Thoughts on Selling to Target
Here are some thoughts on how Early Stage companies can go about successfully selling their product or service to the big box U.S. retail industry (BBR). This is focused on Target Corporation, but the concepts would be similar for Best Buy, Walmart or even Macy’s.
Setting the Right Objective – You should approach BBRs as you would any distribution partner: With a clear objective as to what you want to achieve. Remember that “selling your product in” is relatively easy. Getting it placed in the store in a way that insures sustainable long-term retail movement is much more difficult. So start with the end in mind; with the idea that you want not just to get in, but to stay in. That means you not only need a plan to get in the door, but a well-crafted marketing plan to drive consumer off-take. If you don’t have the money to produce long-term “sell through,” don’t start. Once you have been thrown out for lack of retail movement, you may never, ever get back in.
Starting the Amazon Way – There’s an easy way to get started with Target, or any big-box retailer. Simply start with their online store. Buyers will probably steer you there anyhow, so if you aren’t on Amazon already, be sure you have a great reason. The first step for any brick and mortar buyer for any product is always to see how you are presented on Amazon, how many stars you have and (by hook and crook) what your movement is. You simply have to be there. If you don’t have “straight fives,” you need a great story about why. And don’t even think about trying to pad your product evaluations with “friends of the firm.” Amazon has developed software which is catching an increasing number of the companies doing this. The penalty? Being thrown off the Amazon platform.
Building Your Target Presentation – Every BBR buyer is different, but broadly speaking, they prefer to hear about your product on a conceptual level first. If this passes muster, you can get into the details of pricing, margins, etc. – after they are sure that their guests (what Target calls customers) will be delighted by your product. Remember: Retailers have to focus first on the guest experience; what’s best for the loyal consumer who actually walk into their stores. Their fears about margins, competitive pricing, etc. can be put aside – if they think their guests will love your product. Here are some questions to think about as you develop your (12-page maximum) pitch deck:
- What is the story behind your product? If there was ever a devotee of Simon Sinek’s view of the world of retail, it is us. (See Simon’s TED Talk presentation, at (http://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action.html.) Sinek’s idea is simply this: People don’t buy what you do, they buy why you do it. This means telling the story of your brand, why it was developed, by whom, for whom, etc. BBR buyers want to see their shoppers through your eyes, so they can determine if the product fits to their brand. Remember, no one has to buy your product; not now and not ever.
- How and why will consumers be delighted by their experience with your product??Lead with research which demonstrates that your product is superior to what’s in the market. No retailer needs a “me-too” anything. Here, your data can range from paired comparison blind tests to videotaped focus groups to online quotes from Twitter or Amazon. What the buyer is trying to learn is whether their shopper will be delighted with your product after they buy it; in a way which reflects well on their ability to curate a consistently superior shopper experience.
- What is your roadmap for product improvement?Yes, your product has elements of superiority as it stands. But what happens next? Will you be able to stay ahead of the market for a sustained period of time? Or will a competitor best your entry in the next few months? It takes a lot of work and expense to slot a new product, for which most big box retailers will not charge you directly. The least you can do is lay out a three year plan for improving the quality, pricing, features and benefits of what they sell for you. Remember that they are up against Nordstrom’s and Walmart and Best Buy and Amazon – fighting every day to showcase what’s new.
- What are the logical, natural line extensions for what you are doing? When will they be available? Amazing to some, retail buyers plan for your product to be successful. And as it grows, the buyer is building a sales base for your items. This is great, except that when sales for your product fall into the “base forecast from last year,” the buyer has to find new growth for the next year. Because of this, they want to know what you plan to do to help them. How will you extend your product benefit to adjacent segments, additional usage occasions, different price points, etc.? Be prepared with a three-year roadmap for what you plan to do next, next and next.
- How does your product look on Target shelves? You will be helped greatly by showing computer renderings of how your product would look on retail shelves, in the check lane, on end-caps, etc. for that retailer. Nothing generic, please. “Pretty” renderings are the best way to spoon-feed the buyer’s sense for how your product will work in their store and what it’s going to look like.
- Where will your product go in the store? ? Remember, the buyer does not have a shelf stretcher. If you want to go in, something else has to go out. What would you suggest? Even most important, what do you go next to? Where will shoppers find your product? This is particularly important if your product doesn’t have a natural “home.” You have to go somewhere, so … where?
- What is your sampling plan for the Merchandising Committee? ? Buyers love samples and are much more likely to bet on something they have seen/felt/tasted themselves. Don’t be stingy with samples. If you don’t have enough samples to spread around and give to everyone on the Merchandising Committee, wait until you do.
Issues In the Buyer’s World – The last few years have been difficult for retailer employees, to say the least. Most have faced multiple rounds of layoffs. So it’s worthwhile thinking about the issues your buyer faces every day. Anything you can do to be helpful will pay dividends for your proposal. For example, how will taking on your product make them look good? To their bosses? To analysts and investors? Your buyer isn’t just the buyer, but the company CEO.
Really important: What will you do to protect the buyer if your product fails? Buyers get huge “points off” if something they bring in fails to sell and/or markdowns are required to move the product out of the stores. Think of this as risk sharing. If your product tanks, are you going to accept returns from the warehouse? From retail? Or will you fund aggressive markdowns? It is understandable not to dwell on the possibility of failure, but indicating that you the seller is proactively thinking about protecting the buyer is really important.
The Importance of Having a Broker/Marketing Rep – We consistently tell Early Stage companies not to go direct to retail buyers, no matter who they say they know in the company. People change positions constantly. Today’s “in” is tomorrow’s “out.” What you need is a representative who sits in the retailer’s buying office every single day rather than four times a year. You need a stand-in for you who knows when the senior buyer has a falling-out with the merchandising manager, etc. A great manufacturer’s rep will also know exactly how the new item listing forms should be filled out, where the ten store test should best be sited and how to negotiate the best merchandising support for your new item. (We know the best players here and can introduce you if you like.)