Tips for selling to Retail Buyers for the first time

Hi! This is a brief and general guide aimed at product inventors and small to medium sized manufacturers that are thinking of presenting new or existing products for the first time to retail store chains. Most of the points made relate to dealing with larger retail groups but are still relevant to some degree in dealing with smaller ones. Obviously, with the current Covid-19 situation the chance to meet in person may be a further challenge to be overcome.

Buyer’s Activities (or "why it’s so hard to get to see them"!)

• Buyers have a pivotal role in the retail business managing thousands of products and as a result are usually time starved.
• Each Buyer probably already has many current vendors to deal with. These companies are also all trying to get to see the same Buyer you are trying to reach and are either established suppliers or like you, looking to supply.
  
• Buyers spend a large amount of time on sales analysis and reporting so do not try and contact them on a Monday morning! In general, you may find them more receptive to taking your call mid or late afternoon. Email is better than nothing but try to speak with them directly.
• Their daily routine also involves competitor pricing analysis, product reviews and pre range/line change clearance/mark down activities.
• They work on new merchandise reviews 6-12 months ahead of in store implementation.
• The development of product promotions is time consuming but an important area of their work.
• Their time is also taken up by current product or store issues relating to their buying area.
• Annual vendor negotiations are major events in a Buyer’s calendar.
• Vendor visits, foreign travel, trade shows, store visits, new store openings etc - all keep them out of the office.
• Internal meetings (e.g. Supply, Merchandising, Marketing, Quality Assurance etc) add to their lack of availability to see you or take your calls.

Your preparation prior to getting an appointment

• Ensure you have good research information regarding your market sector, the market opportunity, your product uniqueness, market positioning and how it relates to your competitors’ products.
• Have top line information regarding your company’s manufacturing/supply capabilities and its financial ability to supply the retailer if your products are a success. It’s likely that if the Buyer decides to proceed, there will be a product trial before rolling out to more stores.
• They will want to know that you have supply capacity and are well funded to support the increase in business. Will you be able to provide them with company financials?
• Include relevant sales to date information. The Buyer will usually want to see evidence that a product has some proven sales record to minimize their risk. Remember you are competing primarily on the basis of how profitable your item will be in the space it takes up in store against existing or other new products he sees. If it’s a brand new item then maybe wait until you can show sales success from other activities/retailers before approaching the larger big box stores.
• Create a short and concise product video that can be easily accessed by the Buyer (consider when you want to supply the link before, during or after visit).
• If you intend to patent your product, make sure this is well under way prior to approaching any Buyers.
• Contrary to what might seem a good idea, if you are an Inventor do not attempt to see a Buyer for their reaction to your idea. Its unlikely they will want to see you at this stage of your product development. If you have a great item you also run the risk of your idea/invention getting to an existing vendor and they may beat you to market. If you do end up speaking with a Buyer ensure you have them sign a non disclosure agreement (NDA) before you show them the concept.
• If you can, obtain the Retailer Vendor manual. Sometimes this can be downloaded online from their website under supplier or vendor portals or by calling the retailer directly to get one. This usually contains everything you will need to know about how to do business with that retailer including electronic ordering and logistics systems. Be familiar at least with the "main rules of engagement" regarding their terms and conditions, bar codes (retail and shipping bar codes), packaging etc. before your initial meeting.
• Have samples available for your meeting. If your product(s) is too big to carry into the buying office, consider finding a local hotel near the Buyer’s office to set up a product presentation including any relevant displays and meet there instead. Even if you have smaller items, if you can present to a Buyer away from his/her office you increase the chance of having fewer interruptions and them spending greater time discussing the opportunity you are presenting.
• Ensure you have had your products tested and approved to any relevant safety standards or other compliance requirements. If you are exporting ensure this is also the case for the countries you are selling to as the requirements can be quite different.
• You may not get a second chance to present so make sure you have all the components in place to answer questions and be brief but impactful (rehearse!).
• Create a press release and have this circulated to relevant industry media. This also increases the chances of a Buyer finding you. There are many PR business networks that can circulate your press release to relevant magazines, online and TV programming. All media is hungry for content!

