In the lead-up to Christmas, many retailers are seeing toys fly off their shelves as this is peak time. This is not the case all year round. However, for those of you who may have popped into the same shop for a child’s birthday present at another time, you will have seen there was still plenty to choose from all year round.
To have a large choice of products, toy retailers agree on payment terms for products that match how quickly they think they will make sales and those negotiations help them offer choice and affordable prices all year round. Such negotiations are common across all types of retail and wholesale to help ensure stores can sell the products the customer wants, and ensure they get it when and where they want to. It especially helps provide local, niche, and innovative products, products that respond to seasonality, those that may have a long-life shelf or are expensive, or react to unexpected shocks like natural disasters, war, and pandemics.
This flexibility is not one-sided. It offers all types of businesses in the economy mutually agreeable conditions that help manage the production, ordering, delivery, and selling of products with predictability for both sides (e.g. ensuring a supply of skis for the winter, and availability of DIY or sports equipment that may take a while to sell).
The flexibility also means wholesalers can support their business customers through supplier credit. For toys, the wholesaler can offer storage for the manufacturer who can produce toys all year round so that when the Christmas period starts, business customers find what they need – avoiding shortages, bottlenecks and stopping manufacturers rushing production to meet the demand at the last minute. Wholesalers also support their business customers by helping for example, a tradesperson place an early order for equipment such as heat pumps to match delivery with the planned installation date, knowing storage and payment flexibility are available in case of delays.
The Commission’s proposal for a Late Payment Regulation removes the flexibility to negotiate payment terms. It would require payment after 30 days or less. Nothing longer can be agreed even if wanted.
In our video here a French toy store owner explains what the new Late Payments Regulation would change in terms of choice and fewer opportunities for smaller, lesser-known manufacturers, and newcomers, and how larger manufacturers are set to gain.