Discussion in 'Picture Framing Business Issues' started by Less, Apr 10, 2014.
Ah Oh - going to get THE visit by my rep for their new pricing policy.
This can only be good news for Omega, Décor, etc.
Didn't change a thing for me, except to provide a few more opportunities to save.
What am I missing?
I'm curious to know what direction they are heading with the new pricing. I had the opportunity to talk with the person that was requested to examine the business from an outside point of view. Since he had no connection to the industry he was looking at LJ purely from a business model and not industry specific. I am sure he got a different perspective of the situation talking to an independent owner.
My "visit" was about six weeks ago. My rep said that the majority of frame shops were seeing a benefit from the new pricing program. However, I was not in the majority. After discussions, I ended up taking on a new local delivery vendor that I had not used before. I am awaiting 120 new corner samples as well. I'm kinda relieved. I had had all my eggs in the LJ basket for several years and it feels nice to be able to date other people for a change. We'll see how it goes.
Had my visit 2 weeks ago. Yesterday I made my Omega rep very happy.
BTW we haven't had a LJ rep since December and I missed the discount
cut off by a very narrow margin. It didn't matter to LJ. Smaller discount and
no salesperson :shrug:
Hmmm... I got a "sorry I missed you" voicemail from my Larson rep yesterday. Until I can pin him down can anyone PM me with a summary of the (bad) news?
Or post it publicly?
Got my news about a month and a half, didn't make the cut, so my discount got smaller. So guess what smaller discount smaller purchases, if they think they can cover their shrinking sales with smaller discounts, they are in for a big surprise. I am really not upset, (I care about Larson as much as they care about me) I guess I will have to give of my business to the other vendors that deliver in my area.
That's funny so you must be at the correct level of better, but everyone's pricing has changed, it a an across the board system, no more negotiated deals. Simply based on volume. I think it is smart, I hate the idea of another shop selling less but getting a better deal.
For those that haven’t gotten their visit yet, Larson is doing a new program where they classify customers based on how much they spend annually in moulding and accessories. In moulding they have a Base Price, Bronze, Silver, Gold, Platinum and Diamond plan and in accessories they have a Base, Gold, Platinum and Diamond plan. The category you fit into determines your discount. There are also new bulk purchase discounts for some supplies.
We are actually getting a better discount on the new program, enough that it makes Larson the lowest cost on supplies for us. Personally I like the new program better because I can just look at the chart and see what I have to do to get a better discount. The old system was more of an “I did everything you told me to, why am I not getting the better discount?” and their response was, well now you have to do something else too.
The problem I see is that they are aligning themselves with the big boxes more. Guess they figure they don't need the independents after all. I think it is a mistake. If they helped the independent's compete they would keep market share instead of giving it up to Omega and Décor.
we haven't had this visit yet either. we get visits from the upper mgmt. folks pretty often. including the CEO. it seems that our plan changes with every mgmt. change. LJ has not been the same since they closed the Cincinnati center.
Seeing as I've never gotten a discount from Larson, maybe this will benefit me.
I agree with this. I agree with fair and consistent pricing.
Our new rep just recently acquired this region after the last one left and some temps shuffled paper for a bit. The old rep apparently ran this area like the wild west, giving huge discounts to some because who knows why. After Larson changed their specials we started shopping around for supplies. What we got was inconsistent quality, changes in branding not represented by catalogues, reps who don't follow through, just to save a few bucks (like literally, not really much in the end). We are not a huge high volume shop but we still ended up in the diamond tier for supplies and gold for moulding. We carry and order from regularly nearly twenty brands of moulding. It's a relief to get a discount (finally) for doing so much business after so much time. With the exception of very few specific items, we'll be going back to ordering most supplies from LJ. The consistency and quality are great, the service is excellent.
This feels like old news to me I got cut from the truck my first year. Used to watch it drive by. Then I got dropped from the rep, got turned to in house sales staff, then to what feels like a bulk email account.
