small business bc retail distribution-18apr2013

Retail Distribution

move your product line to market

Small Business BCGerry Spitzner | retailSOS.ca

April 18, 2013

Thoughtstarters

Purchasing methods

Distribution

Product

Preparation

Presentation

retailSOS.ca | Gerry Spitzner 2

Roadmap

Help you with insights for creating, engaging and keeping your customer.

Inputs, outputs and outcomes for your business plan and your sales/marketing plan.

Answer your questions.

My Goal for you today is...

Why they buy

How to approach retailers

What buyers look for in suppliers

What buyers look for in a product

Retail pricing and merchandising

Retail distribution and logistics channels

Your sales and marketing planretailSOS.ca | Gerry Spitzner 4

Objectives

POS = point of sale

POP = point of purchase

WMS = warehouse mgmt system

SKU = stock keeping unit

MOM = minimum order multiple

CPG = consumer package good

Acronyms

IND = independent retailer

UPC = universal product code

QR = quick response code

PO = purchase order

GMROI = Gross Margin Return On Investment

CRM = Customer Relationship Management

Acronyms

EDI = Electronic Data Interchange

EFT = Electronic Funds Transfer

EDLP = Everyday Low Pricing

OTB = Open-to-Buy

POG = Plan-o-gram

RDA = Retail Display Allowance

Acronyms

Thought startersThis packet of thought starters is just that; a starting point. Let your mind wander and consider what you can do to help retailers minimize risks and maximize profitability.

The 4 P’s of marketing◦Product, Price, Place and Position

7 P formula for marketing success◦Promotion, Productivity and “Profit-

unities”

How will this product generate incremental sales for me? And repeat.

Thoughtstarters

What’s the difference between your customers and your

consumers ?

Thoughtstarters

How to sell or why retailers buy; which do you prefer to learn?

Who are people more likely to believe; themselves or you?

Who is better at closing the sale; your potential retail customer or you?

Thoughtstarters

Have you ever had buyers remorse?

Thought starters

Show me the value; or I’ll show you the door.

What is value in the 21st century?

◦ Value is a function of the bundle of perceived benefits offered at a given price.

◦ Sell the ‘applied’ benefits of the benefit you and your product offer. Develop your value proposition.

◦ Prospective customers should be able to visualize exactly what value you could bring their organization.

Important insight #1

Why they buyTaking a look at the initial purchasing process from the buyer’s perspective offers invaluable insight to consider in your own selling process.

Profit; make money or save time

Want products that turn over at a price that will make them money

They want to know the repeat purchase potential, and can it be replenished quickly and reliably.

Why they buy

How can I keep my customers in the store longer?◦Increases the average sale per customer

Look at products through the eyes of consumers to meet leading trends

◦Increased impulse sales = increased average sale per customer

Why they buy

Do you sometimes wish you could just read your buyer’s mind?

Ask; don’t tell.

Stop ‘selling’ and help your customers buy.

Top line sales and cash flow

Customer traffic

Customer profitability

Staff productivity

Return on investment; ROI

What are retailers thinking about?

Inventory is one of the top two controllable assets in the business.

Do we really need that?

◦ does your product fit my current market mix,

◦ do I have the space to merchandise it,

◦ do I have the cash flow (money) to pay for it?

◦ What happens if I’m stuck with it?

Inventory is the retail gamble

It’s easy to turn cash into inventory...the challenge is to turn inventory into cash.

Help me move it; and promote it.

Make yourself irresistible to crazy-busy buyers and

customers...

Complexity and information overload brings them to a screeching halt.

They subscribe to the “ If it ain’t broke, don’t fix it “ philosophy.

Crazy busy buyers

They think making risky decisions is career inhibiting. Especially at chain retailers.

Most of their options seem like near clones of one another.

Not tolerant of stupidity or incompetence in other people.

Crazy busy buyers

Make your presentation in terms of the retailer, your customer.

How they benefit, how they profit, and how they produce will

provide value.

Focus on Challenges

Share Outcomes

Engage in Conversation

Suggest Next Steps

Successful Selling to Crazy Busy People

Keep things simple

Demonstrate strong biz case

Minimize the risk

Prepare, prepare, prepare

Successful Selling to Crazy Busy People

What retail buyers look for in suppliers

In addition to mentally preparing for the meeting, here's a list of some of the things a retail buyer may expect to see at your presentation.

What your biz background is Your Financial means Number of years in business Geographical limitations

◦ What area can you physically cover and ship to?

Always remember, while you are qualifying them; they are qualifying you. Know, like, trust.

Do not expect the retail buyer to know everything about the product category.

◦Come in with some facts & market research.

◦Sales trends in the category, consumer research.

◦Trend watching; help me with what’s hot.

◦Tell me about something new or up and coming.

◦What’s happening in the marketplace?

You need to know my customers.

Do your market research ahead of meeting me then ask me about my market & customers

I need to know your Advertising and promotions plan.

How you are going to educate my customers about your product and get them to try it in my store?

I don't have these answers for your product; you do. Or you should.

