sbbc retail distribution-3nov2014

Small Business BCGerry Spitzner | retailSOS.ca

November 3, 2014

Why retailers buy

How to approach retailers

What retail buyers look for in suppliers

What retail buyers look for in a product

Retail pricing & merchandising

Retail distribution, supply chain & logistics channels

Your sales & marketing plan

retailSOS.ca | Gerry Spitzner 2

POS = point of sale

POP = point of purchase

WMS = warehouse mgmt system

SKU = stock keeping unit

MOM = minimum order multiple

CPG = consumer package good

IND = independent retailer

UPC = universal product code

QR = quick response code


PO = purchase order

GMROI = Gross Margin Return On Investment

CRM = Customer Relationship Management

EDI = Electronic Data Interchange

EFT = Electronic Funds Transfer

EDLP = Everyday Low Pricing

OTB = Open-to-Buy

POG = Plan-o-gram

RDA = Retail Display Allowance


A starting point…


What is the real purpose of a business?

◦ Profit is merely a result of the business. Not a purpose.

Creating, engaging and keeping customers is the

key to repeat business and long term business

survival for your business & the retailers business.

◦ Why does your business exist?

◦ What purpose does it serve?

◦ How will you create, engage and keep your customer?


Who is your customer… really?

What’s the difference between your customers and your consumers ?

◦ Most retailers think YOUR end consumer is their customer, and they themselves; the retailer, is your customer.

◦ If you frame your sales proposition this way, you'll always be on the safe side with all retailers.

◦ Retailers don't appreciate suppliers who make assumptions about THEIR customers.


Have you ever had buyers remorse?

◦ Every retail buyer has had this feeling too.

◦ Most buyers/retailers are sceptical and cautious about

new products; especially when doing business with people

they don’t know.

◦ Your value proposition and the professional relationship

you build with prospects will make all the difference to

help them buy.


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?

The simple truth about selling – and the secret to selling more - is that your customers are better at the “closing” the sale than you are.

◦ If you’re able to lead them to it.

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


“Price is what you pay; value is what you get”- Warren Buffet

What exactly is value in the 21st century?

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

◦ Sell the ‘applied’ benefits of the benefit you and your productoffer. Develop a unique value proposition.

◦ Prospective customers should be able to visualize exactly whatvalue you and your product could bring their organization.

◦ Value is not determined by the people who set the price, it isdetermined by those who choose to pay the price.

◦ In order to engage your prospect or your customer, there must besome form of interest or perceived value on their part.


Simply put; a retailer is looking to

drive business TO and THROUGH

their store.


Want products that turn over at a price that will

make them money.

Want to know the repeat purchase potential, and can

it be replenished quickly and reliably.

The repeat purchase and sale is the profitability of

the sku for the retailer.

It is one of the most important applied benefits of

your product or service.


How can I keep my customers in the store longer?

◦ Increases the average sale per customer

◦ It’s a proven fact that the longer a customer stays in the

store; the more money they will spend.

Look at products through the eyes of consumers to

meet leading trends for impulse sales.

◦ Increased impulse sales means increased average sale

per customer usually with profitable product mix.


Confidence is the #1 factor

◦ in determining what, from who and why retailers buy...

Quality is #2,

Service is #3

Selection is #4

and Price is #5

◦ Give value first, don’t add it later.


Stop ‘selling’ and help your

customers buy.

Ask; don’t tell. “Telling ain’t selling”


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

◦ How they benefit, how they profit, and how they produce will provide value.

◦ Your customer (buyer) wants to know what’s in this for them and their customer?

◦ Consider the Life Time Value of a customer and think customers for life, rather than as a single transaction.

◦ Get great at sales planning to engage and build a relationship to position yourself as a trusted advisor.


Approach to IND’s is different than approach to chain.

◦ Chain retailers like to act like small retailers

◦ IND retailers look for products not in chains

◦ Dominant relationship at chain retail is with brand suppliers.

◦ The dominant relationship at IND is with independent

suppliers and wholesalers.

◦ Chain retailers rarely consider a product that hasn’t been

tested and proven in a local market small retailer.

◦ Chain retailers will often test market or pilot new products in

a handful of stores.


