These are good questions that you raise. I have significant
experience working for a large midwestern grocery/general merchandise
retailer, so I am basing my answer on that experience. I am familiar
with all of the stores that you mention.
As far as initially approaching the companies, you can try the numbers
at the bottom of my answer or any numbers for the main corporate
switchboard you may have. You are looking to contact the Electronics
buyer at these various companies, most likely. Borders may be the
Music buyer. You may very well be connected to them, in which case
you explain in about 30 seconds why he or she would want to see your
product (novel features and characteristics of it and any promotional
activities planned which would cause consumers to come to his or her
store asking for it) and ask for a 15 minute appointment. You may or
may not have success with this approach.
Your local store department manager can probably tell you who the
appropriate buyer is, too, since they have to deal with them regarding
promotional activities in their category. Bring a sample of your
product during a weekday morning to your local store and talk to the
department manager about it and who the buyer would be.
If you are unable to get an appointment for yourself, then you will
want to enlist the services of a broker. Brokers represent a large
number of manufacturers to the various retailers. Most small
companies, and even a lot of large ones, find that using brokers is
the most cost-effective way to deal with buyers. The retailers like
them also because they make the buying process efficient: by talking
to one person, they can make arrangements for a large number of
products instead of talking to each individual manufacturer. Since
you are presumably completely unknown to the retailers, working with a
trusted broker is much more likely to meet with success. Particularly
if you are offering a complementary product that doesn't compete
directly with products from the companies you mentioned, find out who
represents them and try to get them to represent you, too. An
excellent way to do this is to inquire of the buyer when he turns you
down for an appointment if he works with any brokers to purchase
products of your type, and if so, who are they. Visiting relevant
trade shows would also be a good way to network yourself to a
relationship with a broker.
Once you've established who is going to actually meet with the buyer,
you will need the following:
Sample product to take to the meeting (your single biggest selling
point). Expect that you will be leaving it with the buyer so that he
can try it, give it to coworkers and friends to get their reaction,
etc.
A presentation on a laptop and/or a color-printed booklet to leave
with the buyer describing what the product is, why it is
different/better than the competition, information about who carries
it and how much of it they sell, and, most importantly aside from the
characteristics of the product itself, the types of financial
incentives you are prepared to offer the retailer to carry it in terms
of cash payments and free product. For a discussion of slotting
allowances, see my previous answer at
http://answers.google.com/answers/main?cmd=threadview&id=207344.
While the grocery business is the focus of that answer, you are very
likely to encounter the same issues, especially with Meijer.
You will need to provide them with a forecast of how much they will
sell at what retail, how much shelf space your product will require,
what their cost per unit is, your promotional plans for the product
(coupon drops, television, print advertising, discounts periodically
to the retailer, etc.). You will want to compare your profit to them
per unit of shelf space relative to your competitors. Unless your
product is extremely unique and obviously attractive to the consumer,
you will need to be as good or better. A lot of data about the
competition can be purchased from firms like IRI and Nielsen. Another
advantage to working with a broker is that they will most likely have
real figures for the costs, retail prices, and sales volume of the
competitors gathered from various sources. And, having a personal
relationship with the buyer, they can help you fine-tune your
presentation to address that particular individual's concerns.
Finally, you will need to provide information about the logistics of
purchasing your product: who do they place orders with, how quickly
can you respond to their orders, minimum order quantity, and whether
or not it is delivered directly to stores or handled through the
retailer's distribution system. Also, will you be providing personnel
to help roll out the product in the stores by placing it on the
shelves, and what kinds of ongoing store level support will you be
providing. Brokers can also help with this tremendously since they
have to deal with it all the time and have economies of scale and a
local presence that you don't. Obviously, the easier you make it for
the retailer to introduce your product and maintain it on their
shelves, the more likely they are to carry it.
The purchasing departments are generally organized around categories,
which is why I indicated that you are wanting to speak with the buyer
for the Electronics department in most cases. The buyers are
typically measured on the profitability of their category, frequently
measured by gross margin of the products sold in their category, and,
to varying degrees, on inventory turns. Some more sophisticated
measures, such as profit per square-foot may also be used. The amount
of markdowns they have to take from the initial retail to be for a
product finally sells is also monitored very closely.