I am sure that some here will enjoy the added discounts they get. For a little while. Like was said, smaller discount, smaller orders. The lost discount will mean smaller shops go elsewhere, which will mean LJ loses their volume discounts and pricing which means that the added discounts will be going up to cover costs at LJ.
There has to be a better way to make money and save it at the same time. Seems like if LJ wanted to increase their sales they wouldn't do it by showing customers the door.
The problem I see is that they are aligning themselves with the big boxes more. Guess they figure they don't need the independents after all. I think it is a mistake. If they helped the independent's compete they would keep market share instead of giving it up to Omega and Décor."
I don’t want to sound too much like a conspiracy theorist but, Larson has the same reasons as the government for preferring to align itself with big business rather than small. Logistically it is far easier to deal with a few large companies than tens of thousands of small ones. Think of all the extra costs entailed in delivering tons of products to tens of thousands of locations compared to rolling a truck or two down to one location in Texas a couple times a week. When there are problems with products they need far less personnel to field questions and resolve issues because the complaints are coming from fewer large corporate operators that are far less “passionate” than the tens of thousands of small independent, disgruntled operators. Large corporations have a much easier to investigate track record of whether or not they pay their bills, and when there are issues with payment they only have to go after one contact rather than a thousand separate entities. This saves them on personnel, time, and money that would be spent on court fees, legal counsel or writing off bad debts that they can’t collect. Large corporations with smaller selection can also afford to buy products literally by the boat load allowing Larson to cut costs on processing and storing these materials. When you add up all of the costs of doing business with small independents compared to large corporations it seems like a no brainer to me. If Larson were to put a huge number of independents out of business it would not lessen the demand for the product. It would force consumers to go to the big boxes or the large independents where they would buy more of Larson’s products. So buying less of Larson’s products instead of finding a way to get yourself into a higher discount bracket makes you even less valuable to them and therefore more expendable.
I guarantee that Larson would never admit to this, because they want to preserve their public image and don’t want to alienate those of us independents who they want to keep as customers or the public in general who want to support small local independents. Larson, just like the rest of us, wants to cut costs, streamline production and delivery, and make a bigger profit so that they can expand their business.
I am not saying that I like any of this or that it is right or fair, but it is business. It’s not fair that some people can’t afford our products but we don’t give the one customer who is never going to buy from us again the same discount on their single frame that we give to the corporate customer who is buying a thousand of the same exact framing package. It just doesn’t make financial sense. I myself have recently started to weed out customers that are “trouble makers” because they are far costlier to my business than the amount they spend.
I am sorry that Larson doesn’t value your business, but don’t take it personally because they don’t.
I worked for a big box that filed chapter eleven. I doubt LJ was cozy with the idea of having to write off debt of that volume any more than Roma and Nurre.
I am surprised that so many people have an issue with having to compete with big box companies anyway. We all know they aren't really competitively priced and play a slight of hand game with discounts and coupons. We, as independent shops deliver an entirely different product. What big box stores are offering lately resembles more and more an equivalent to what consumers can order online. The only difference being there is a human at the door to take their order. Sure, there are a lot of talented framers working these jobs but they are only able to deliver as much expertise as their environment allows. If you have to shop local vendors to get a better deal, go for it! You have that option! My only question is why haven't you done it before? You can do whatever you want or need to cater to your specific needs and your clientele. You have that advantage over big box stores. In my opinion, they are not competition but sell a different product.
Hmmm... except for buying box once in a blue moon, I don't buy in enough volume to qualify for any discounts anyway. Having said that, what's happening to their Base prices? That's probably the level I'll end up at...
We also got our visit last week and we didn't make the cut for our discount.
We feel sorry for the Larson Rep's, because they lost a major part of their income, some are now taking part-time jobs to fill the gap in income.