There are four basic ‘currencies’ in all peoples lives

that are motivators, which create needs, wants,

desire and value.

How can you?...

1. Help them make money

2. Save them time

3. Make them feel safe

4. Make them feel special


Do you sometimes wish you could

just read your buyer’s mind?


1. Complexity and information overload brings them to a screeching halt.

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

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

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

5. Not tolerant of stupidity or incompetence in other people.


Focus on their challenges◦ Your prospects only care about their challenges, not your

products or services. They don’t care how awesome you are.

Share outcomes◦ Give examples of similar customers that you’ve worked with in

the past.

Engage in Conversation◦ Plan your questions ahead of time because it’s impossible to

think of good ones on the spot.

Suggest Next Steps◦ Make sure to recommend a logical follow-up to this initial

meeting or conversation.


Keep things simple◦ Show them how you'll make it easy for them. Give them fewer

decisions to make.

Demonstrate strong biz case◦ Help them see how they'll achieve their primary business

objectives by working with you.

Minimize the risk◦ Propose smaller initial contracts or deals.

Prepare, prepare, prepare◦ Think everything through in advance. Leave nothing to chance.


Top line sales and cash flow

Customer traffic

Customer profitability

Staff productivity

Return on investment; ROI

Inventory


Inventory is one of the top two controllable assets in

the business. Constantly scrutinized and measured.

Do we really need that?

◦ Will your product replace sales of what I currently have?

◦ Does your product fit my current market mix?

◦ Do I have the space to merchandise it?

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

◦ What happens if it’s not moving and I’m stuck with it?


Inventory is the retail gamble

◦ Inventory management and moving inventory is the main

focus of all retailers.

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

to turn inventory into cash.

◦ Moving it and repeating it; is cash flow. And cash flow is the

life blood of the business.

Help me move it; and promote it.


“Building relationships” is double talk for nothing will happen in this meeting that will move the sale forward.

Get great at setting great sales meeting goals and great results will follow. Great sales meeting goals…

◦ Are measurable

◦ Move the sale toward closure

◦ Involves both buyer and seller commitment

Positive relationships are the pleasant by-product of conducting a professional, prepared and productive sales call.


In addition to mentally preparing

for the meeting, here's some of the

things a retail buyer may expect to

see at your presentation.


What your business background is

Number of years in business

Your Financial means

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.

Make me feel safe you will survive.


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?

Make me feel special; help me.


You need to know my customers.

I do.

You need to know what it is about my customers that

will make your product sell in my store.

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 will you educate my customers about your

product and get them to try it?

What is your plan to ensure your product will survive

in this competitive environment?

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.

If your product goes on a “run” or a “heater” can you

supply?

Your supply chain to the manufacturer 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.

◦ An objection is nothing more than a request for additional

information. Interpret it as a question.

Understand your customers situation

◦ The buyer is dealing with limited shelf space, open to buy

budgets, limited cash and the ability to test new products.

◦ Make it easy for them to buy.


“Shop” the store ahead of time.

Understand the strategic positioning of the store.

Understand how your product fills a needed void in the assortment or mix (in terms of category, price, or whatever)

rather than duplicating existing category content.

Keep things simple; make your presentation short and snappy.

Don’t show everything you have at once. Too many choices confuses the buyer. Show your best stuff first.


Avoid the temptation to leap to solutions; it is often

the single biggest barrier between you and your

prospective customer.

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


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?

◦ Will my customers look for it?

◦ What does it ultimately help my customers achieve?

Need to know why your product will be wanted by the

retailers customers.

◦ Is there a need or a market? Or both?

◦ A need alone does not mean there is a market; desire does.

◦ Desire is the sweet spot where the market is.


Push or pull product?

Is there a barrier to entry? For me; my competitors?

Is your product future proof?

What is the life cycle of product?

Will this item make my store more appealing?

Will it add to my average sale per customer?

Will the retail price point of this item be in the rangeof what my customers will spend?


What does the product do or how does it work?

◦ Must be easily understood by store staff and consumers.

How will it bring new customers to my store?

◦ Particularly important for smaller retailers especially if

there is nothing else like your product in their marketplace.

How & Who will educate my customers?

