The Doing Business in Bentonville Podcast
To create an ecosystem that connects leaders of all kinds – industry, community, student, educational, civic, investment and entrepreneurial – to help overcome Omnichannel Retail barriers through exclusive, insight-rich content.
The Doing Business in Bentonville Podcast
Ep. 99 - The Art of Retailer-Supplier Collaboration: Lessons from 35 Years in Business
Trust, time, and transparency form the backbone of the most successful business partnerships in retail.
Drawing from 35 years of working together, Terry Trofholz and host Deanah Baker unpack what makes supplier-retailer relationships truly effective in today's complex business environment.
They begin by acknowledging a challenge many businesses face: with increased responsibilities and the pressures of omnichannel retail, finding time for meaningful collaboration has become harder yet more essential than ever. Both veterans share candid observations about how the fundamentals of business relationships haven't changed despite the evolving landscape.
The conversation dives deep into what builds trust between partners. When a supplier takes on a major program, they're essentially being entrusted with a significant portion of the retailer's success—affecting sales goals, department performance, and even personal compensation. This responsibility creates a natural alignment of interests: suppliers succeed when retailers succeed, creating a virtuous cycle of growth.
Perhaps most valuable are their insights into navigating challenges. From late deliveries to underperforming products, they discuss how transparent communication—especially delivering bad news promptly—distinguishes exceptional business partners. Terry shares a compelling story of facing a potential business crisis when losing a major licensing agreement, and how Walmart's collaborative approach helped transform that challenge into an opportunity that ultimately doubled their business.
The retail veterans make clear that strong collaboration doesn't mean avoiding tough negotiations. What it does mean is building enough mutual understanding and respect that both sides recognize their shared interests in long-term success. As the retail landscape continues to be dominated by giants like Walmart and Amazon, those retailers who can optimize their supplier partnerships gain a critical competitive advantage.
What's your experience with business collaboration? Have you seen the benefits of investing in strong partnerships? Share your thoughts and join the conversation.
today's topic. When I was thinking about who should I, who should I talk with, you know who'd have to be a great uh partner in, and I thought of terry, because you're very well-rounded, so much experience. But you have also, through the years, been an incredible business partner to me and to the Walmart team, and so you are a natural fit for me A business partner that met you in 1990, I think.
Speaker 1:I started Walmart September of 1990. I showed up, yes, and I met you soon after. Yeah, and I was at the bottom of my ladder at that time. So, yeah, it's been many. How many years? 35?, 35. We were just talking about Just amazing.
Speaker 1:But today the title would be collaboration. And then, even taking it a step further, how do you arrive, how do you get to the place of mutually beneficial relationships in business? You know, it's not just good for the retailer. The supplier benefits, to the point that they grow stronger as the retailer grows stronger. And to me that, as we move on into the future, it's critical to understand, with all of this noise, all of these responsibilities that we just talked about, how do you still make time for that? Because, to me, that collaboration is just fundamental to everything in business, right? Because you can't do it by yourself.
Speaker 2:No, that's exactly right, and you had mentioned to me before that you'd heard the word collaboration a lot at the most recent Walmart summit. They want collaboration. Yes, and I've had other people my son, particularly, was there as well and he was very encouraged by what he heard from Latrice. What he heard from Latrice, and you know specifically that she wanted every supplier in the room to feel like Walmart was their favorite customer and that's certainly the way. You know that created a lot of growth and a lot of strength for Walmart over the years. As we said, what has changed a little bit is time, because of the complexities of the business and what everybody has to do, and you certainly need some time. But I mean, you've got to have open, honest communication and that takes some time. So that's a little bit of a challenge. And then, if you can add some historical perspective to it, I think that that helps Certainly for every supplier. You know Walmart, amazon, target they're going to be big customers of theirs, so they understand the importance, be big customers of theirs, so they understand the importance.
Speaker 2:There's been a lot of turnover of personnel both on the supplier and the retailer side. I mean a lot of people. Well, I've been in this business long enough that a lot of people have retired along with me. But COVID, I think, also scared a lot of people off and brought a lot of new people in, and for that reason, if you can sit down and have a meeting and you can start maybe with, every retailer has their version of a scorecard or at least some discussion of past historical business.
Speaker 2:You know what is this supplier meant to me in the past. I mean, has this been a you know? Is this a relatively new supplier that I've just started doing business with and things are going okay but we've got things to prove in the future? Or is this somebody that has been a strategic partner, that we've done a lot of business and a lot of good things together? That helps at least prioritize the time that you need to spend, and there's no doubt that I can't imagine the number, the matrix, the supplier matrix that suppliers or that retailers have now when you throw e-com in with store assortment.
Speaker 1:So talk to me about that. So, historical perspective what if there's a new strategy and you know the retailer in this case wants to go a different direction than in the past or augment it, and you're a historical supplier, are you still important?
