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More retail Jungle fever...Retailer’s vision …(part4)

Written by: Anthony Testa

Article Overview: What the retailer will be looking for when you present a new product.

More retail Jungle fever...Retailer’s vision …(part4)

Here is some information we need to know about retailers. Be prepared to have everything covered, before you make your pitch…

Retailer Mark-up

Many retailers want 50% mark-up. Some mark-up their products anywhere form 30% to 50%, this is based on quantities, suggested retail price and cost, Risk + value to business. Electronics are less. You need to factor this into you final costs and your wholesale price to your retailers.

Prototypes

Retailers do not want to see work in progress/concepts or drawings with detailed explanations involving extensive imagination applied concepts. They do want to see working product with packaging developed, clear and defined to the final size. This will enable them to determine product placement on their plan-o-grams. They also want to know how fast you can deliver the product. You need to be ready for production or already have produced.

Trademarked and copyrighted

Retailers prefer to deal with products that are trademarked, copyrighted, or patented. This shows real commitment and belief in the product on the part of the supplier, as well eliminates problems with them carrying a product that may have some liability attached to it. Retailers don’t want someone walking in the store and claiming that this was their idea 6 months ago!

Plan-o-Grams

Retailers review portions of their business on pre-determined schedules. They begin in mid-summer with their suppliers, August and September, and then cut a PO with stock in Stores in February. Retailers use Plan-o-Grams to determine product placement, shelf space or peg area. These Plan-o-Grams are extensive and involve their suppliers for each product on that particular Plan-o-Gram, and are planned six months in advance.

They are detailed to how many per peg or shelf, and what product is on what shelf. Detailed sketches are produced to effectively make the most of the space used. The key here is to be ready 6 months in advance; you have to be aware of their buying cycles. Always talk to your intended retailer.

Quantities

Quantities will be determined once a retailer sees your New Opportunity presentation. In estimating what the potential quantities could be, you need to explore how big the potential market is. Potential market will be a reflection of the existing market of X product buyers. This is research information that you need to have prepare.

Questions will be asked about the market potential.

Expect to have succinct answers. If they get the feeling that you don’t know your market well they will not feel positive about carrying the product. The better you know your market the more confidence instilled in the retailer. You need to have market knowledge and drop that knowledge in front of the target retailer.


…Be prepared to answer the following questions


• Retail and other competitors: USA or Canada; has this product already been on the market?
How well has it done?

• Market Knowledge: Units annually, sales. What are your forecast figures? Who is your
market? How big is your market? Is this a mass market appeal item or is it a niche market
item? Market size will influence wholesale cost. (what the they are willing to pay for it )

• Risk + value to business: What is the risk and value to their business? Here we are looking
at costs vs. profits. Is your market sufficiently large to sustain your product?

• Features and benefits: What are your products features and benefits? This needs to be
presented to them clear and focused. What does your product have that the competitors
don’t? Cost, packaging, advertising, unique feature, what’s the product differentiation.

• Price point: Cost and suggested retail price. You need to have established your
manufacturing price.

• Manufacturing: Time lines 8 to 16 weeks to production. Has your product already seen the
market place in very low quantities? What was the response, are you now ready for a larger
distribution network.


• Master pack/inner pack: what are master packs and inner packs?

When retailers purchase goods from suppliers they arrive to the store in master packs on skids. With inner packs which contain the actual product. This facilitates selling and makes inventory easy to manage.

Example; you’re selling your product in inner packs of 10 (which means that there are 10 actual products inside a box) Then 5 of these boxes are packaged inside a larger box which is now your master case. So your master contains 5 x 10 or 50 pieces.

So you’ve set up your selling parameters to sell at least a minimum of 5 pieces with each order. (One inner case)
You need to communicate with your retail outlet because master packs will be determined by the retailers that you speak with. Many have restrictions on size and weight. Another important factor is cost of the units in the master pack for the retailer. You may have to develop one size for the large outlets and another for the smaller ones. Again this depends on which markets you want to attack.


…Some additional things to consider


As a supplier how are you supporting your product?

• Trade Shows: What trade shows have you attended or plan to attend. These can be given to
the retailer as part of the marketing presentation.
• How will you educate consumers about product and where to find it
• Marketing plan: what is your marketing strategy?
• Provide as much information about the target market as possible


Competitor information you need to know …..

Competitor Corp: X product (example)
Local company called competitor X corp., produces similar product this is a $9.99 item located in the camping section with a simple packaging sleeve, sits on a lower shelf and moves extremely well.
A plastic injection molded item this item was introduced in the past through the local stores as a consignment item and has since become a regular store item. Product has been in the store for 19 years.
Quantities: Retailer has in the past sold 50 000 units @$9.99 as a start up quantity, that’s gross profits over $499,000.
X product advertises on the Weather Channel.

More Visions become real!

Related Articles
  The Retail Jungle…where vision become real( part1)
  PoP (Point of Purchase) Visual Merchandising
  Throwing the Elephant
  The Retail Jungle…where visions become real (Part 2)
  Is Your Website Like A Jungle?

Article Tags: august and september, belief, business electronics, detailed explanations, drawings, imagination, mid summer, peg, pitch, product placement, prototypes, quantities, retail price, risk value, shelf space, six months, sketches, wholesale, wholesale price, work in progress



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Depends on the conditions - If for example I give up ownership, but the owners commit to pursuing my vision with my product, then I will certainly considering giving up ownership. Contingent on my being able to buy back ownership in the event of incompetence or if the new owners fail to follow through with my vision.
Re: Fashion - Nana, At you choice you may choose to research the fashion industry a bit more. There is obviously a Business side to it as well as a creative side to it. Find out all the types of roles that exist in the industry. Some that come to mind merchandiser, Window dresser, floor plan organizer (someone needs to determine the layout of a retail store to best sell the goods), fashion consultant (Yorkdale mall has fashion consultants that take you around and tell you what looks great on you - you also get a cut from the sales). This is what I've observed from the business side, you may know more. All these roles I've written about will help you grow as a business person and make the contacts in the industry...possible stepping stones. But further more you'll also notice that you need to develop some business acumen possibly tailored to the fashion industry. When I was at Ryerson I knew I wanted to be an entrepreneur someday too. I knew I needed some basic business courses to get a foundation to build from. I was in a Tech/Business Major (I'm sure Fashion has something similar - Fashion/Business Major) and then started to create my own minor. Here are some of the courses I took: Marketing, Law, Entrepreneurial, Management, consulting.. and a few more . Also, I'm sure that within the Fashion Major there are also courses you have to take where you can use your creative side and create designs. Typically within a Major there are focuses you can choose - ask the program coordinator. Your next step is to do some research. 1. Visit Commercial retail outlets like H&M, Banana Republic, or jacob. Tell the Manager your doing some research for University and would like to know what types of Corporate roles exist aside from the roles on the retail floor (like sales associates). If she asks you to elaborate then you can use some of the roles I mentioned above. 2. With this information in hand you can visit the Ryerson Fashion department and inquire with the Program Coordinator on what focus within the Fashion Degree would help you the most. In my program there were 5 different focuses within the Tech/Business program. Just a quick aside. A good friend of mine too has a dream of fashion. he want to create a niche fashion line tailored to skinny men (I can't mention the style). He's in Business school but not in the Fashion program... He's in International Business but all his Minor courses are tailored to running a successful business ... similar to the ones I mentioned above for myself. I have no doubt in my mind he'll make it 'cos his vision is that strong.


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