◦ What’s your plan to educate my staff, especially if it’s a

more complex product?


A retailer’s shelf space is their commodity.

◦ That’s why they are careful about what inventory they put

on them.

◦ Just because you are new, doesn’t mean you are not worth

the chance.

◦ They need new products that add interest, value and

‘excitement’ to their stores.

◦ Retailers need new mix to create new; engage and keep

customers to increase impulse sales and profit.


Setting the right price for your

products and services requires

balancing merchandising, pricing,

placement, packaging, and

promotion.


Can I sell this in my market; so it will move at the

retail I need; to make money?

The retail pricing approach depends on the product

and the buyer. Sometimes a buyer will use both…

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

price. What can I get for this?

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

price would have to be to move it and if the product price is

a fit to their market.


Know your competition’s pricing.

Do not compromise on your price

◦ Negotiate the price you deserve

Know your taxes; PST/GST/Tariffs

◦ Is your product vulnerable to currency fluctuations?

Wholesaler upcharges

◦ Include in your quoted price to retailers.

Include all your costs

◦ Packaging, shipping and your operational expenses.


Mark up & margin. What’s the difference?

◦ Mark up is % of profit on cost

◦ Margin is % of profit on selling price.

All of these terms often get confused in the

conversation...

◦ Gross profit percent; GP% (markup)

◦ Gross profit dollars; GP$ (markup)

◦ Gross margin percent; GM% (margin)

◦ Gross margin dollars; GM$ (margin)


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


Plan-o-grams & compliance

Package size/dimensions

Photos of your product

UPC code

UPC code that stays on package

Effective packaging


Supply chain channels consist of

some combination of producers or

manufacturers, agents or brokers,

wholesalers or distributors,

transportation, importers, and

retailers.


Three main logistics channels...

◦ Different cost structures to ship to your customer.

Wholesalers

◦ Intermediaries or middlemen who buy products from

manufacturers and resell them to the retailers.

Direct Store Delivery; “DSD”

◦ When a supplier ships directly to the retailer’s door.

Self Distributors; Chain retail

◦ What is your cost to ship to the retailers distribution point?


Department stores

Mass & Big Box

Specialty & Discount

Catalogue & Internet

Grocery & Drug Stores

Convenience stores


Within each retail category; 3 types of store

◦ Chain stores

◦ Banner stores

◦ Independent stores

Who exactly is your ideal retail customer?

◦ Who is your end consumer? Where does he or she buy?

◦ Pick one category and one type store and work it.

◦ Work backwards through the system.


Is the product WMS friendly?

Case and product UPC

Can the box (case) stand up to wear and tear so you

don’t have to deal with concealed damages.

Master case pack; are smaller MOM’s possible?

Insurance

Logistics or ‘transportation’ charges

◦ How are they determined?


Consider 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.

◦ Royalty or a % of sales; factor this into your COG’s

◦ Make sure they really understand your business and have contacts at retailers where you want your product to be.

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


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.


The 4 P’s of marketing

◦ Product, Price, Place and Position

◦ The important core elements of every product or service.

My 7 P formula for marketing success

◦ Include Promotion, Productivity and “Profit-unities”

How will this product generate incremental sales for

the retailer? And repeat.

What will you do to help make that happen?


Endure long receivable cycle; risk not being paid

Provide dating and /or a prompt pay discount

A plan to deal with payment by credit card

Provide a listing allowance

Prepay freight; delivery to door

Clear up damages and returns; have a plan for recall

Provide a line sheet

Sign a vendor agreement


Using a wholesaler or broker that specializes in your

product category

Value in a short term incentive

Becoming the retailer & go online; e-commerce

The use of online business media to promote

Carefully consider consignment

Almost all national chain retailers have their own

import department. Why do they need you?


Now what or what now? …

Your outlook is a matter of your

positive attitude and willingness

to help.


Start a sales & marketing plan as a blueprint.

◦ Understand where your target market is, who your ideal customer is and ideal consumer buying motivators.

◦ Consider what you can do to help retailers minimize risks and maximize profitability.

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

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

◦ Figure out what it will cost you...can you make money?


Define your unique value proposition and keep it

current. Keep crafting and working on it.

