miller said. He added, “When encountering a company like this, remember the power of ‘no.’”

Because people do business with people, Chadwick suggests operators take the time to get to know their suppliers and forge a relationship. Chadwick said building relationships starts with the vendors’ visits.

“Regardless of whether it is their first or fiftieth visit, I always try to be very considerate and compassionate. I always thank them for their time and their trouble for getting there along with bringing their samples,” Chadwick said. “I always try to find something we had a mutual interest in and keep notes. It puts both of us in a relaxed state before we started the meeting and would remove any tension.”

When it comes to making the ask, Miller said it doesn’t hurt to aim high. “A young girl was quoted saying, ‘If you want a cat, start out by asking for a pony.’ And who knows, you may just get more than what you thought you were going to. You don’t know until you ask,” he said.

Four Quick Tips for Entering Vendor Negotiatons

1. Know Who Your Customers Are And What They’re Buying.
Getting the right deal on the wrong products won’t help the bottom line, so it is important to know the brands and inventory your customers want to see at your location. It can also help you prioritize your negotiations. There is no reason to spend hours negotiating apparel prices if you only sell a few pair of jeans a month.

2. Understand What Is Truly Important To You.
Everyone wants to get a good price, but service, selection and support also come into play. By identifying your top priorities, you can better negotiate to them. Because negotiations are all about give and take, knowing what you’re willing to give up can be helpful as well.

3. Identify The Support You Want From The Vendor.
The amount of support your vendor offers may vary and is something you should negotiate. Since you can’t have it all, be sure to focus on the aspects that matter most. For example, will your supplier hang marketing collateral when delivering product or provide internet marketing for their products?

4. Have A Basic Understanding Of The Products You’re Buying.
Before you close the deal on a contract, be sure you know the average market price for the  items you’re buying. If you don’t know, take the time to check the web for prices or meet with additional vendors offering similar products.

Schulte is teaching an educational session on how to harness the power of vendors at The 黑料社区Show 2013. Learn more about his session .

This article originally ran in Stop Watch magazine. Stop Watch provides in-depth content to assist 黑料社区members in improving their travel plaza business operations and provides context on trends and news affecting the industry. The magazine is mailed to 黑料社区members bimonthly. If you are a member and not receiving Stop Watch, submit a request to be added to the mailing list. Not a member? Join today or submit a request to receive additional information.

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