So, your job, or your broker's job, is to convince the buyer within a
few minutes that you have a product that consumers will want to buy at
full retail and that you are prepared to sell to the retailer at a
price which allows the buyer to look good on his profitability
measurements. You will want to get a sense of the gross margin target
that the buyer has for his category and the gross margin offered by
your competitors, and make sure the your pricing for the suggested
retail price and the retailer's acquisition price are at least that
good. I would imagine the margins on the types of products you are
talking about for the retailer are pretty high.
I hope that you find the above information helpful. I will respond to
a request for clarification if you are confused by anything in my
answer.
Another consideration, which is beyond the scope of your question but
which you should consider, would be protection of your invention from
theft by the retailer or by someone who sees it at a trade show
through the patent process. I would be happy to answer questions
relating to that subject if you have any since I have a background in
that subject as well.
Wonko
http://www.kmartcorp.com/corp/restructuring_information/res_infor_index99.stm
Kmart Vendor/Supplier Information Line 1-800-247-0200
http://www.bordersgroupinc.com/about/contact.htm
Borders Group, Inc.
100 Phoenix Drive
Ann Arbor, MI 48108
(734) 477-1100
http://www.meijer.com/guest.html
Call toll-free within IL, IN, KY, MI, & OH: 1-800-543-3704
Outside region call: 616-453-6711
Or write to:
Public and Consumer Affairs
Meijer, Inc.
2929 Walker Ave. NW
Grand Rapids, MI. 49544-9428 |
Clarification of Answer by
wonko-ga
on
29 May 2003 16:53 PDT
I am glad you found my initial information useful. Let me address
your follow-up questions:
The presentation needs to explain what the product is, why consumers
will want to buy it, the financial benefits to the retailer from
stocking it, and logistical issues associated with carrying the
product. The details I talk about in the paragraph with the link to
information about slotting allowances, and the following two
paragraphs, are what you want to have in your presentation. However,
the most important item, which you must be able to articulate
succinctly and convincingly, is why consumers will want to buy it. If
the buyer doesn't think there will be any demand for the product, he
won't bring it in no matter how much you offer in terms of financial
support.
Calls to alumni, and other networking methods, would be an excellent
approach to gain access to the retailers. Have your presentation
prepared in advance, though, so that you will have a smooth speech of
about a minute to give over the phone about your product when you call
seeking help. Know exactly what you need in advance before you call,
and exhaust every other possible source first. If you don't sound
like you know what you're doing and are asking rookie questions, they
will be less likely to help you. On the other hand, if you appear
knowledgeable and capable, you are likely to get much better
assistance. Hopefully the information I have provided will help you
sound knowledgeable.
The animation showing the product in use would be an excellent part of
your presentation. I would want to use it very early in the
presentation to get the buyer interested. The buyer will probably
make an initial decision about carrying the product within the first
two or three minutes of your presentation based on his impression of
your product samples. So, anything to generate interest quickly and
to look professional is great. If he likes the product, assuming your
financials are in-line, you will be in business. By the way, be
prepared for negotiation about the financial deal you are offering.
Have a strong understanding of where you could give ground to the
benefit of the retailer without killing yourself before you walk in,
and present your initial deal accordingly.
Appropriate follow-up would be a one-page letter thanking the buyer
for his or her time along with a quick summary of the key aspects of
the presentation in terms of consumer benefit and the financial
benefit to the retailer. Indicate you will call in a week (give a
specific date and time) to answer any questions about the product, and
then make sure that you do so.
Best case for getting something on the shelf is probably six weeks if
you deliver directly to the stores, and probably eight to 10 weeks if
you go through the retailer's distribution system. Of course,
offering labor to help stock the product in the stores gets you on the
shelf faster. These are extremely rough estimates. It depends on how
often they revamp their shelf sets and how dramatic an impact your
product would have on the arrangement of the surrounding products.
Also, they may have to find a product to throw out to make room for
yours. These things all take time. I would be extremely conservative
in my assumptions (i.e. I would plan my cash flow to support a delay
of up to four months).
The best way to forecast sales would be to look at competing products
and, assuming your offering has similar usage characteristics, take
some percent of their sales as a forecast. For example, you might
present a range of values from 90 % to 110% of the competitor's sales
showing the financial impact of your product. Nielsen and IRI can
provide store level detail for lots of items if you are willing to pay
for it or have a source who buys it from them. The retailers get the
data for free in exchange for providing it, so another use of any
alumni contacts you can cultivate might be to get some data about
competitors' sales within that particular retailer. You would look
more sophisticated, however, if you already had the data yourself.
Good luck with your product!
Wonko
|
,
0 Comments
)