What Larson doesn't understand is that they gave up 50% of my purchases (Mats) from them and when I don't buy mats from them, you don't purchase other items from them ( they don't get the Bainbridge , metal moulding and supplies either). We buy from the vendor who can give us our purchases. This year our Larson purchases are down 46% from last year with a 18% increase in our purchases. Omega, Valley Moulding and CMI are also glade Larson cut the discount percentage and stopped being a full line vendor, because now these vendors are getting our purchases. We have also increased the brands we now carry.
Larson's move didn't really cause us much pain, because our other dealers are matching or giving better discounts---- because of our purchases. Our purchases still give us twice a week delivery, but now it only takes two or three minutes for our driver to bring our purchases.
You know, LJ used to have folks who were active members of The Grumble. This type of thread would have been something that they would have seen. I wonder if LJ sees this today. I wonder if their folks are still around on the G and if they are allowed to talk. I wonder if they see what we all think is so obvious. When JeffR mentioned that he spoke with someone who had recently helped LJ review their business I wonder if LJ cared that their business consultants (who apparently are the genesis for these pricing and business changes) were talking to the average framer on the street - no offense Jeff. When Immaluma revealed her discount plan on supplies was their highest level even though they are a lower volume shop (I think that's what she mentioned) I wonder if that was giving out a secret information that will cause a ripple effect in the info folks share about their pricing. I wonder how many shops out there have an increase in purchases but a decrease in their LJ business. I wonder how much of that LJ's leadership is willing to allow to continue. I wonder how much of that before LJ falls back to the pack (so to speak). I wonder how much longer before an aggressive vendor like Omega or International swallow up enough smaller guys to be big enough to eat the rest of LJ's lunch. I wonder if Warren (not Tucker) cares? It all makes my head hurt. and my heart.
Here's the story Paul
My conversation was with a new customer who owns a vacation home here. His wife had taken a nice photo they wanted to frame for the place here and asked a family member that lives here where to get it framed. Since the family member is a customer they were sent to me.
The first visit was simple and we chatted and chose a nice 2" wide hand finished Italian ready made I had on the floor. They weren't looking to spend much framing the 24x36 and the job came in at a less than the moulding would cost wholesale. I had no idea who he was other than personal conversation we had about framing the photo.
A couple of weeks later they came back to have another photo done and I believe I printed that one from the wife's digital image as I had recommended we do as we decorate the vacation place. While we were choosing the framing the husband asked if any of my mouldings were LJ and I said no but went on to explain what I do to offer incredible materials for the prices of the most basic frames. I was asked a question about LJ which was not planned or staged by him and my response was as honest as I am about anything someone may ask me so this was when I learned he worked for a BH company.
Turns out that WB had specifically asked for him to look at LJ as a complete outsider with the only goal of how to make the numbers look more like they do at the highly profitable business where he is selling an unrelated product. The first thing he found was that there were way too many SKU's at LJ to run the way it should. That was the point the entire Crescent split occurred as they were needing to eliminate like items.
We spent quite a bit of time discussing politics, the economy, business and LJ and what was going on from both sides. Once again he has nothing to do with the framing business so he was simply asked to look at it from an analytical position. Discounts were all over the board with no rhyme or reason to them so they were washed. There were several recommendations he had made to WB and this visit was well after the change. I gave him a perspective he never had prior to decisions and I have no idea if he has communicated any of my points of view or if he is still in the LJ loop.
Since LJ closed warehouse in Cincinnati my relationship with them on decline. Relocating the shop to a very nice area by the end of the summer and taking only a few of their corner samples, not sure about the mats, probably not.
Doesn't look like they care about me anymore and local vendors get my business.
The work was done prior to the new leader being put in place. I would say the discussion in this thread is implementation of the new direction they need to accomplish the turnaround. All moulding businesses had huge price increases at the production level and passed on the increases. While I don't pay any attention to prices at LJ I know the change in discount structure achieved a large portion of the price increase.
My personal opinion is they had too many price levels. No matter where an independent lands on the discount structure they desire a lower price category. I really think it made their moulding price higher than it needed to be in order to offer so many programs. I think it is good for everybody here to discuss reactions to the changes because I'd be willing to bet a C-Note that this thread is being read.
