Maybe Frito Bandito?

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I promised yesterday to get into specifics about the idea I put forth of manufacturers adopting the Wal Mart approach of not owning inventory as way to get local "audio experts" to become high-end retailers. Reader Steve Barry (himself once a high-end retailer) pointed out a flaw in that model and suggested something better which I include in today's post.

"I do have one concern, and that is that Wal-Mart is perceived in a certain way, which may require too large of a leap of faith for our target readership to accept at face value - perhaps there is another example of "the dealer doesn't pay for inventory" concept that might be more broadly "acceptable" - Frito-Lay.

The Frito-Lay company does the same thing for all the chips you see in every store, regardless of the store "brand" (7-Eleven, Safeway, Albertsons, airport stores, etc.) - it doesn't matter who owns the store (i.e., host the product offering).

Frito-Lay, until the store's customer purchases the product and walks out the door with it, owns, stocks, inventories, refreshes the product display and even replaces the product on the shelves if it is past the "sell-by date". They even pay the retailer for shelf space.

Perhaps using the Frito-Lay example/concept (where the manufacturer has no territorial exclusivity, and puts the product on display wherever the target market is likely to be, allowing the location, convenience, and customer service relationship of the many different store companies to add value) rather than the Wal-Mart example/concept (where the manufacturer needs the customer to go to a single place and "deal with the consequences" to see a broad range of products on display) would be better.

I couldn't agree more.

Tomorrow, we discuss "the new day".

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Paul McGowan

Founder & CEO

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