ChannelNews has also been told that Harvey Norman who has been pushing vendors for three and four month exclusives on selected products is also demanding and getting guaranteed margins from manufacturers such as Teac, Sony and Hisense in the TV market.
Sony is believed to have agreed to a 28% guaranteed margin on this year’s range Teac 30% while Hisense has agreed to a 32% fixed margin with 2% going to sales staff as a sales “spiff”.
Last year Microsoft paid retail staff $50 for every Surface Pro 2 tablet they sold.
With the guaranteed margins the big retailer who has witnessed improved trading during the past two months is protected when other retailers start discounting the same products.
ChannelNews understands that the same Guaranteed Margin offer was made to two other major TV suppliers but the offers were rejected.
During the past 12 months Harvey Norman has started to lose share in the AV market as consumers shop elsewhere for their TV’s and sound gear. The big winner has been JB Hi Fi who has increased their share of both the TV and sound market selling brands such as Bose, Sonos, JBL and Sennheiser in the sound and audio attach market. They have also increased their sales of TV’s with brands such as Hisense, Samsung and LG as well as with their Soniq house brand TV’s.
According to retailers several manufacturers are now looking to offer incentive programs to sales staff in an effort to get their products ranged over their competitors.
One PC vendors is looking to give away $100 to sales staff as a spiff on every notebook sold that is over $2,000.
Another vendor who recently agreed to a fixed margin with Harvey Norman is set to offer 3% margin on new wireless sound systems.
A major supplier to Harvey Norman said “This is a very dangerous situation that is developing as it seriously puts pressure on distributors who supply the likes of Harvey Norman as they don’t have the margins that manufacturers have. One has to question as to how close guaranteed margins come to price fixing. Both vendors and distributors who are not in a position to offer a spiff or a fixed margin deal are going to suffer”.
They added “This type of activity seriously opens the door for distributors and vendors to go and cut deals with the likes of Google to sell direct”.
Harvey Norman, Sony and Hisense were not available to comment.
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