Your Product

• Is it unique enough? Can they get a similar item by briefing an existing vendor (as this may be an easier route for them)?
• If it’s a "me too" item, then will the savings be sufficient for them to switch?
• Have you a quality advantage and if so why would they switch?
• Is it a "one off" item that will get lost in the visual noise of the store? 
• Buyers typically will want to see more than one SKU (stock keeping unit) from a new vendor to make listing the supplier worthwhile. Are there other sizes, colors, customer opportunities (male/female product versions, indoor/outdoor, large/small, etc.) you can offer?
• Try to develop your "own" category and stay ahead of any potential competitors so you are seen as pro active and not reactive by the Buyer.
• Large retailers are increasingly becoming realtors of shelf space and usually the big brands are best placed to "manage" footage for them in terms of product assortment and maximization of sales per linear foot. This means it’s relatively hard for the smaller vendor to find a slot. If you only have one or two SKU’s consider whether or not you may be better off initially having an existing supplier to that retailer incorporate your item into their product line? Consider licensing your product to another manufacturer to run the product within their branding for that retailer and others?
• Apart from presenting a product for regular shelf merchandising, also present it in a promotional format e.g. cut case, pallet stack, multiple buy, clip strip around the store, cross purchase promotion etc. Just like you, the Buyer will be looking to drive sales so presenting them with a widget without considering methods to create volume business is underselling your product and reducing your chance of a successful outcome from your initial presentation. If relevant, do you have a trade/contractor strategy and product to suit their requirements?
• Study how your retailer merchandises similar product to yours and then create a suggested "planogram (i.e. shelf layout)" for your products based on various footages (more than one if the retailer has large and small stores) and use these as part of your initial presentation. It shows you have done your homework.
• Set up actual store product layouts (maybe in your warehouse) based on your "planograms" and photograph these for inclusion in your presentation. Do this too for any promotional proposals you might have (e.g. cut case, pallet stacks, POP/POS displays, multi-packs etc.).

Packaging

• Do you need retail packaging? If you are selling to online retailers you might not need retail packaging at all.
• Retail shelf/display packaging has to convey the product’s message to consumers in seconds – it is your silent salesman!
• If you can, include a QR (Quick Response) bar code so Smartphone users can be directed to your web site and see the product video immediately!
• Research the impact of your retail packaging in terms of how well it conveys the purpose and benefit of the product. You don’t necessarily need expensive focus groups to do this. The best way to test this is by presenting it to people who have never seen the product(s) and assess how easy it is for them to understand the product attributes from looking at the retail pack. Make sure the customer facing part of the packaging "tells all" simply.
• In the case of small items then think of a unique way for them to stand out but bear in mind bricks and mortar retailers tend to want to maximize their product density and so unnecessarily over-sized packaging may be an issue.
• Design packaging so the customer can see the product clearly to minimize the chance of a package being opened by the consumer. Failure to do this may result is the opened item reappearing again at your business as a retailer return!
• One of the best ways to get inspiration for impactful and generally good packaging design is to carry out store audits in a number of different stores not just in the market in which you operate. Look for products that stand out and convey product benefits. Also note packaging structure, fonts, color schemes, layout and graphic style. This audit is also very useful for assessing product promotional techniques that you might be able to adopt. It will also give you examples of poor packaging and pointers as to what not to do.
• Pay attention to any retailer requirements regarding security tagging for high value items. You may well have to conform to their required system specification and install these devices yourselves. The systems used may differ across your retail customers.
• Make sure that any installation instructions are simple to understand with clear diagrams.
• Try and have some indication on the packaging for the customer to get a basic understanding of use/assembly so they do not have to break into the packaging to find out.
• Have all packaging copy and any enclosed instructions thoroughly proof read. Any significant mistake on packaging may mean an expensive stock uplift and repack.
• Know if multiple languages are needed, but take care not to compress too much information on the customer facing part of the pack. Where possible, explore the use of simple graphics instead of multi lingual text).
• If your product conforms or is certified to a required standard(s) make sure this is shown on the packaging.
• Most products in the USA and other markets are required to show the country of origin on the packaging. There are a few exceptions but assume this will be required.
• Don't forget to come up with some ideas for promotional multi packs and also POP (point of purchase aka POS point of sale) displays. If appropriate, look at cut case and floor standing promotional displays.
• Clearly, goods have to arrive in a saleable state. If you have a new product you MUST carry out sufficient transit trials to ensure that the outer master cartons and any inner box carton packaging are robust enough for the retail pack and product to survive a long distance journey. In the USA, a product may have to travel 3,000 miles coast to coast and be handled numerous times throughout the supply chain.
• You may be required to stack products in a particular way on pallets so that the retailer can scan incoming goods in a specific way. Their vendor manual will usually outline how they want you to do this. It may be different for each retail chain you deal with! Make sure your warehouse and carriers are fully briefed.
• There may also be a requirement for you to use recycled cartons for master and inner boxes. If not, it may be good practice for your company to do this anyway.
• Case sizes may be an issue for the buyer (he may want fewer in a master carton than you intended).
• There are various bar codes that may be required in addition to your product's UPC/EAN/Retailer code. You will need to find out what these are for each retailer.

