Bentonville here you come!
Through a special arrangement, what follows is an excerpt of an article from the blog of Hamacher Resource Group.
The appointment has been made. Your bags are packed. Prototype products are pristinely mounted on their display board. A professionally-produced video of the company history and founders is cued up on the laptop. And a twenty-slide PowerPoint containing testimonials from family and friends who have tested and used the product for the past year has been prepared.
What can possibly go wrong? Everything!
Perhaps the teams in Bentonville, Deerfield, Woonsocket, Minneapolis, Cincinnati, Carrolton or any other category buying office will be cordial enough to listen to your spiel, but chances are they won’t be interested in bringing your product onto their shelves. Realize this may literally be your only opportunity to secure product acceptance during this review cycle, which generally occurs only once a year.
Realistically, the teams will be quite impatient and offer you little support or encouragement. With the hundreds of product manufacturers just like you vying for a once-in-a-lifetime opportunity, you can bet that some other company is better organized, has their pitch better prepared, and has more effectively done their homework.
How can you be that company? Although there are no guarantees, here are five steps to consider when planning for the moment of truth with the buyer.
- Tell them about the opportunity in the market that you are satisfying. Be specific, fact-based, and confident.
- Demonstrate the unique features and benefits of your product. Compare it to what is currently on the shelf and why more shoppers will favor your innovation.
- Show them specifically where it could be placed on the shelf and how to drive incremental sales and generate additional profit for the category.
- Reveal how you will drive traffic to their retail stores and create demand.
- Share information about your manufacturing capacity and how you can keep up with their order rate.
Preparing well, managing expectations, and constructively collaborating with your new retail partner is a much more effective path to success than setting unrealistic goals combined with inadequate planning. Best of luck.
Discussion Questions
What advice would you have for suppliers pitching new products to major chains? What would you add to the tips offered in the article?
Poll
BrainTrust
Dick Seesel
Principal, Retailing In Focus LLC
There is a fine balance to delivering the right information in the right format. With so much data available today specifics and detailed insights are required—but information must be highlighted and not buried under excess, unnecessary data. I appreciate the tips offered here and they are all very important. I would only add that you should view your presentation with a critical eye: Is it clear? Concise? Are your insights and claims supported by data but not overwhelmed by it?
From my long-ago experience at Kohl’s, I found that some vendors pitching to be added to the “matrix” (which can be a tough task in many stores) failed to take the most elemental step: They hadn’t shopped any stores and were therefore unprepared to discuss how their brand or product might fill a meaningful void in the assortment. This step seems obvious, but I saw it happen over and over again. (And I’m often talking about New York-based vendors who apparently didn’t bother with the 15-minute drive from Midtown to The Meadowlands.)
I think the five steps outlined in the article are vital—and should precede any discussion about cost pricing, even with a tough negotiator like Walmart—but there is no substitute for a store visit first, to understand how your product will resonate with customers and meet their needs.
Good list. I’d add one more point: Be aware of margins and volume. Too few entrepreneurs have a solid grasp of the mathematical formulas that surround margins, from the cost of goods to brokers and distributors to the profit that a retailer wants to make from each sale. Also be prepared to offer reasonable volume projections and know how your estimated volume compares with current sales in the category.
Oh, and one more thing …
This is Bentonville, right? So you had better be able to talk about THEIR metrics and scorecard. They will be very concerned about “realized” margin (better understand and be able to talk hard and soft margin support).
And before you spend too much time on how you have capacity to meet their orders, don’t forget to illustrate how you will turn your inventory for them in ways that will produce maximum GMROII.
And there are several more things, but time and space won’t permit the list. Suffice it to say that Walmart is interested in really hot products, but they are masters in details of supply chain and logistics that make products profitable in their stores (as well as on their growing website)
When in Rome or Bentonville, you need to be able to speak their language, and Walmart’s is filled with numbers and details.
Don’t tell them how good you make your products. Instead let them know how good your products will make them. Solve the retailer’s problem(s) and that will solve your problem. Focus on your customer’s customers needs/wants. Provide a meaningful differential advantage.
Talk profits, sales, velocity and promotions. The retailer wants to know what you will do when things head south, and what it will mean to their numbers. In retail, no risk is a full reward.
I like the fact-based approach engendered in a lot of these suggestions. A few simple charts that show that you’ve tested the product and can tell the retailer what they can expect when they take it on, while not guaranteeing acceptance, certainly makes their evaluation easier. We are often able to summarize the results of our virtual tests in two or three charts for a retailer presentation.
Good list. On that one extra point, Dick Seesel nailed it for me. Know the customer, study the stores and understand their needs and challenges. Bring concise paper backup materials in case PowerPoint, etc., fails. Practice. Bring your sense of humor.