Speaker 2:Well, let's talk about what that new direction is. Because, quite honestly, once again we said open, honest communication. I mean, if my historical perspective, my success, has been in knits and now they want to do something in wovens and I don't make wovens, then it's up to me to say you know what? Because the mistake that most suppliers make is oh, I can make anything.
Speaker 1:You know, don't worry, I may have got that a time or two, jerry, you may have got a time or two.
Speaker 2:You know what Not everybody can make everything, so that's a significant change and they're typically not that significant. So what is the strategy? Which direction do you want to go in? What are the benchmarks for that strategy? What is the trend behind that strategy?
Speaker 2:Buyers, you know all over, are really being challenged for innovation and newness, and that's what we want to see. When we go into a store I mean, if you go into a store a few times or you go online to buy something you constantly see the same thing you start to lose interest. It's like a restaurant that never changes its menu. You know, after a while, even if I like the restaurant, I've eaten most of the things on here and you know I'm going to look for something else. We have to hit the wants as well as the needs. Exactly, exactly so. But what I think? While you're reaching for innovation and newness, if you have a supplier that you've had a lot of success with, then there's no reason a longtime supplier can't bring innovation and newness. Innovation and newness doesn't mean newness in the supplier. It means newness in the assortment or whatever is being brought, and if you can have a conversation that says look, this is really what I'm looking for now. This is the trend that I've seen. This is what I'm happy with. This is where I'm getting my benchmarks.
Speaker 2:Then you give the supplier an opportunity at least to bring that back to you, because it is so difficult. I mean, every major retailer has a different way of doing business. You know, target is very different from Walmart, is very different from Amazon, and there's a learning curve that can cost both sides a lot of money. And you know there's a learning curve to get through the testing that needs to be done. There's a learning curve that goes through the distribution channels. There's a learning curve that goes through the distribution channels. There's a learning curve that goes through how do we replenish this. There's a learning curve that goes through how do we manage this business to success. So, before you leave somebody that knows how to do all those things things for a new supplier it's worth at least seeing what that challenging the supplier that's in place to see what can be done to bring you the newness that you're looking for or the innovation that you're looking for.
Speaker 1:But there is a place for new suppliers. Oh, absolutely, because you know you and I know apparel. But let's talk about, you know, some other areas. Oh, absolutely, that new item wouldn't be available to a large, you know viewing of customers if they weren't given the time, you know, to have a seat at the table.
Speaker 2:Absolutely, absolutely. And once again, that's what it comes down to is time. How much time do we have to do that, how much time can we devote to that, and how relevant or how much of the business does it really affect? So there's so many things that go into prioritizing how to get about to that. And you know the other thing that it's not just experience that is important in a relationship, the trust that you have.
Speaker 2:You know, I've always kind of thought of it as if you're a buyer and you're trusting me with this program. You know it might be a round record, it might be whatever it may be, but if it's a major program you're trusting me with a good part of the success of your department. You also may be. I mean, if I don't deliver this up to your expectations and on time and in full, then I put at risk your sales goals. I put at risk your bonus. I mean, let's face it, you're getting personal now, terry, yeah, we're all in this to make money. So those are the things that are at risk. So my own personal philosophy that I've always tried to pass on to the salespeople that work for me is if I sell this buyer, this retailer, something that is financially successful and does well and I execute it, then I have a chance to do business with them again going forward. If I don't, then they've got every right to move their business on down the line and do business with somebody else, and I don't want that to happen.
Speaker 1:Right, Exactly, and you know the trust is definitely a two-way street.
Speaker 2:Trust, and trust can come a lot through how a business is managed. I'm giving you this business, I'm giving you this to manage. Take care of it for me. I'm giving you this business, I'm giving you this to manage. Take care of it for me. And I think you know examples of taking what we always try.
Speaker 2:Whether it's a 500,000 unit order, 100,000 unit order or a million, if it's a large order, you've got a pretty good idea within the first three or four weeks. If you've once again collaborated, you've shared ladder plans, you know the expectations. What does a win look like for both sides? Within the first three or four weeks, you've got an idea if you're going to make that sales plan or not, or at least you've got a pretty good inkling. So if it was a million unit program and you're exceeding sales plan, you know delivering that good news. That's easy, that is so easy. Another way I always thought you could judge a good salesperson is how well he delivers bad news and how quickly and accurately he delivers it. Because if that million unit program based on sales is going to be lucky to sell through at 60 or 65%, then how do we address that? And those are difficult conversations because that means I've got to go either suggest a rollback that could cost us money, or I've got to go suggest how do we get out of some of these units.
