Following on from my previous blog “BBC 2 – Britian’s Next Big Thing – making breaking into retail look way too easy!” I promised a more detailed answer for those entrepreneurs, designers and inventors who wanted to know a bit more about how to successfully present their product to a major retailer, avoiding getting copied, and ensuring they walk away with a deal that doesn’t leave them struggling.
This is a massive topic and of course the final approach and presentation will be different for every individual product. The reason for this is of course each product will be targeting a different customer, with different positioning, price and promotional opportunities, and, with a different commercial proposition for the retailer. There are however some simple “rules” to follow to be “retailer-ready”!
The rules for getting “retailer-ready”
- Check the competition: It may sound rather obvious but you do need to do extensive research to know exactly where your product “belongs”. Is there anything else like it? If not, What purpose does it serve / gap does it fill? If there is then why is your better / different / relevant? If you are confident there is an opportunity you need to know how significant this is…
- Check the market: Whilst you may have a product that fills a gap or stands out from the crowd, you need to prove that there is sufficient demand for it to justify a retailer buying in to it. If your niche is too small then the likelihood of getting full distribution in a major chain is very low. Knowing who you would ideally reach and where they shop will enable you to determine which retailers you should be speaking to…
- Check the commercials: Retail buyers are targeted to deliver margin and put cash in the till through the products they select. They work with the merchandiser (the “B&M” relationship is the heart of everything “product”, although the actual job titles might not be “buyer” & “merchandiser”) to determine a whole structure for the ranges. See the list below… Bear the below in mind to make sure the price you plan to offer to the retail buyer offers a significant margin AND that the product presents the retailer with an opportunity to sell it in volume… if not then they simply won’t entertain potentially delisting another product in favour of yours. Retailers’ commercial / range teams are responsible for:
- How much of the total floor space should be allocated to a range in order to deliver a good return on the real estate it occupies?
- How many items should be included in the range in order to offer customer choice but not to add complexity to the range and unnecessary stock / management overheads?
- What prices can the products be retailed for to offer the customer a value proposition in line with the retailer brand proposition and product attributes?
- Be the solution, not a source of ideas: Retail buyers know that they can usually achieve higher margins (thus meeting their objectives and getting their bonuses) by developing products in house and sourcing these directly from manufacturers. When they meet designers, inventors and entrepreneurs who present their product ideas, with a compelling case that there is a sizeable market opportunity, they won’t be able to help wondering if there is mileage in doing the same in house. This isn’t because they are evil! It’s because when it comes down to it they want to both maximise profitability and reduce their risk. When appraising a potential new supplier (your business) they will study (in meticulous detail) the following list (as a guide, this is not exhaustive) – so you need to be the solution (have all the answers ready). If you remove the risk and guarantee a great commercial package you will be more successful as you’ve made it less work / effort for the buyer to bypass you and copy your ideas.
- Is the supplier able to scale up production to our volumes?
- Is the product quality (including considerations for environmental factors, standards in production, health and safety aspects, packaging, shipping – everything!) up to scratch for the kind of scrutiny that mass retail products are put under by consumers, and worse, the press…
- What percentage of the supplier’s business would my (retailer) order represent? If the supplier’s existence depends on just my order then from our own ethical position if we dropped them we could put them out of business.
- Believe it or not this is an important consideration. A buyer will not want to know that they are the be all and end all to your business. Ideally you should illustrate how they would never be more than 40% of your total turnover.
- Can the supplier present new ideas for future products?
- Can the supplier provide market insights for the category based on a “whole of market” view?
So, what SHOULD you do to successfully present your product to a retailer?
To sum up, you really need to be the ONLY route the retail buyer will want to go. You need to hold the key to the solution, not just give away all your ideas. The product, proposal and YOUR marketing know-how need to present such a compelling all-round package to the retailer that it would be too slow, too complex or too costly to go elsewhere.
Once again I think that Emma Wimhurst’s story of Diva Cosmetics is a wonderful example of exactly how to win big retail business – she demonstrated all of the above and more in her approach to potential clients. By presenting Diva as the solution (to a gap in the offering that many of her clients didn’t even realise they have) she was able to sign up client after client.
My advice is to work out how you can replicate the “Diva” model in your product proposition to in turn replicate Emma’s success.