Dave’s points are right on the money. I will add to it that it’s a huge mistake for entrepreneurs to go to market alone, without a professional retail sales specialist who knows the retailer’s business models, greater overall objectives, infrastructure, systems, key players and politics. Retailers really do not have the time to train you, coach you or mentor you on their own, and most prefer to work with knowledgeable, experienced retail-savvy professionals. It’s your job to know your product, inside and out, but a retail sales professional knows the retailer inside and out and has the right frame of reference to put all the pieces of the puzzle together. If you go at it alone you are almost sure to be over-matched by other wannabe suppliers competing for the same four inches of space on the shelves. For more free tips see consultdavidb.com.
Might be beneficial to craft and communicate an exit strategy in the event the items underperform (markdowns) or worse, undergo recall, excessive damage or spoilage issues. Do you have the infrastructure or at least access to it for returns from 3400-plus stores?
From my vantage point the miss I continually see is that brands come in focused through one lens—how do I sell my widget—and in trying to do that explain only why its good for the brand.
If you want to win and leave a mark tell a story, and in that story ensure that you have captured the three most important things: Why it is good for the retailer, why it is good for the brand and why it is good for the shopper, and then offer a clear plan on how to execute those points. BOOM! Three simple elements. Be succinct, get in and get out. That is partnership.
As some of my colleagues have already said there are other important facts to be considered. Most important of the other factors is the “What’s in it for me?” piece. What will your product do that others won’t to make our business stronger than the competition? Next is the margins. What will they be, and what are you going to do to increase them? Plus, and a big plus, is knowing their stores by having shopped them, and the ability to speak their language. All of these points have been noted. So I am not adding much more than my two cents to the conversation.
Don’t play the slick video at Walmart, or be ready for the “save the money you wasted on that video and give us a lower price” conversation. No need for slick handouts, no gifts, etc… Walmart does not like or appreciate sizzle, just bring the steak!
As has already been suggested, solve Walmart’s problems, not yours. Bring data that show you fill a gap in their assortment, proof that demand exists, where and how your product should be merchandised. Prove you can meet Walmart’s volume needs. How are you going to lower Walmart’s costs over time?
By the way, make sure that the initial economics work for you, because they are never going to get better for you.
In my experience as a buyer, the thing I disliked the most was that more times than not, vendors did not shop or tour the stores before they came and presented their product. Do we have the right demographic for the product? Is there a need for it? Did you present it as a package option (future growth of product line), and are you able to to keep up with the supply to have enough in the pipeline? Will this be a direct or distributor relationship? More times than not, a lot of these questions were not answered and they left without a consideration for this year’s planogram refresh.
The tips are all great, however, I’d focus most on connecting with the audience. The style of the pitch, maybe even NOT using PowerPoint?! Extract and highlight the uniqueness about you, your product and your company, and how all of those facets can help the customer (the retailer).
It is always refreshing to see a topic such as this generate such terrific advice, feedback, and reality checks. And, to ensure there wasn’t a misunderstanding, I never advocated for the slick video or gimmicky gifts … whether Walmart or some other major chain or wholesaler.
Spend the four hours sharpening your axe before you begin trying to chop down the tree. And remember, the presentation is about the retailer, not your product!
The challenge is that buyers no longer have the clout they once did (in most retail organizations) and retailers can make and market any number of products on their own. These days, relying on old school product pitches that are targeted to buyers is a one-way ticket to commodity hell.
Retailers are no longer just places that sell stuff, they are platforms that include solutions, services, physical, digital, big data, content, and more, and there are a slew of new decision-makers and influencers (many of whom are being hired from outside of traditional retail), who hold sway over these areas. I call them the “aliens at the table.” Smart suppliers will up their game and become more meaningful to specific retailers by positioning platform to platform and address the specific challenges and opportunities that these new stakeholders care about.
In my one-day workshops, I train companies on how to perfect platform positioning. I’ve found that most companies are undervaluing their assets and clogging their pipelines by throwing the kitchen sink at every pitch. Simply reframing what these companies already do so well, and implementing a repeatable and scalable process for telling the story, completely changes the game.
As rightly said, buyers are highly impatient and its difficult to make your mark with many vendors pitching. My suggestion would be to prepare a very potent elevator pitch which will get their attention in the first 2 – 3 minutes of the conversation. Do your homework on their pain points in the category and how your line will address. Know your customer’s customer.
Try new business models to excite them.
My greatest advice is, don’t sell your soul to anyone just to get in the door. There are many different ways to go to market with your new product idea, and you need to think about how you can prepare for the onslaught of a big-box store volume and pricing demands, before you commit to throwing all your eggs in one basket.
The other thing is simple. Can I actually make a profit selling my product at such a low price, which is what they will demand, and if it doesn’t move, am I prepared to credit back all the money I owe them when it goes to the markdown bins? Most startups cannot afford this, and unless the product is a success, you need to be prepared to take a huge hit off the bottom line.
1. Emphasize consumer trends and how the product serves the forward-looking trend in customer demand. This should align with their changing category strategies.
2. Communicate marketing support and timing, in order to place urgency upon the decision. First-to-market emphasis can be a winning proposal also.
3. Touch on/discuss sustainability elements, logistics efficiencies, and if possible, U.S. manufacturing.
4. Lastly, COGS/retail relationship, pricing vs. market, and CTM status within the category.