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> Retail stores actually buy everything they sell

This is true in general, but not absolutely true.

In some cases, manufacturers rent shelf space from stores, then pay the store a commission for each unit sold.

Various power tool manufacturers use this model, the name of which eludes me at this moment. I think Moleskine also does it.

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Yes, in rare cases, such as for low volume goods (or new goods with an unproven sales history), manufacturers might sell inventory on consignment through a retail store.

But that is the exception that proves the rule, and suppliers go into those situations with the option of simply selling to competing retail stores.

Yep. Then the vendor has to add the responsibility of covering “shrinkage”, as the store doesn’t care when the product is stolen, as it doesn’t belong to them!

???

Vendors do not cover shrinkage, except for the rare items sold on consignment. Shrinkage losses are either absorbed by the store or handled by insurance.

Rack jobbing means the vendor stocks the shelves, sometimes literally. The vendor isn’t paid until the item sells. That’s common for a variety of merchants.

https://en.wikipedia.org/wiki/Rack_jobber

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