03 Feb The risks of being a retail buyer (or how to get a listing!)
Imagine you are the buyer of a major retailer – you get upto 200 emails a week from people wanting to list their products. You have a great range already – its not doing badly – why take the risk of launching another product??
Then out of the blue, something different and interesting – you have seen it out in the trade – you are interested. But there’s a big risk of change – so how does the supplier alleviate that fear and make it easy for the buyer to have the confidence to take the plunge?
Risk no 1 – it won’t sell and I will have lost sales for the space for something else
The biggest challenge for a buyer is choosing a product that is going to grow the category and provide exciting new opportunities for his/her customers. And as they don’t have elastic shelves, to sell more than the product that is already on the shelf. So how do you alleviate their fears and reassure them that this is the product for them?
- Show how your product has a unique difference to anything else on their shelves which is relevant and important to the retailers customers
- Demonstrate with examples from other retailers, online sales, markets how your products are selling well and how they have grown the overall category
- Build their confidence with your social media following that you have dedicated and loyal customers who will come in their direction
- Offer them a strong (but profitable) commercial deal with investment in marketing that will build success for the product
However please do NOT offer them sale or return or to pay for any waste. I have clients who do this but it is potentially signing an open cheque. The buyer needs to have the confidence that the product will succeed. The only time I have agreed to pay for waste is when I had a short dated product that would be unsaleable unless I moved it through retail quickly
Risk no 2 – it does sell and they can’t keep up with demand
Success brings with it its own challenges. I remember the Brewdog guys talking about the problems that their listing in 400 Tesco stores gave them in terms of production and cashflow. So it important to work out what the business will mean:
- Capacity – can you meet the increased demand in your factory. Would you need to put on another shift, bring in additional people and even in some cases build another factory (it does happen!)
- Cashflow – retailers are a lot better at paying invoices and shortening settlement terms but lets just do the maths. You sell a product for £1 into 400 stores and it sells 20 per store per week – that that’s £8000 per week they owe you. Your first order will be big as well as you need to fill the shelves so assume additional 8 per store. With 30 days terms, you will supply 3200 for shelf fill plus 32000 units to restock. Assuming it costs you 50p to make you are looking at £17600 investment.
So know your business and its capabilities before you go to your retailer meeting – you may want to just take a few stores to enable you to understand their systems, minimize YOUR risk and to ensure that your listing is a long and happy one. Not one that just crashes and burns after a few weeks.
If you need help with planning your retailer route to market, please feel free to contact me at firstname.lastname@example.org.