I’m afraid this blog will be a little bit of a rant. I hope it will also enlighten a few would-be suppliers to retail as to the ideal way to approach the multiples. It will absolutely dispell some of the myths that have been created by BBC2 show “Britain’s Next Big Thing” which is presented by Theo Paphitis.
I caught the tail end of the 2nd in this series last night having heard much about it from twitter last week. I only saw the last 2 entrepreneurs going into present their product ideas to Boots, but felt compelled to write this as I really do believe that the show doesn’t go far enough to help would-be suppliers to retail understand the pros and cons of approaching retail multiples.
First of all, what do I like about “Britain’s next big thing”?
Before I go into the core of this blog I wanted to say that I love the concept. I love that SMEs, entrepreneurs, inventors and designers are being encouraged and inspired to aim high. I love that Theo makes himself so accessible – he comes across warm and supportive (not like a fire breathing dragon at all :-)). I believe that with so many people being made redundant a show like this is a great morale boost for many as they can see that passionate people who present a great product idea and have the end customer in mind in all that they do can carve out their own success and future.
So, what’s my problem with the show – what’s wrong with “Britain’s next big thing”?
Considering all of the above, and when I switched the show on, you might think I am being a bit “bah-humbug” – yes, I’d love to be presenting it! Yes, I’d love to have my clients televised being praised for their great product ideas on national TV! BUT… no way would I want my clients to be so ill prepared and to present so naively as the lovely lady with the young skin care range.
Compare the pitches delivered to the Boots buyers…
If you compare the 2 last pitches to the Boots buyers – the fertility predictor is a product that combines massive amount of physiological knowledge and technical deployment. If I was the buyer at Boots I would have a couple of thoughts in my mind during his pitch:
- Can we sell this in all stores and in sufficient volume to justify giving it shelf space? (Answer: Absolutely YES)
- I’m probably contemplating how I can get them to agree to range this product exclusively in Boots (to rule out Mothercare from grabbing it)
- Does the cost price enable us to reach a respectable retail price and still deliver our target margins? (Answer: not sure at this point – but worth detailed analysis!)
- *Critically I am also thinking* Is there any way Boots can copy this product and retail it as own brand thus increasing our margins and guaranteeing our exclusivity? (Answer: unlikely…)
- That’s because his pitch made me, as a buyer, think this guy is suitably qualified, with loads of experience and a proven product – it will be faster and likely more profitable for us to go with him as our supplier than to copy his concept.
Contrast the above thoughts, and importantly the final point, to what I would have been thinking when that charming lady was presenting her product, developed by teens for teens…
- Can we sell this in all stores and in sufficient volume to justify giving it shelf space? (Answer: Maybe… I am not sure if this age group is our core market. Maybe they shopping in New Look, Claire’s Accessories, Superdrug etc?)
- Does the cost price enable us to reach a respectable retail price and still deliver our target margins? (Answer: not sure at this point – but worth more checking)
- *Critically I am also thinking* Is there any way Boots can copy this product and retail it as own brand thus increasing our margins and guaranteeing our exclusivity? (Answer: too right we can, and, if this is a market we should be going for then we can roll out a whole new teen brand proposition across ALL health and beauty ranges, not just skin care…)
I felt this because the skin care lady’s pitch made me, as a buyer, think that whilst this lady was charming she had essentially just highlighted a gap in my own brand proposition to me that I might be able to fill. If this market was worth going for I could be making more margin and delivering a more comprehensive offer than by just listing her products, which in any case I need to test extensively and determine production capacity for before I could entertain listing the range.
Not a good example of how to present your new product idea to a retail then really…
Why should a major retailer buy YOUR product rather than simply developing it in house?!?
For the answer to this I will refer to you my good friend Emma Wimhurst. Emma is an entrepreneur who DID manage to prove that a 1-man band business CAN sell a product to a retailer. There was no doubt that the retailer could have designed and developed her product themselves. It was the way Emma’s business presented the product to the retailers that secured her success.
Prior to setting up in our respective businesses Emma and I had much in common. I was on the retailer side, involved in the commercials of the buying decisions for a number of the UKs well known multiples. Emma worked for a brand, selling product to retailers. She and I knew the main objectives of the retail buyers and as such when Emma launched her business, Diva Cosmetics, in the early 1990’s she made sure that her product presentations made life so incredibly easy for the retail buyer that it would feel like too much effort to even bother to copy her ideas and produce the product in house! She was able to offer them such a phenomenally personalised service and such a deep insight and understanding to their ideal customer that the retailers buying from Diva had 100% certainty that the product would fly out of the door (and it did). The buyer would be able to take all the kudos for listing the range and Emma’s business was able to grow at an alarming rate of knots….. And if you want to know the whole story then you need to listen to one of her talks!
Summing up – what SHOULD you do if you want to successfully present your product to a retailer?
This is a question my clients ask me all the time, and you will find a more detailed answer in my next blog… (updated – here it is 🙂 – What SHOULD you do to successfully present your product to a retailer?)
The short answer is if you want your product to REALLY be Britain’s Next Big Thing then what you need to do is make is so easy to do business with. You need to make your business proposition to the retailer so compelling that really the effort in copying your ideas feels too much like hard work for the retail buyer. At the end of the day these are busy people tasked to buy products which will retail in high volume delivering the maximum margin… make sure your product and presentation delivers that!