What is a Rack Jobber?
A rack jobber is a vendor who rents space in a retail store or supermarket to display and sell products. Many rack jobbers are distributors, bringing in products from larger wholesale companies to sell in local stores. Others actually make or manufacture their own items and contract with store owners to allow them to use floor space. Conducting business in such a way is beneficial to both the rack jobber and the store owner, in that the jobber is able to expose his or her product to a wide customer base while the store owner gets to share profits without the burden of taking inventory or restocking items.
Before contracting with a retailer, a rack jobber generally conducts market research to try to predict if the store's regular customers will be interested in his or her goods. The jobber determines what quantities of items to stock and what percentage of profits should be given to the retailer. He or she likely will meet with the store owner or manager to negotiate contract terms and decide where to set up the items. As the job title implies, a rack jobber usually brings his or her own rack to display goods. A retailer may also be willing to allow the jobber to use store shelves if space is available.
Some rack jobbers work exclusively with one store or chain, while others do business with many retailers. A jobber visits stores regularly to check on inventory, create new displays, and restock items. It is important for the rack jobber to keep careful sales and inventory records to determine if he or she needs to adjust prices in order to make a profit.
Many people who manufacture their own products utilize rack jobbing as a way to get their businesses off the ground. By setting up displays in prominent grocery, hardware, or clothing stores, an independent rack jobber does not need to rent a building, advertise, or hire employees. Instead, the jobber is able to expose his or her products to a large number of potential customers and build profits before tackling the other elements of running a business.
A host store can benefit from working with rack jobbers as well. A manager does not have to worry about ordering, stocking, pricing, and selling a new product; the jobber handles it all. The store does not suffer a loss if a product does not sell. If the item is successful, however, the store is entitled to a cut of the profits for granting the jobber the right to use floor space.
My uncle owns a grocery store, and he included rack jobbers in the planning of the store’s layout. He wanted to sell some foods made by local people, and they were happy to have this opportunity.
He has a section of homemade foods reserved for rack jobbers. This is a good spot to find some amazingly delicious pies and sweet breads.
Of course, homemade items don’t last as long, because they don’t contain preservatives. However, he usually sells all of them while they are still fresh, because people know how good they are.
Since these goods are fast-moving, the rack jobbers keep a steady flow of cash coming in. They also stay busy baking!
My best friend rents space to rack jobbers inside her beauty salon. She has about three different ones displaying their stuff right now, and the merchandise is moving.
One person has jewelry and watches for sale. Another has handmade purses. One other sells clothing.
All of these rack jobbers purchased space in the large waiting area of the salon. Customers tend to look around while they are waiting on their stylist to be available, and this has resulted in many sales.
The rack jobbers were thrilled that they actually sold stuff in the first week of having their stuff there. They keep renting space, so my friend keeps making money off of them, and everyone is happy.
@titans62 - At least in my experience, these types of racks are most common at smaller, locally owned places. For one, I assume it is easier to work out the contracts that way. Secondly, given the issues previously mentioned, I assume larger companies shy away from these deals to avoid potential lawsuits. If a rack is in a small store, it should be much easier to keep track of inventory and prevent shoplifting.
My aunt used to own an antiques shop where there were a couple of rack jobbers who sold things although they didn't go by the term rack jobbers. One of them was a friend of my aunt's who painted and made little craft items. The other made decorative candles. Each of them had a table in the shop for them to do with what they pleased as long as it looked nice.
Like the article says, a setup like this is often good for everyone. The rack jobbers had an outlet for their goods that they normally wouldn't have had, and my aunt ended up with a pretty regular stream of revenue.
@jcraig - Theft is something else you would also have to consider, since I think it happens fairly regularly. It would be unfortunate if a rack jobber's goods were taken, but should that be a cost of doing business just like it is with the main store, or should the person be compensated even for the stolen goods? Like you said, it's a complicated issues, but I'm sure most of that is covered in contracts.
As far as rack jobbers go, I am not sure I have ever knowingly seen any sort of rack merchandising of this type before. Do the retail stores usually try to blend the outside racks into the style of the store, or do they usually end up sticking out?
I am mainly just curious where I might be able to find something like this to see how it works. I also think it is good to support local businesses and craftspeople, so I might be more likely to buy something from one of these racks if I knew what it was.
@Emilski - Hmm, that is something to think about. I have never worked in a store where there were rack jobbers, but I am betting there is some agreement worked out between the jobber and the store manager. I am guessing that the manager signs off on something saying how many of a certain product are in the store and then they are responsible for paying for all the items that are gone at the end of the month or some other time period.
That is still an interesting thought, though, because then you might have an unscrupulous rack jobber who takes items from the rack and says that they are gone. In the end, I don't know how it all works out.
This is a very interesting concept. I don't think I have ever heard of anything like this before. I am curious, though, how a rack jobber would keep track of his or her inventory in a situation like this.
From what I gathered from the article, the person in charge of the rack doesn't actually sit around all day and watch the area. It seems like the products just sit on a shelf like everything else. How do the rack jobber and store owner then keep track of how much everyone is owed?
I'm sure the person in charge of the rack would know their inventory, but I guess my real question is what would happen if the owner or manager of the store said that only ten items were sold when eleven were taken from the rack?
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