Retailers buy products from manufacturers and wholesalers or distributors to sell in their own stores.
Supermarkets are the most commonly recognised retailers of food products but there are other retailers who might be interested in your product, such as gourmet stores, food service suppliers, service stations and specialty shops. Retailers will expect you to guarantee consistent product quality, and assure quick order and delivery timeframes as a matter of course.
The world of retailing has changed dramatically since the emergence of department stores, chain stores and supermarkets when mass production and distribution first emerged. Now, retail is driven by global businesses and brands. Rising standards of living have fuelled demand for consumer products of every kind, and brand loyalty is challenged every day by new directions in popular culture.
More recently, consumers have gained the ability to have a two-way conversation with brands and businesses via social media and consumer trends indicate that for many products, including food, a significant number of consumers are interested in the finer detail of where the ingredients come from, whether the business is Australian-owned and the product Australian-made. These trends offer marketing opportunities as well as challenges to a new food business.
The surge in online retail is challenging the traditional concept of a physical store. In Australia, retail trends are strongly affected by the big players moving towards private label products, putting pressure on small food manufacturers as they compete for shelf space.
Retailers also consider their stock decisions in the context of the calendar (Christmas, Easter, footy season and other times that can be leveraged for special sales and offers) and the season. This cycle is considered in conjunction with merchandising requirements, which include any attributes that will assist in maximising sales, such as the product’s own design, packaging , pricing, point of sale materials and displays, and special campaigns such as discounts.
They favour products that:
- have a large potential market and a wide appeal
- are supported by solid market research
- can be delivered in volume and consistently during the year
- are priced appropriately relative to their own market positioning
- have assured, consistent product quality
- are packaged in a way that is robust and readily displayed
- are shelf-stable
- have a well-defined brand message and promotional strategy
- give them an edge over their competition
The Australian Retailers Association represents retailers in Australia.
Small retailers, such as gourmet shops, will generally undertake their own purchasing, as the range of products they stock is integral to their own positioning. They will tend to seek out new and local products that fit with the gourmet perception of limited and exclusive products.
Smaller retailers operate on minimal resourcing and their systems can be overstretched, meaning they will expect you to chase them for re-stocking. The most effective approach is to make a personal visit to consolidate the relationship, check the shelves and re-stock on the spot. This method is still used today by very large suppliers because it helps strengthen the critical relationship between the brand and the retailer. It also gives you a chance to share information about your product’s benefits and uses, which in turn can be passed on by the retailer to your end consumers. In a sense, really good small retailers become a part of your marketing team, to the benefit of both of you.
Trade expos are a useful place to start looking for potential distributors and stockists. You can often visit these without exhibiting first, to get an idea of who is in the market and to research competitors. When you get to the stage of exhibiting at a trade show, have at your fingertips all the information you have gathered about your consumers and any promotional materials you may have so that potential stockists or distributors can see what you have in mind and decide if it works for them. Having your research done and your plans in place will give new customers confidence in you and your product.
Larger retailers like supermarkets can operate quite differently from smaller ones, with the really big ones expecting you to pitch your product regularly and be ready to respond instantly to any problems or requests they may have. They will also have much more stringent requirements for stock delivery and business terms that will need to be evaluated against your production capacity. Trading terms are negotiated and need to be considered as part of the costing or products.
Small businesses face an uphill battle in accessing chain stores. Buyers prefer known suppliers, with a track record of delivering quality product on time, a national presence, and locally accessible distribution points. Buyers like suppliers with a large range of products, who can quickly fill extra shelf space if their products are popular. Additionally, the global trend is to reduce purchasing costs by reducing supplier numbers.
Larger retailers employ specialist buyers. Buyers have the ultimate say in whether your product will be purchased. They are bombarded with product deals, and it is not easy to capture their attention.
The process of selling to any size retailer is the same in terms of your preparation. It might be more formal for the larger players but in every case, preparation is the key to success in gaining a sale, and after sales service can help keep your product on the shelf.
- Prepare for the interview by reviewing your business and marketing plan. Have a range of samples ready, and be clear about the key target market.
- Be able to identify the key benefits to the consumer and the key differences from the competition.
- Research the retailer, understand their margins and make sure there is a fit between their target market and the target market for your product.
- Be ready to address the key question from the retailer: “What’s in it for me?”
The sales presentation
- Use this information to create a sales presentation and present this in a folder at the interview. It needs to be smartly presented and the information accurate and clearly expressed. Get help from a graphic designer if you need to as this folder will be representing you when you aren’t there. It should be consistent with your brand and other design elements already in use in your business and include all your contact details, full product list with pricing and any other information you think will be relevant to that specific retailer.
- The presentation folder and your verbal presentation should emphasise answers to the key questions the retailer will ask about your business capacity as well as the attributes of the product and what makes it different from similar products already stocked by that retailer. Include pricing, packaging sizes, and samples.
- Quite often the retailer will come up with a reason why they can’t stock the product so it’s important to use your prior research and information in the sales folder, as well as incentives, to overcome these objections. Be ready to negotiate on price by ensuring you know how far you can go without endangering your own bottom line.
- Close the sale by asking a question that encourages a positive outcome, such as “how many would you like to start with?”
- If you are not successful, leave the buyer alone until you have something new to announce or the buyer is replaced – then try again.
After sales service
- This is extremely important to ensure the retailer gives your product the best chance. You need to check to see if you have been given a good shelf position, and offer support to the retailer that will encourage consumer trial). Checking by phone to see if the retailer (or their buyer) is happy should be a regular part of your service.
- You should visit retailers regularly to check that your display is tidy and enticing. Retailers can be very busy and it doesn’t take long for a display to get untidy. Your visit and care will emphasise to them that you want to achieve the best results for both your business and theirs.
- It can be useful to combine these checks with making time to provide a tasting for staff and consumers. Staff who like your product will be more likely to promote it, while consumers who like it will hopefully indulge themselves in purchasing it after tasting it and meeting the maker.
Whether selling in your own retail outlet, through supermarkets, or setting up a display at a trade/consumer show, point of sale material, commonly known as POS, is an important element of the visual display.
Point of sale material can include:
- branded price cards
- branded shelf talkers
- branded information sheets
- branded flyers and brochures
- recipe suggestions
- posters and banners
- racks and stands
- other props (i.e. baskets, vases, flowers, greenery)
It is important for the point of sale area to be consistent, no matter where the display is. A simple way to deal with this is to get a visual display consultant to develop several options depending upon space available, type of event and needs of the customer. Also work with your designer to ensure the elements of the display are consistent with your brand and other marketing materials and activities. Different levels of height in a display and different use of your brand colours can work well in-store but bear in mind it needs to be simple to use, durable and easy to install and pack up.
Take some time to look at other POS displays and see what works by watching to see how consumers behave. Do they stop and look or just walk straight past? Ask trusted colleagues and consumers you know what would work for them too.