◦ Focus on applied benefits not just features.

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

price.

◦ Your UVP should include what you bring to retailers.

◦ Ask yourself: Why should my ideal prospect ( or the group

you intend to serve) buy from me instead of a competitor?

◦ Be better on at least one value than anyone else; your

unique point of distinction.


Retailers are always looking for new products to differentiate add excitement, drive traffic and create new sales in their stores...

◦ They don’t have time to find them;

◦ IND retailers tend to work in the biz rather than on the biz...chain retailers tend to work on the business rather than in the business.

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

This is your opportunity!


I hope I’ve helped you.

Feedback is the breakfast of champions; your

evaluation is appreciated...


Follow Twitter: @passion4retail

Connect LinkedIn: Gerry Spitzner

Web: retailSOS.ca

Blog: gerryspitzner.com

Email: [email protected]

Online Biz Card: gerryspitzner.tel

You Tube Channel: Gerry Spitzner


Gerry Spitzner is an optimist and retail consultant 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 40+ years experience in multi-site retail operations, store ownership and the

wholesale supply-chain; Gerry brings the leadership, knowledge and market awareness of

business development to retail owners and their suppliers, 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 others in retail to manage market analysis and build business plans that

increase profitability through creating a competitive advantage.

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

business services to support retail owners and their suppliers with branding and marketing.

With a clear understanding 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

implement strategy for optimal growth 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 *{your key word i.e.

food brokers} vancouver bc*

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


http://www.cylex.ca/vancouver/manufacturers agents representatives.html

WalMart vendor agreement:

http://www.walmartstores.com/Suppliers/248.aspx

Canadian Tire vendor agreement:

http://corp.canadiantire.ca/EN/JoinOurTeam/Suppliers/Pages/SupplierRequirem

ents.aspx

Target vendor agreement:

http://img1.targetimg1.com/wcsstore/marketing/ca/company/images/canada/p

df/Vendor_Online_Agreement.pdf

Home Depot vendor agreement:

https://homedepotlink.homedepot.com/en-

us/Related%20Documents/Canada%20Supplier%20Terms%20and%20Conditions

02-04.pdf


http://www.walmartstores.com/Suppliers/248.aspx

http://corp.canadiantire.ca/EN/JoinOurTeam/Suppliers/Pages/SupplierRequirements.aspx

http://img1.targetimg1.com/wcsstore/marketing/ca/company/images/canada/pdf/Vendor_Online_Agreement.pdf

https://homedepotlink.homedepot.com/en-us/Related Documents/Canada Supplier Terms and Conditions02-04.pdf

For QR codes: www.qrstuff.com

For bar code info; www.gs1ca.org

Retail Pricing & Trade issues◦ http://www.agf.gov.bc.ca/foodprocessing/documents/retailer/section4.pdf

Retail associations:

◦ Retail Council of Canada: www.retailcouncil.org

◦ NRF - National Retail Federation; Global retail:

◦ http://www.nrf.com/


http://www.qrstuff.com/

http://www.gs1ca.org/

http://www.agf.gov.bc.ca/foodprocessing/documents/retailer/section4.pdf

http://www.retailcouncil.org/

http://www.nrf.com/

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

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

Sales help and power questions

◦ http://andrewsobel.com/

Sales and personal development◦ http://www.briantracy.com

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


http://www.raintoday.com/

http://www.gitomer.com/salesHelp/Sales-Help.html

http://andrewsobel.com/

http://www.briantracy.com/

http://www.jillkonrath.com/

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


http://www.trendhunter.com/

http://www.springwise.com/

http://www.trendwatching.com/

http://en.wikipedia.org/wiki/Gross_margin

http://www.retailwire.com/

Little Red Book of Selling or 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

Any of Gary Vaynerchuk’s books;◦ www.garyvaynerchuk.com/


http://www.gitomer.com/

http://www.bedifferentorbedead.com/

http://www.unmarketing.com/

http://www.guykawasaki.com/enchantment

http://www.garyvaynerchuk.com/

sbbc retail distribution-3nov2014

Retail

retailers business

perceived value

retail buyers

retailers dont

unique value proposition

retail display

sales proposition

prospective customers