Getting your product in a supermarket or retail chain is for many Fast Moving Consumer Goods (FMCG) the most logical path to sales. But how to get your product in, especially abroad?
The point of view of a category manager
Most supermarket, pharmacy and other retail chains have category managers, who are responsible for the selection of products that the store offers. A catagory manager typically has:
- A potential opportunity to select products for the categories assigned among about 500.000 individual product varieties, or Stock Keeping Units (SKUs)
- She/he needs to select products for a store that can keep only 1.000/3.000 SKUs on the shelves for her/his assigned categories (4.000 small smkt – 10.000 medium – 40.000 large)
- A shopper buys an average of 400 SKUs per year.
- A basket in a single shopping trip is composed by 30 – 60 SKUs.
And a category manager knows that only 1% of new products launched in the market survive more than 1 year…
Do you research first
The easiest way to prepare is to visit a number of supermarkets first and have a look at your competition. If you want to be in there, another brand has to disappear. If you can suggest one, with good reasons, this will improve your chances. It also is important to think how you want to position your product, and what your suggested retail selling price will be.
Prepare your pitch and information
Any category manager will have a number of standard questions. So the better you have prepared the answers on the following questions, the more chance you have on success.
- What is your product’s USP and how do you estimate the interest and attractiveness for shoppers/consumers? (preferably based on research or sales data)
- Which are values for shoppers/consumers in comparison to (competitor) products in the same or different categories?
- Is it a substitute or complementary product ?
- What is your suggested retail selling price? Why?
- What is the expected margin for the retailer?
- Do you offer promotional support on price and/or in store communications, animation, etc.? Do you have examples and how do you determine what amount you invest?
- Which rotation do you expect for this product in the specific stores?
- Did you plan above the line advertisements? How, where, when, with what budget?
- What is your trade strategy? (territories, channels, competiting channels, exclusivity, retail price control?)
If you want to export your products
Selling your products in your home country is relatively easy, as you know the culture, the regulations and there is no time difference or large travel distances. If you export, you will also have to think of your logistics, complying to local regulations and how to handle complaints and returns abroad. Having a local agent or representative that can resolve operational problems for you is essential. This needs to be part of your marketing plan and of your pitch.
How to avoid or limit slotting fees or listing fees?
Retailers take a risk when placing your product on their shelves. This automatically means removing another product on which they currently make money. So if they have an interest in your product, they mostly want to share the risk of introducing it. This means that you will have to pay them for making room for your product. There are various names for this, but the most common are slotting fees or listing fees.
The better the sales data you have (for example from other countries or other supermarkets), the lower the risks, and in most cases also the lower the slotting fees will be. In order to build data, you can also suggest to do a trial first in a number of stores, before scaling up to all retail outlets in a country.
A last thing could be to compensate the retailer only if your product sells worse than the product it replaces on the shelves. In this case you compensate the missed margin, which is a good thing if you really believe in your product.
You only have one chance to make a first impression
If you want to target large retail chains, please bear in mind that you mostly will only have one opportunity to do so. Therefore it may be better to wait and prepare first, in stead of going unprepared. Or to start with a smaller retailer first, before going to the big ones.
Alliance experts has a well-structured general Market entry approach and knows the industry. Our global FMCG team has extensive experience with product introductions and can help you to open doors, in stead of having them closed in your face. This of course comes with an investment, but good preparation in general pays itself back with faster introduction, less marketing costs and lower listing or slotting fees.