Managing customer deductions – an increasingly costly challenge

Today’s economy is forcing every company to look at how it can improve its performance. For companies selling to most of the major retail chains, the need to improve performance has been compounded over the last several years by increasingly aggressive retailer programs that have:

 

Imposed ever-rising slotting and reset charges,
Turned returns and reclamations into a growing retailer profit center, and
Led to rapidly increasing co-op advertising allowances and chargebacks with less and less value added relative to costs incurred.

This growing cancer will most likely spread even faster as a result of today’s economic environment. Given declining retail revenues and Consumer Confidence ratings that are at a 9-year low, retail chains will be looking for new ways to reduce costs and improve profitability. Even as they look to you, as a supplier, to help accomplish their goals, your company’s revenue streams may be weakening. In an environment where revenue enhancement opportunities are limited, chargebacks may be one of the single best profit-improvement opportunities available to you and your company today.