The key information you need to manage with Retailers
When it comes to selling with retailers - especially in supermarkets - there’s a temptation to assume that the category manager or buyer is there to support your products to succeed on shelf. Whether that’s giving it advertising space, making sure its in the best place on shelf, that shelves are fully stocked at all times or working out the ‘right’ time to promote.
The reality is the category managers and retailers are constantly working dealing with their current suppliers & products, and new brands or business can struggle to get through to them (especially if its outside a major review period). Some Retailers like Foodstuffs have put in place a new ‘Emerging Supplier Manager’ which should be a good help but there is still a LOT that you are responsible for.
You are responsible for:
KEEPING YOUR PRODUCT INFO UP TO DATE
The product images that retailers use are based on what you provide, so you need to make sure they tick all the boxes in terms of specs (right size and format) as well as all the product descriptions. This is more and more important as shoppers buy online, and your retailer is NOT going to double check spelling, image size, or the sales copy for your products.
Make sure your product images are all updated with places such as GS1 >> this means you’ll be set up for online sales on retailer websites and avoid any confusion with the product not looking different to what a consumer expects.
GS1 have a ‘National Product Catalogue’ that is a single, secure platform to keep all your product information (data) up to date. Load product data once or make changes to existing products – your data is validated for accuracy by GS1 and then shared with all your trading partners.
Although this may be an additional cost to your business, it is worth it for ease of updating all information in one place and shows that you’re serious about investing in the right systems.
DEVELOPING YOUR PROMOTIONAL PROGRAM
Working out your promotional plan for the year means taking the time to map out the full year ideally by week, and making sure that the costs of any promotional activity will be covered by the uplift in sales & profit. You don’t want to commit to a big promotional program only to find out that you can’t afford it and end up in a financial hole.
This doesn’t need to be a complicated system - a simple Excel spreadsheet is fine and used by even the largest FMCG retailers in NZ still !
Simple steps:
1) Highlight any key dates or events that could impact your sales eg Mothers Day, school holidays, long weekends, Easter and Christmas.
2) Think about your shoppers buying behaviour and how often they are likely to purchase. Is it a one-off or major event product like flowers for Valentines Day or a regular shop from the category like milk or bread. A tip - look at how long your product lasts an average consumer and add a week or two for the ‘average’ purchase cycle for YOUR kind of product.
3) Look at the different types of promotional options with the retailer. Do they do regular promotions for a week, or offer longer 4+ week promotions? Can you ‘boost’ promotions during the promotional period and is your product one that could benefit from going on a display outside the regular shelf?
4) Work out the COSTS for promotional plan (there will likely be variable costs and possibly fixed display/ advertising costs) and understand what are the break-even points in terms of price and type of activity. You might choose to do some ‘loss leading’ activity to drive trial but make sure the numbers stack up for you in the medium term as well.
The final step is to share your plan with your retailer and get them on board with what you’re doing and why its important that they support you by running the program instore. You need to be able to demonstrate that it will help THEIR business as much as it will help YOURS too.
ENSURING YOUR PRICING IS UP TO DATE
Pricing is the achilles heel of many business as it can be challenging to set the ‘right’ price at the start for your wholesale list price; and then apply the different discounts (also known as ‘deductions’) to get to the final net price. Work with your accountant to make sure you’ve factored all fixed and variable costs upfront, and then work through a full margin model to make sure your pricing and P&L all stack up.
It is not simple to just ‘increase price’ with large Retailers and you should plan these carefully to understand how much to increase your wholesale list price by, if/ what changes you might make to promotional prices and ultimately what you would like the new retail price (shelf price) to be.
We do a lot of work with pricing, discounts, promotional spend and margin models & can provide tools to help with this. Check out our Services to find out more.
With major retailers & supermarkets there are clear process for informing them of price increases. This can be around 13 weeks to get implemented (once the new pricing is agreed) and there are also ‘blackout’ times when you are NOT able to implement a new price increase. This is generally called ‘moratorium’ during the busy Christmas period from Nov - Jan.
Countdown (Woolworths) Knowledge Hub is a great resource for all training to do with invoices, financial claims etc for dealing with this retailer.
If you need help with communicating a price increase then check out our blog which is a guide to managing a price increase.
REMEMBER - YOU CAN”T SET THE END RETAIL PRICE. That is up to the Retailer in line with the Commerce Commision guidelines. https://comcom.govt.nz/consumers/dealing-with-typical-situations/buying-goods-and-services/pricing
MAKING SURE YOUR PRODUCTS ARE IN STOCK & ON SHELF
Keeping on top of YOUR stock is vital to make sure you can fill all orders when they come in. There is an expectation of ‘delivered in full, on time’ service levels of 95%++ for you to get product to stores. Empty shelves = Lost sales and if you have a pattern of regular short-supply then you may find your products being unexpectedly deleted.
When it comes to stock in the store, even if you have ‘core ranging’ with Foodstuffs or are on the planogram with Countdown, compliance to plan can range from as low as 50% if you don’t keep on top of it and proactively check that orders are flowing through.
For independent stores in particular, it is important to have a call cycle plan with retailers to phone or email (better still - go and visit them) and check that your products are in the right place and well merchandised. This is a great way of talking to staff instore and understanding any questions that shoppers are asking and feedback on your products.
How can your Retailers help you?
Giving you suggestions on when the main selling periods are, and when to avoid
Understanding the shopper trends in their stores. This is a matter of building trust with the retailer and asking them probing questions. There might be patterns like ‘pension week’ that can
Understanding THEIR process. They have support teams and administrators to make sure that new suppliers follow the process and there are online training courses you can do for retailers that have more complicated systems.
Keeping you up to date with any changes in their process or systems. These may be through general ‘all supplier’ email updates so check your junk or spam folders in case you don’t get them.
Sharing with you insights on how shoppers are behaving in their stores - trends, changes and activity that might impact your products or category. This can be helpful especially when you’re starting out and/or if you don’t buy scan data.
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If you’re feeling stuck with setting your price, working up a promotional program or developing a strong retailer sales & marketing plan - then drop us a line. We’ve launched hundreds of products and dealt with all major retailers in NZ; and have a dedicated pricing project
