Winning Brands Corporation (WNBD)

[just_an_ant]

Hello Moderator Team - Walmart Canada Update

Walmart Canada originally placed Winning Colours into approximately half of their stores on a trial basis. That trial period continued to be extended because Winning Colours demonstrated improving turnover on a period-over-period basis, and in almost all participating stores – from a standing start. In other words, we went from zero to eventually having thousands of Walmart shoppers purchasing Winning Colours at this banner, and asking for it by name. All the trend lines are positive. The buyer who was originally in charge indicated the desire to expand Winning Colours into all stores because of these positive leading indicators. A new buyer is now in charge, and has proposed new rules for the listing, including price adjustments and operational concessions. If we agree to these, it would prevent us from being even-handed with other Canadian national retailers (because the proposed concessions would not be sustainable across all accounts) and thus create a downward spiral. My position is that I would rather withdraw from a single account than undermine an established and accepted pricing/operational protocol that is satisfactory to everyone else. Accordingly, a meeting date has been established for later in July at which these issues of principle will be discussed in the context of a formal review. It would not be in anyone’s interest if a single buyer were to set policy for this brand for North America. I must therefore accept the possibility that conditions will emerge that will not be considered mutually beneficial. There has been no material development at this time that requires a News Release. I am merely confirming for the record that Winning Brands has a portfolio of retail partners, large and small, and has a commitment to its future success across many categories of trade with partners who are able to accept a common understanding of our mutual needs. This, as a matter of policy, requires the ability to charge fair prices, operate to viable conditions and retain sufficient authority over one’s own brand that the company is never overly reliant upon a single account. The measure of the value and wellbeing of a company is not only in what is says yes to, but also in what it is prepared to say no to.

You are also correct in stating that the “paint section” is just one of several in which we have a natural home (such as the Cleaning Department, Automotive Department, Pet Supplies, etc.) These departments are managed by professionals with their own specific business plans, within a larger context of factors at work within the retailer (and any large retailer) as a whole.

Bottom line: Still a dynamic situation that contains the seeds of change, but is not formalized to us (or by us) in writing, one way or another, at the present.

Eric Lehner, CEO
WinningBrands.com



Additional followup

Yes, the Manufacturer’s Suggested Retail Price (MSRP) is a guideline only. Retailers set their own shelf price. However, some of the largest retailers, led by Walmart, have installed provisions in their Vendor Agreements, which require that the price that they pay be the lowest price paid by anyone – or to put it differently – that they do not pay more than anyone. If we participate in a rollback with one vendor, “A”, then as a legal matter, we would need to begin introducing such rollbacks across other vendor listings as well. The net result will be that all parties will lose and our business model will be undermined. This is because when the first round of equalized lower prices settles in, a certain party will then again seek further rollbacks, creating a vicious circle. This has been the undoing of some brands in this setting, unless they are owned by much larger companies. Some retailers are more suitable for certain brands at differing stages of their brand life cycle.

Concessions are also not only price based in nature for such accounts. It may involve minimum order quantity, shipping payments, set-offs and allowances that are not earned, etc.

I can assure you that we will do nothing that will unnecessarily jeopardize any mutually beneficial relationship.

Rgds,
Eric

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My note:

Welcome to the big leagues of business. Where the bigger ones will always flex their muscle and likely try to push you around. Hurdles of developing, building, and controlling the brand.

Always said it wasn't "easy". But the one that sticks to sound business and ethical principals have a shot in the long run imo.