Pricing

• Do not show a Buyer prices printed on a standard sales volume based pricing matrix or "wholesale less 15%, 20% etc.". The Buyer needs to believe that they are getting a special price.
• Present sales volume, value and gross margin forecasts but do this with care. Base it on "suggested" competitive retail prices and reasonable store roll out projections – but of course make it look attractive financially for them. Don’t "tell" them what they will be selling your products for, as they will decide on this anyway.
• If you sell to consumers directly on line, NEVER undercut the prices that your retail partners are likely to be selling your products for in their stores and through their online presence.
• The aim of the large retailers is usually to gain market share. It is likely that in return for giving you volume business they will not only want the lowest cost price but they will also drop their retail prices to undercut the smaller retail players. When you calculate your price architecture make sure that if you are dealing with distributors/wholesalers that you leave enough oxygen for your distributors to sell your products to smaller retail accounts and stay competitive.
• When you get underway with a new retail account you can expect as part of your agreed terms (reviewed at least annually) to be contributing to other "pots" they have that may include: Volume Rebates, Media advertising, "Free" new store opening stock, Store Flyer advertising, in-store training, cash discount for different payment settlement periods etc. Build these into your product costings and margin expectations for various volume levels. Try to find out from other non competing suppliers dealing with the same retailer what percentages you might be expected to contribute.
• There may be other charge backs and you will need to fully understand their policy for customer returns up front.

Social Responsibility/Environmental considerations

• The last thing a retailer wants is to be exposed on network TV or in the media as a company buying and selling products that harm the environment, customer or have been made using child or "sweat shop" labor (if your manufacturing is off shore or even on shore). Larger retailers can and often do "audit" production and warehouse facilities to ensure that the products are made in satisfactory labor and environmental conditions.
• Is your retail packaging recyclable?
• Is your transit packaging made from recycled materials?
• Does your product have any recycling benefits at the end of its life cycle?
• How’s your business's "carbon footprint"? This might not be crucial at the outset but may become something they might need from you later.
• Be sure that your factory (here or abroad) is "clean" on these issues. If you are using wood as a component, ensure that it has come from recognized sustainable and managed forests (especially hard woods). Retailers are increasingly aware that their customers are becoming more sensitive to these issues and will probably expect you to be compliant.

Quality Assurance (Control) department – the retailer’s own “Product Police”!

• Most retailers have some form of quality assurance or quality control department that monitors products coming into their business. Before you start supplying the company their QA department will take product samples and check that they meet any laws or regulations and are basically safe for their customers to buy.
• Make sure you send them thoroughly inspected samples! They may also require you and your factory to keep what is often known as "sealed buying samples". These are samples that have been approved and signed by QA, the Buyer and other interested parties in the retail organization. These samples are the "benchmark" quality standards that you will be expected to meet for all future production. It's likely that these will also be accompanied by an agreed and signed off product specification sheet which includes all aspects of the product they are buying. If a batch of product arrives in their system that fails to meet the agreed "sealed buying samples" and/or specifications then they can request an uplift of this inventory. Note: there may also be penalty clauses if sales and profit are lost in this process.
• It’s a good idea to mark "man to man" and have the person responsible for QA in your company work closely with the retailer’s QA department. (This goes for any specialized departments they may have. e.g. accounts, environment, inventory planning, etc.).
• If you are unfortunate to have a product recall a good working relationship with QA as well as with the Buyer will help you manage the situation and may prevent a more costly outcome financially and politically at a higher level in their Corporation.