Speaker 1:Well, and I would think it would always be kind of the seller's dilemma If something's not running on time, when you say I can fix it, I can handle it myself, we can deliver it on time, and you say quiet, right, and you don't divulge it to your retail partner, versus when you do, because you don't want to bring them like. You know every issue, you want to try and solve it, but there has to be that line in the sand for you of they deserve to know. You know, here's everything we're still going to do to try our best, but, like I'm sure you've come across, that in your career many times?
Speaker 2:No, that's absolutely true, because early you know, if you're six weeks out on a delivery and your factory tells you we're, you know, we're running a little bit behind here, well, you know what does that mean. Can you specify that and can we fix it? You know what can we do, and there's always something a supplier can do, because you can devote another line to that product. You have to take it from somewhere else, but you can devote another line to that product, or you can run overtime on that product, and so there are ways to fix things if you're six weeks out. There are ways to fix things if you're four weeks out. But when you're two to three weeks out, if they're still telling you they're going to run late, then there's a really good chance they're going to run late. You've got to raise a flag. Yes, yeah, you've got to have a conversation.
Speaker 1:Well, and from my point on the trust suppliers, that would tell me that I won't say I was this good at it at the beginning, but, being a trusted partner back, let's say you brought that to me and you're going to be two weeks late. Yep, okay. Let's say you brought that to me and you're going to be two weeks late. Yep, okay, I would look at my entire assortment. Am I open to buy? Can I afford for this to be late or can I not? Is it detrimental or is it just an inconvenience?
Speaker 1:Yeah, and anytime that I could weather it with the supplier, I would, and the idea was that it's not hurting the ultimate customer. I can weather it within my assortment and there's going to be a time when I'm going to need their help. Yeah, hard to say. Any big business situation I found myself in that wasn't good trusted suppliers and I'm not talking at all about sharing things that shouldn't be shared, sure, but things that were appropriate, like within the two businesses they would help me come up with the best solution to solve it. Yeah, you know I could come up with any solution, but the best required more than one mind on the subject.
Speaker 2:Yeah, yeah, and it takes a willingness to do that. I mean, if you've got a partnership and you've got somebody that you've been doing business with for a long time, maybe within a week you have to say okay, we're going to have to expedite the freight on all of this. That costs a significant amount of money. Or maybe you do that, or maybe I come to you and I say, deanna, you know what? We're going to be two weeks late, there's nothing I can do about that. I'll help you at the end of the season and we'll take in less inventory, or I'll help you with a markdown, or I'll do something to prevent this from really harming the overall financial results. There's lots of ways. Once again, it goes back to an open communication back and forth that you can solve problems.
Speaker 1:And I think it's long term too, terry, because, okay, let's say we have that one season. If you have it repeated seasons, the trust goes down. Like you know, the money in the bank of trust goes down over time, right, because this supplier has trouble being consistent, right?
Speaker 1:If it's a one-time occurrence and they've told me that we worked through it together your bank of trust goes up right and so you know, early in a merchant's career, you may tend to think that the suppliers have buckets of money they walk around with all the time. Just you know. Here's career, you may tend to think that the suppliers have buckets of money they walk around with all the time. Just you know. Yeah, here's some for you. Yes, the more I learned that business model of my partner, I feel like I was able to make better decisions for my own business. Yes, right, because you know. One of my friends told me, when you know better, you do better. Right, because you know some one of my friends told me, when you know better, you do better. Yeah, but it was that making sure that I understood the suppliers puts and takes, what they needed to run their business more efficiently, helped us both make more decisions that ultimately found their way to the customer in value.
Speaker 2:Yeah, I had a chance to talk to a young man who was being recruited by Walmart. He was from Duke and you know he said is there any advice that you would give me? And I said, well, you know, if you know that you're sitting down across from whatever department you're in, you're sitting down with the supplier and this supplier has you've done business with for a while, his best interest is served if he sells you something that you sell. So try to always remember that, because for him to sell you something that you don't sell, eventually you're not going to do business with him and so try that. That takes some trust and I think you had mentioned this once before.
Speaker 2:You'll kind of get an idea of the people that you can trust in business and the kind of people that you can't. You know, obviously, if you've got somebody that you know doesn't doesn't tell you that he's going to have problem with the delivery until the day before, doesn't tell you that he's going to have a problem with the delivery until the day before, or you've got he has told you that he would do something that he doesn't do, there's all of those. There's all of those kinds of things. But you get kind of an idea and that's where you know to the degree that you can move. I think inherently there's a adversarial relationship that can be thought of in, or this, this in a buyer seller relationship where he just wants to sell me something and uh, so I can't trust him. That's um try if you could try to move beyond that and understand that they, they want to do well, so you do well, so they can do well again.
Speaker 1:Now you're saying that all of our cost negotiations went extremely smooth, right? Oh no, oh no.
