How a small retailer uses web-based POS to increase clout with suppliers

By sharing sales activity information from a web-based POS system, The Party Warehouse, a five-store chain based in Albany, NY, persuades suppliers to give it first crack in its market at new, margin-boosting items, president Jerry Sykes tells Internet Retailer.

“There is usually little information available to suppliers from small retailers,” says Sykes, a former executive with Federated Department Stores Inc. “If a supplier calls and asks how well solid color plates have sold in the past, I can give them that information in five minutes, but most small retailers will say they can’t get the information because they don’t have the time to count their stuff.”

The Party Warehouse uses a web-based system from CommercialWare Inc. that takes POS data from each of its stores and transfers the information to a central data warehouse and analysis tool. The system enables Sykes to log onto a web page to run instant reports of sales activity–for example, the number and pricing of witches’ costumes sold last year in the three weeks before Halloween. “CommercialWare gives us total flexibility, so we can say how many particular Halloween items sold last year in the last two days before Halloween or the last 10 days,” he says.

Getting quick access to such information and sharing it with suppliers helps to build stronger supplier relationships, making suppliers more interested in providing a merchant like The Party Warehouse with their best-selling or hottest new products, Sykes says.

But the system also helps the retailer improve its profit margins by using reports of past sales activity to set proper pricing and avoid unnecessary markdowns, he adds. “The system has certainly helped our margins, because in the past we would arbitrarily mark down items as we got to the last week before a holiday,” he says. “But now I can go in the system and see that I did 80% of selling in the last week in the prior year, so I can be more aggressive with pricing.”