Can you replenish quickly; do you have a solid supply chain?

Speed to market is just as important (if not MORE important) than the shelf price or cost of an item.

Your supply chain to the MFR. becomes part of my supply chain and I care what it is.

Objections and roadblocks

◦Objections are signposts that lead you step-by-step toward closing the sale.

Understand your customers situation◦Help me move product and make money;

frame your sale this way.

◦The buyer is dealing with limited shelf space

What sellers ought to do

Shop the store ahead of time.

Understand strategic positioning of the store.

Keep things simple; make your presentation short and snappy.

Don’t show everything you have at once. Too many choices confuses the buyer.

What sellers ought to do

The answer is no...

◦If they feel pressure from you,

◦If they feel like you're trying too hard to be liked,

◦If they don't think you understand their business,

◦If they think you’re focused on what’s in it for you,

◦If they get overwhelmed by what you're saying.

Important Insight #2

What buyers look for in a product What you say and how you deliver your “pitch” will make all the difference...

Where else are you selling this product?◦What makes it sell? ◦What problem does it solve?

I need to know why your product will be wanted by my customers.◦Is there a “market match” to my market?◦What does it ultimately help my

customers achieve?retailSOS.ca | Gerry Spitzner 38

Is there a need or a market?

Or both?

A need alone does not = a market; desire does.

Desire is the sweet spot where the market is.

Push or pull product?

What is the barrier to entry?

Is your product future proof?

What is the life cycle of product?

Taste, health, ingredients, appearance, sustainability, preparation, packaging, customer value...etc etc.

All buyers do things for their own reasons, figure out what the buyer wants and then provide it for them.

Must be easily understood by store staff and consumers.

How & Who will educate my customers?

What retail price can I get for this product?

A retailer’s shelf space is their commodity.

Add interest and ‘excitement’ to their stores with new products and value.

Will this item make my store more appealing?

Will it add to my average sale per customer?

The retail pricing approach depends on the product and the buyer.

Some look at product first; ◦then see if they can ‘carry’ the price

Others look at cost first; ◦they are judging what the selling price

would be and if a fit to their market or match in a category.

Pricing and Merchandising

Setting the right price for your products and services requires balancing merchandising, pricing, placement, packaging, and promotion.

Know your competition

Do not compromise on your price

Know your taxes; HST to PST/GST

Wholesaler upcharges

Brokers fees

Include all your costs

Setting Your Cost for Retail

Mark up & margin. What’s the difference?

All of these terms are often confused in the conversation...◦Gross profit percent; GP%

◦Gross profit dollars; GP$

◦Gross margin percent; GM%

◦Gross margin dollars; GM$

Setting Retail Shelf Prices

Tamper proof packaging

Display racks and trays

Display packages with a window

Off shelf areas for new mix

Must fit on shelf in section or category it is going to be merchandised in

How to deal with merchandising

Plan-o-grams & compliance Package size/dimensions Photos UPC code UPC code that stays on package Packaging is effective and worthy of shelf space

How to deal with merchandising

Retail Distribution & Logistics Channels

Retail distribution channels consist of some combination of producers or manufacturers, agents or brokers, wholesalers or distributors, transportation, importers, and retailers.

Three main supply chain channels...◦What is your cost to ship to your

customer?

Wholesalers

Direct Store Delivery; DSD

Self Distributors; Chain

Retail logistics channels

Department stores

Mass & Big Box

Specialty & Discount

Catalogue & Internet

Grocery & Drug Stores

Convenience stores

Retail distribution channels

Within each retail category; 3 types◦Chain

◦Banner stores

◦Independent stores

Who exactly is your ideal customer?◦Who is your end consumer?

◦Where and why does he or she buy?

Retail distribution channels

Is the product WMS friendly?

Case and product UPC

Dealing with concealed damages

Case pack; smaller MOM’s?

Logistics or transportation charges; how are they determined?

In the Logistics Channel

Consider using a professional agent, broker or wholesaler.

◦ When you don’t have your own sales team or sales is not your strong point .

◦ There is a cost; however they have connections and already established relationships.

◦ Some wholesalers have their own sales dept. that you may be able to “tap into” for representation.

Retail reps

Your Sales & Marketing Plan

A successful marketing plan doesn't have to be complex or lengthy, but should contain enough information to help you establish, direct and coordinate your marketing efforts.

Endure long receivable cycle

Provide dating

Provide prompt pay discount

Payment by credit card

Even risk not being paid

Be Prepared to:

Provide a listing allowance

Prepay freight; delivery to door

Clear up damages and returns

Have a plan for recall

Sign a vendor agreement

Be Prepared to:

Use a wholesaler or broker that specializes in your product category

Referrals are the way to go

Value in a short term incentive

Becoming the retailer & go online

The use of online business media

Carefully consider consignment

Consider

There is a stumbling block...for importers.

National chain retailers have their own import department.

Why do they need you?

Consider

What now?Now what or what now? …

Your outlook is a matter of your positive attitude and willingness to help.

Confidence is the #1 factor ◦ in determining what, from who and where

retailers buy...