All of our distributors/manufacturers have incurred many increases in costs of materials. The answer boils down to where can you get the good stuff for the right price. I believe that a lot of business will twirl around to different sources for various reasons. I like a healthy supply chain so some indie vendors will get a little healthier and LJ will lose some business but much of the loss will reduce the cost of low volume accounts. Corner samples eat tons of cash and there are a lot of new mouldings coming out. A lot of finishes have changed with all of the scrambling to new factories so all vendors are under pressure there.
All the points you make are true. And maybe it works for very large companies. But I know that personally I like to have a good mix of large and small customers. The big ones fill the schedule up, but the small ones even out the workload. Further, and consistent with the posts on this thread, while the smaller customers require more resources, they also provide the most profit percentage.
To have a consistent business you need diversity. Not necessarily diversity in product, such as selling frames, apples and tires, although the more diversity you have in product within your targeted demographic the better. Big customers, small customers. Consumer, corporate, art oriented. Geographically spread out as far as you feasibly can. Expensive options, cheap options. Widely ranging items that may take a while, at least a few things you can get "right now". Etc, et cetera. The more diverse you are, the more stable you'll be, as typically when one is doing poorly the other is doing better.
Large customers make up approximately 60% of our sales. In 2009 we had a couple of our largest customers drop up to 90% in sales. Overall, those large customers dropped 60%. If we had only large customers we almost certainly would have gone out of business. Thankfully our smaller customers only dropped an average of 10%, so while it was still a very tough year we pulled through. In this case it wasn't just because of the size of the customer, but that the larger customers tend to do all the same type of work for the same part of the market, and that part of the market was hit hard. Regardless, I believe that the diversity is what saved us.
David make cents to Less.
The big boxes and high-volume guys don't need Larson. They can buy direct if they choose. Larson-Juhl's business was built on the independent's and the independent's are their best opportunity to keep, gain, or lose market share.
If the truck is driving by my door, it makes cents to load up the truck.
They will do what the have to do, but I believe they will lose market share. Once the damage is done, it will be harder to get it back.
Take away the great discounts that helped me more than double my business with them and I see no positive outcome for either party. Again, I believe that those vendors who help the independent's in the "New Normal" will keep and gain market share. I think Omega is a good example. I had been begging Larson for help for years. They only responded when Omega and Décor started bringing truck service and attractive pricing options. Larson finally responded and my business more than doubled with them. To threaten to take that away makes no cents.
Lets see what the have to say.
Our discount is the highest level because we have qualified for that based on their discount program. It is only my opinion that we don't have a huge volume of work here. We could be much, much, busier. I'm just surprised at how many people don't qualify.
I find it silly to make blanket statements like "they don't care about their customers" of course they do, they also care about their livelyhood and remaining a leading distributor in the industry. Larson does a huge amount to promote the industry, more than most. If anything this fair and smart change.
The discussion of a discount program or any vendors discount is about the same deal you get going to BB and getting 60% off custom framing. It's really a "Carrot" program.
Most of the discount programs go back to the old days when we could buy no chops. Since everything was length you were stocking a large portion of inventory so the 500ft, 1000ft, 2500ft & 5000ft prices were real. Many of the suppliers could offer fill in orders at the discounted price since it was a rare occasion that only a stick or bundle was purchased.
Now most vendors have sealed box price (nobody handles the moulding but only a single box), mixed box (which requires an order to be pulled and boxed), bundle (which is wrapped already to go from the factory), single length (somebody has to pull and unwrap a bundle), chop (4 cut pieces and inspected) or join (4 cut and inspected pieces that are joined).
Many industries use 6 month, 12 month & 24 month purchase history to establish discounts. As a retail outlet I know the headaches and lost money of servicing small purchase customers. A customer that spends $100 per visit is much more profitable than the ones that make 10 visits to spend $100. International has done a good job of sorting customers into the proper categories. Now that they own distributors all across the country they will be more efficient and framers don't see 10 different price levels at any source. I buy a bunch of full boxes from Int'l directly and assorted boxes or bundles from G&G which they recently purchased.