Other considerations

• If you are to replace an existing vendor’s product with your own, you maybe required to contribute to mark down pricing and then be expected to uplift the residual inventory and not to sell it in a competitive market channel.
• Space management is a retail science. To just change 1 item in all stores is a relatively complex process, let alone a whole product line. Retail chains have a team dedicated to optimizing store layouts and product space efficiencies and you will probably be dealing with them early on.
• Buyers use "like for like" week on week, month on month and year on year store sales to gauge how well a line is performing. Subject to any seasonality, if your product is suffering a downturn in sales you will need to act fast with pricing action assuming your product demand is sensitive to price movement or introduce another appropriate promotional activity.
• If you want to grow your business long term with any retailer new product development is VITAL. You must have an ongoing program of NPD activities that syncs with the retailer’s product review calendar. You will be presenting products 6 months to 12 months away from introduction.
• You will need to have an ongoing program of sales promotions which co-ordinates with the retailer’s promotional calendar. There may be seasonal or gift opportunities around certain times of the year, links to national or sporting events etc.
• Be sure you have a good idea of your shipping method and shipping times from order.
• Make sure you are able to discuss returns and also how you will handle customer service.

Year 1 sales will not be the basis for year 2 sales forecast!

• Many vendors make the mistake of basing their year 2 sales forecast on year 1 sales. If you have an order to fill say 300 stores with your product(s) your initial product input will be to fill the shelves(shelf stock). After this you will have regular turnover sales. If your required depth of stock remains unchanged by the retailer in year 2, then your sales into the retailer in year 2 will not include the value of initial stock fill experienced in year 1. Be careful of any rebate implications in year 1 and the Buyer’s vendor turnover expectation for year 2 (they sometimes forget about the distortion caused by an initial stock input!). Also bear this in mind if you are presenting sales forecasts to venture capital investors and also when you commit forward orders of raw materials, components or packaging to your suppliers.
• Big retail groups and even smaller ones tend to be slow moving and have to plan activities 6 months to 12 months in advance. You may come in with a new product just after they have signed off all the line changes for the next year in that product area. Try to find out when your product area is next up for review and get your item(s) submitted early for consideration. Obviously, you will have to maintain visibility of your products with the Buyer you are dealing with.
• If you miss the review deadline for your product area try to have them take your product as a promotional item or into trial stores, have it listed in their online store or special order catalog.
• Most Buyers will have an assistant. Ensure that you keep them in the loop for any communications. They can be and should be your “best friend” as you will probably be speaking with them more than the Buyer.
• One clause in their vendor buying agreement is likely to be compensation for late deliveries or out of stocks. Don't forget seasonal uplifts in demand. Your inventory planning person/department needs to be in close contact with the retailer’s own supply department.

The first appointment

• As mentioned earlier, retailers nowadays tend to publish their "rules of engagement" on-line and often this will include how to submit products. This may be as simple as sending in a sample and presentation material (not the best way to present but better than not having your product seen!). This is why retail packaging presentation is so important. It has to gain the attention of the Buyer who will be seeing the item on the first occasion as a new consumer would.
• Some retailers have "buying days". This is a chance for vendors to setup shop and the Buyers come and visit. This may be at their location or separately depending on the organization.
• If you write to a Buyer or meet a Buyer at a trade show and they invite you to visit, remember you may only be given a 5 or 10 minute slot for an initial presentation (ask ahead and tailor your presentation accordingly).
• You have to be brief but get as much over about your company and product in this initial meeting! Rehearse and refine this first presentation. Focus on presenting the commercial opportunity your product offers for incremental sales and margin for their business. Present sales forecasts and margin earnings for them based on various store distribution scenarios. A follow up meeting may be longer and they are likely to require more details and additional samples for evaluation at that point.
• As mentioned above maybe use a local hotel close to the Buyer’s office and book a meeting room to set up your presentation. They may find it more convenient to visit (and a reason to get out of the office for a short while!).
• Don’t send unsolicited samples. It's not professional and even if they do reach a Buyer they may just send them straight back.
• If you have to present a prototype do not leave it with them as it will probably be the last time you will see it. An unscrupulous Buyer may forward it to a favored vendor for them to respond with a similar product. Remember, Buyers usually are trying to consolidate the number of vendors they deal with to leverage buying gains and the number of people they have to deal with and not add others.
• Be persistent in trying to get to see a Buyer.

There are many hurdles to overcome when supplying retailers, but these tips should help steer you in the right direction.

Good luck!