Quality is #2,

Service is #3

Selection is #4

and Price is #5

Important insight #3

How can you?...

Help them make money

Save them time

Make them feel safe

Make them feel special

Stepping Stones

The approach to IND’s and Banners is different than approach to chain...

Chain retailers like to act like small retailers

IND and Banner retailers look for products not in chains

Stepping Stones

Just because you are new, doesn’t mean you are not worth the chance.

Retailers need new mix to create, engage and keep customers.

Increase impulse sales and profit.

Stepping Stones

Decide first if you want to approach IND’s, banner or chain retailers.

Then determine your exact ideal retail customer and method of distribution.

What Now?

Start a sales & marketing plan as a blueprint.

Understand your target market, ideal customer and consumer buying motivators. ◦Retailer (your customer) and end

consumers

Who, what, where, how and why?retailSOS.ca | Gerry Spitzner 67

What Now?

Define your unique value proposition and keep it current.

Focus on benefits not just features.◦Value is the bundle of perceived benefits

offered at a given price.

◦Consider the applied benefits of the benefit.

◦Your UVP should include what you bring to the retailers table.

What Now?

Retailers are looking for new products to differentiate their stores...

◦They don’t have time to find them;

◦They need you to help them find the products and then help them “move” the inventory...

This is your opportunity!

The Opportunity

Your evaluation is appreciated...

Want a copy of this presentation with my speakers notes?

E-mail me; gerry@retailSOS.ca

Thanks!

Follow Twitter: @passion4retail Connect LinkedIn: Gerry Spitzner Web: retailSOS.ca Blog: gerryspitzner.com Email:gerry@retailsos.ca

Online Biz Card: gerryspitzner.tel Online Biz Card: retailSOS.tel

Find me

Gerry Spitzner is an optimist with a natural "kid-like“ curiosity for improving life and business results. He

believes in a bright future and our ability to build it together.

Drawing on 35+ years experience in multi-site retail retail operations, store ownership and the wholesale

supply-chain; Gerry brings the leadership, knowledge and market awareness of business development to retail

owners helping them achieve growth objectives. He teaches and inspires them to achieve results by aligning

their vision with marketing strategy and operational execution.

Fascinated with a lifelong curiosity for why customers buy and a passion for retail; Gerry guides leaders and

organizations to create, engage and keep great customers by delivering the promise of an extraordinary

customer experience. He has devoted his life to sharing his thinking with other retail leaders to manage market

analysis and build business plans that increase profitability and create competitive advantage with systems to

implement.

His company is retailSOS.ca, a Vancouver-based business management consultancy with a suite of

outsourced business services to support retail owners starting, buying or strategically realigning their business.

With a clear understanding of the business of retailing he uses a solution oriented focus with ideas and

alternatives that clients can use to address the changing marketplace issues they face right now. Gerry

understands who they are, what they need, and where to find it, helping them market and strategically realign

their services to integrate the business activities for optimal growth outcomes through customer experience.

For mfr agents info: http://www.cylex.ca/vancouver/manufacturers%20agents%20representatives.html

For list of mfr agents; Google key words; *manufacturers agents vancouver bc*; or *{food brokers} vancouver bc*

For wholesalers; use Google key words; *wholesale (your product category) vancouver bc*

Resource Links

WalMart Vendor agreement: http://www.walmartstores.com/Suppliers/248.aspx

Canadian Tire vendor agreement: http://corp.canadiantire.ca/EN/JoinOurTeam/Suppliers/Pages/Su

pplierRequirements.aspx

Target vendor agreement: http://img1.targetimg1.com/wcsstore/marketing/ca/company/i

mages/canada/pdf/Vendor_Online_Agreement.pdf

Home Depot vendor agreement: https://homedepotlink.homedepot.com/en-us/Related%20Docu

ments/Canada%20Supplier%20Terms%20and%20Conditions02-04.pdf

Resource Links

For QR codes: www.qrstuff.com For bar code info; www.gs1ca.org

Retail associations:

Retail Council of Canada: www.retailcouncil.org

NRF - National Retail Federation; Global retail http://www.nrf.com/

Resource Links

Sales & Marketing◦http://www.raintoday.com

Sales help and power questions◦http://www.gitomer.com/salesHelp/Sales-Hel

p.html Sales and personal development

◦http://www.briantracy.com Sales strategy and value propositions

◦http://www.jillkonrath.com/

Learning Links

Trends: www.trendhunter.com Trends: www.springwise.com Trends: www.trendwatching.com Pricing and margin definition: http://en.wikipedia.org/wiki/Gross_margin

Retail, sales & marketing and small business: www.retailwire.com

Learning Links

Little Red Book of Selling; by Jeffrey Gitomer The Sales Bible; by Jeffrey Gitomer

◦ www.gitomer.com Be Different or Be Dead; by Roy Osing

◦ www.bedifferentorbedead.com Unmarketing: by Scott Stratten

◦ www.unmarketing.com Enchantment: by Guy Kawasaki

◦ www.guykawasaki.com/enchantment

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