Exactly. Our discount remained the same, and is the highest in one category and middle of the road in another. Greater discounts for greater volume without favoritism makes perfect sense. Isn't this the way we give discounts to our own volume customers?
I don't buy the same discount for everyone argument. If I am trying to expand my business whether it is due to competition or just trying to get new business I may offer better pricing to someone else other than a regular client. In fact, I do it all the time. I give the great discounts to those who need it the most. I would rather have some smaller profit business than not get it, or let someone else have it.
Life if not fair, and the squeaky wheel does get the grease. In exchange I give them more business and I get more business. If your argument holds true then the only framers left standing will be those in very wealthy communities and the big boxes.
It's not the same for everyone, if you spend more you get more. Just like your quote. It's just not based on a rep and framer relationship or as you say the squeaky wheel.
One is based on actual past performance and the other is based on expectation of future performance. Big difference.
I would strongly suggest re-thinking that logic because it is likely to come back and bite you in the @@@.
Your brand new designer customer may well know your regular designer customer and if regular finds out their friend gets a better price you will lose a regular.
Same for retail customers, same for artists,
Bob Carter schooled me on requesting discounts from my vendors. He walked me through the first one and coached me on what to say. That was Studio Moulding and I got that discount. Then I managed to get discounts from all my other vendors including LJ. I got what they called "end column pricing" on mats and moulding even though I didn't buy enough to be a partner. It was all about negotiating space on the wall for their product. Plus, even though I was small potatoes by most standards things were changing for the vendors as shops were dropping like flies. They were flailing around to try to hold on too.
It is only natural for LJ to seek out BB's, they need to find a way to keep alive too. They really shot themselves in the foot when they became Joann's exclusive vendor. They lost a bunch of independents then because they felt betrayed. I wonder if they have ever completely recovered from that. I know for sure that aligning with a BB has not been as lucrative as it could have been as sales continue to decline company wide. (in framing)
Chances are good that when LJ loses business from people who are miffed about losing their discount they will have no choice but to "dangle that carrot" to convince people to put their stuff back up on the wall. It's just business.
So, you give your best customers the biggest discounts? **. I bet you keep the extra profit to average out those that you have to discount for. When the economy went south, I changed my ways and gave business to those vendors who were willing to help me survive. Yes, I do expect them to help me compete against the big boxes of the world. I don't have a warehouse so I don't have room for 40 boxes.
I can tell you that I treat my best customers very fairly but give the deepest discounts to artists without expectations of future business. I hope to get more and most often do.
I just negotiated very favorable pricing with a brand new vendor that I am excited about giving business to that they never had before. It will be good for both parties.
If a company like Larson ( who at this time I like very much) chooses to materially change our agreed on structure, then they will get Less. They won't be my bread and butter vendor. They will get just the higher end unique jobs that I cannot get from another vendor. This may be just what they want.
I was told that they really don't want the glass and supply business anyway. I can tell you Omega and Don Mar sure see value there.
We shall see how it goes.
Don't forget that there is a difference between price and value. I compare vendors based on what I get for my dollar not just on what discount is offered from a published price.
~ Do they have quality products?
~ Are they innovative in their offerings?
~ Do they refuse to sell to your customers directly and have consistent qualifications for buying from them?
~ Does the vendor offer free delivery?
~ Will they work with you on large jobs by offering to provide services like chop/join or a better price?
~ Do they offer terms that are favorable and offer terms discounts?
~ Is there consistency in their product?
~ Is their billing correct and do they promptly credit your account when there is a problem?
~ Do they have a rep that makes appointments, keeps them and is trustworthy both in keeping confidentiality about your business and others while still helping you to grow your business?
~ Do they stand behind their products and services?
~ Do they have the right attitude that it is just as important to them to please your customer as it is to you? In other words do they "get it" that your customer is ultimately their customer too?
~ Do they treat their own employees well?