Speaker 2:No, no, no, no, no. You know what? What we loved about and still love about Walmart was the cost. Negotiations are always, I mean, they're always tough. They're always tough as can be, but once you've agreed upon a price, then you don't have. You know, you can be, you can. There's certain retailers that will nickel and dime you to death over any. It's never, there is never a final price. So yeah, no, I mean you have to be, is never a final price. So yeah, no, I mean you have to be competitive on a worldwide basis. There's, or there's, or go look for something else to do.
Speaker 1:The world is a competition. I say that all the time, yes, and it really is. So bring your A game right, and things tend to work out the way they should. So, terry, you've given us lots of things to think about today, and just given me an opportunity to reflect as well. Is there a particular story or two that you could leave our viewers with of just kind of like how this has been played out in your career?
Speaker 2:Sure, well, you know, from a partnership standpoint and how that's played out for both parties. I think you know we talked about the COVID crisis and what we were able to do when you guys said, okay, you know, this is somebody that we think can help us with that. But beyond that, we had a meeting with you and then Andy Barron, back in gee, I want to say it was maybe, yeah, it was 2019. And this was just a yearly or semi-annual meeting to kind of say, okay, this is, you know, intradeco. Here's what we're doing to invest in our business, here's what we're doing to align with your strategic goals. And at the end of that meeting, we said you know, there's a.
Speaker 2:We had a large workwear business with a national brand and we were one of the. We were a licensee and we were making products that they weren't really that good at, but they were in apparel. You kind of rounded out that assortment yes, exactly. And that business grew with you and a couple of other retailers to be maybe 15% of the total business we were doing. And that brand was bought by another national brand that already had a workwear business in place and it was about the time that our licensing agreement was about to be renegotiated and they decided that they could make those products that we were making. And if you make a product yourself and sell it, then you realize the entire margin versus just a royalty margin. And so we were about to lose that license and lose a huge chunk of our business.
Speaker 2:And you suggested another brand that might be really good in workwear, and we had thought about that brand a little bit. And you know I'm pretty sure what I said was you know, deanna, if you guys could say something to that brand for us, endorse us as a, you know, reliable workwear supplier that you've counted on, it would mean a lot to us moving forward with them. And you did that. And that business today is about twice as large as the business that we had with the other brand. It also brought a new brand into the workwear assortment, which was good, because at the time there was only about one brand, so it brought in some competition between two national brands.
Speaker 1:Well, and that's exactly. You know, beyond the fact that you know I like you and I didn't do it for that reason no, I understand that, but it was because my customer needed an additional choice, right, and the world is a competition. And so, being an advocate for my customer, we needed to offer more breadth of assortment, which meant an additional brand, and it played out very well. And I think you have an ongoing relationship Interdeco with that national retailer going forward. All I did was make an introduction, you know relationship, uh, interdeco with that national retailer going forward.
Speaker 1:Um, all I did was make an introduction, you know, but knowing that was a lot, but me knowing what you needed, right, uh, collaboration, uh, on an ongoing basis, allowed me to play a role in connecting the dots. If I hadn't been curious enough to ask, you know, it wouldn't have happened. And that, ultimately, I think, is just one way collaboration and then going beyond that to what's mutually beneficial for both businesses. It takes a little more thoughtful effort than just let's work together on something, yeah, and as the supplier gets stronger, the retailer gets stronger and the support continues. So, you know, easier said than done. But with everything there is to be done in this omni-channel world, there's one truth I know, is that we're not going back?
Speaker 1:Yeah Right, it's here to stay. Is that we're not going back? Yeah Right, it's here to stay? Number two we have to figure out a way to take care of the two channels as one, but also get back to what I believe is the foundational strength of a business and its collaboration.
Speaker 2:Yeah, without a doubt, the supplier-retailer relationship. You know the business continues to be extremely competitive out there. You know we see every day headlines about how. You know it's really the two behemoths now Walmart and Amazon are fighting it out and whatever advantage you can gain can make the difference and I think your ability to really optimize your supplier base and put them in exactly the position that Latrice said she wanted every supplier in that room to value. Really, what she was saying is I want you to value our business more than any other retailer you're doing business with, and that comes from collaboration and great supplier retailer relationships.
Speaker 1:Absolutely Well, terry. I've enjoyed this immensely. I could talk longer.
Speaker 1:We may just go get coffee after this and continue the conversation, but thank you so much for joining us today on Doing Business in Bentonville To our viewers, listeners. Thank you for joining us. Please give us feedback. You can leave it on the Doing Business in Bentonville website or you can look at my LinkedIn. Deanna Baker and I would love to hear your comments, your feedback, and it'll just make the next podcast better. So thank you all today, enjoy the rest of your day and let's go sell some stuff. Thank you, thanks, deanna.