Rule of the Road # 5: How to determine which retailer to approach first for brick & mortar distribution?
Your brand is really starting to get some local traction in the market and via your brand website. You have reviewed all of the operational elements discussed in our prior post and have determined your brand is in fact ready for retail distribution. But now how to decide which retailer to go to first? This is a critical decision and the answer is not ‘hey- I am going to go with this retailer because they gave me a meeting after I met them at a trade show.’ There is a chance this could work out, but a greater chance it won’t. As mentioned in our introduction to this blog, going with the wrong retailer and having the launch fail is extremely hard to overcome as other retailers will wonder why it did not work out.
Here are a few steps to work through to help you zero in on the right retailer to approach first:
Demographic match between your brand and the retailer’s shopper
We have interviewed over two (2) dozen buyers at major retailers in the US. When we ask about what the retailers look for in an emerging brand- they all said ‘fit with my shopper profile’. So, if you have a high-end skin care brand, launching with a dollar channel retailer is not a winning move. Likewise, unless you meet their product specs- don’t try to take your brand to Whole Foods or Sprouts.
You can get the data you need to make this decision by spending some money on custom research or from one of the big syndicated data firms like Nielsen IQ or Circana (formerly IRI). If you have hired a broker, they may have access to the data you need.
Proof that you know your consumer
Expect your retailer to ask for proof that you know your consumer demographics: age, sex, income, presence of children, etc. Again, this is where research comes into play to help you make your case. Depending upon the data you capture, and the scale of your DTC business, you may have some solid information there as well.
Does your brand have regional strength?
If your brand is starting to gain a following in your local market- look for a retailer in this general region with a shopper profile that is consistent with the demographics of your brand. This fit is critical. Additionally, if your entire brand story is your “New England heritage”- then start in New England. It would make zero sense to launch your brand into a Midwest grocery chain (for example) where no one knows about your brand and may not really care at all about your ‘New England heritage.’
Additional benefits of starting in your local market
1) Your marketing dollars will work harder as you will not have to try and drive brand awareness and trial across multiple markets.
2) Depending upon where your product is produced- if it is made in your home market, shipping costs will be significantly lower than shipping all over the country as a small brand.
3) You will be able to watch the market closely and show up in your stores. No one on the planet will care more about your brand than you will. Get into those stores to make sure the product is packed out from the back room, properly shelved, pricing is what you agreed to, and if your product lends itself to this tactic- it will be easier for you to oversee sampling events.
4) In the event there are issues at your retailer- since you are local you should be able to troubleshoot them faster, and hopefully, resolve them more effectively.
Final Thoughts
If you opt to launch into a retailer outside of your home market, not only will the four (4) points made above be harder to have come out positively for your brand, beware of these potholes along the road to retail success:
- You run the very real risk of needing to spend much more money to drive awareness and trial for your brand.
- You will have less ‘feel’ for how things are going in market since being on the ground will be harder.
- If you fail to hit velocity hurdles within the specified timeframe, the demand for incremental promotional support at the retailer will grow.
- If you are discontinued at your out of market retailer, the markdowns, discontinuation, and return fees may be higher.
Selecting the right retailer to launch into brick & mortar distribution is critical. Don’t launch with a retailer just because “they gave me a meeting!” Buyers are paid to look for interesting products and have meetings with suppliers- it’s their job. Make sure the retailer(s) you are targeting make sense for your brand, the retailer, and the consumer. Ask your targeted retailer about their performance expectations for emerging brands and if they have any ‘emerging brands’ programs you can be a part of. These programs may offer you a longer period of time to achieve category velocity hurdles or allow for inclusion in certain promotional programs.
As mentioned at the top of this post- launching into brick & mortar distribution with the wrong retailer that ultimately results in discontinuation can adversely impact your ability to gain distribution with other retailers as all may wonder “what went wrong over there?” Make this first move deliberately. Good luck out there!
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