~ Do they come out with new moulding designs or just pirate others?
~ How complete of an apple cart do they have?
~ Do they support the industry as a whole?
If you evaluate any vendor solely on price or supposed "discount" you are making a mistake because a good vendor offers much more value than just the cheapest price.
(Deep harmonic voice here) Imagine a world without Larson Juhl.
Basically I think LJ just pulled out of the "Race to the Bottom". To Paraphrase David W. they stopped giving "Speculative Discounts" and started giving "Earned Discounts". They pulled out of the Futures market.
With BH at their back, they have the smartest business minds in the world running the show. They know which side of the bread the butter goes on. If they can't make a go of it then we're in a lot deeper trouble than simply losing a distributor.
Jeff, here's some irony for you. Despite what the guy hired from LJ told you, one of the primary reasons Crescent and LJ split was that Crescent wouldn't give LJ a better deal (unpublished pricing) than the competition despite their volume consumption, thus protecting their smaller distributors from a pricing war. Now LJ is adopting that same model by having Tiered Published Discounts based on past performance. I really don't know if anyone can get better pricing from LJ on their top tier. I would imagine that, if they could, they are probably already importing their own and bypassing all distribution.
Thank you, Dave. I believe that Larson passes your test, at least inour experience.
I would add one more:
Do they consistently stock what they sell? This is an area where lately, almost all distributors of supplies come up short.
And isn't this what we are about as well?
I knew both sides of the story before any of it was released to the public. Crescent was told to reduce the number of items and lower the price. LJ argued they were ordering more than the lower price customer but the other customer had the entire order shipped to one location. LJ's orders were numerous smaller orders going to multiple locations.
That's interesting, because Larson's policy for accounts with multiple locations is that they only count the most productive location and do not combine all locations to qualify for a discount bracket. If what you say is true it sounds like LJ is adopting the rules that they argued against. So your saying that Crescent has the same sort of system for its wholesalers as Larson has for its retailers?
That is correct Ed
I find that odd too since (at least to the best of my understanding) what I receive from LJ is shipped by rail on piggy back trailers from Chicago to Lakeland and then brought by local delivery to me. If I am in error in that in regards to Crescent, then I would have to agree with Ed that LJ was playing both sides on that toss. I also keep in mind that what I hear is quite often what someone else wants me to hear.
Back to Less...As independent business owners we can cherry pick who we give discounts to because in the end we are only answerable to us, and if the scheme fails, we are the only ones that lose. Corporations are beholding to the stockholders, and they cannot make a business plan that aren't in the stockholders best interest (in theory mind you). Granting exceptions in a pricing structure for small volume/high maintenance customers is not the best business plan regardless of the altruistic motive. The argument about helping small businesses only works if the small businesses themselves act in a businesslike fashion.
I was told by an ex Crescent employee that LJ found out what Crescent was charging Michaels who was buying half as much and just wanted the same pricing.
I can answer yes to all of my vendors and this has nothing to do with who has the lowest prices. It has to do with helping those that they depend on to help them.
Yes they are a good company, but have not been able to get several mouldings lately, they discontinue plenty, and I cannot get Crescent which was a stupid decision in my opinion.
They are still a good company. I absolutely love the ease of ordering and knowing what is in stock at the local warehouse. Especially on Saturdays, when I can just check it in the system. Customer service is still extremely good, although not as good as a few years ago.
I have had a few more issues with quality and quality control lately.
No more automatic samples, although their records should show that I put new samples on the wall and usually sell it within 2 weeks. If there are many discontinueds and no new replacement, my walls would start to feel empty. Except I am filling some of it with new vendors.
I have had a few issues with out of stocks and discontinueds.
I have had issues with them not having Crescent mats anymore.
I don't care as much about the discounts. My supplies are less expensive from other sources, this new discount policy made me look a bit more closely at my pricings so I have been ordering less supplies through LJ.
I will probably always have them on my wall, but they did loose a bit of wall space. For me, that all started with the Crescent fall out.
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