SBBC Retail and Distribution 23Mar2015

Small Business BC
Gerry Spitzner | retailSOS.ca
March 23, 2015

 Why retailers buy
 How to approach retailers
 What retailers are thinking about
 What retail buyers look for in suppliers
 What retail buyers look for in a product
 Retail pricing & merchandising
 Retail distribution, supply chain & logistics channels
 Your sales & marketing plan
retailSOS.ca | Gerry Spitzner 2

 POS = point of sale
 POP = point of purchase
 SKU = stock keeping unit
 PO = purchase order
 EDI = Electronic Data Interchange
 EFT = Electronic Funds Transfer
 IND = independent retailer
 UPC = universal product code
 QR = quick response code

This packet of thought starters is
just that; a starting point.

 What is the real purpose of a business?
◦ Profit is merely a result of the business. Not a purpose.
 Creating, engaging and keeping customers is the
key to repeat business and long term survival for
your business, and the retailers business.
◦ Why does your business exist?
◦ How will you create, engage and keep your customer?
◦ What purpose does it serve?

 Who is your customer… really?
 What’s the difference between your customers and
your consumers ?
◦ Most retailers think YOUR end consumer is their customer,
and they themselves; the retailer, is your customer.
◦ If you frame your sales proposition this way, you'll always
be on the safe side with all retailers.
◦ Retailers don't appreciate suppliers who make
assumptions about THEIR customers.

 Have you ever had buyers remorse?
◦ Every retail buyer has had this feeling too.
◦ People do business with people they know, like and trust.
◦ Most buyers/retailers are sceptical and cautious about
new products; especially when doing business with people
they don’t know.
◦ Your value proposition and the professional relationship
you build with prospects will make all the difference to
help them buy.

 How to sell or why retailers buy; which do you prefer to learn?
◦ Beware the myth of “closing the sale” or Always Be Closing mantra.
◦ Who are people more likely to believe; themselves or you?
◦ Who is better at closing the sale; your potential retail customer or you?
 The simple truth about selling – and the secret to selling
more - is that your customers are better at “closing” the sale
than you are.
◦ If you’re able to lead them to it. All you need are the right questions.
◦ Show me the value; or I’ll show you the door.

 What exactly is value in the 21st century?
◦ Value is a function of the bundle of perceived benefits offered at
a given price. Perception is in the eyes and ears of the beholder.
◦ Value is not determined by the people who set the price, it is
determined by those who choose to pay the price.
◦ Sell the ‘applied’ benefits you and your product offer. Develop a
unique value proposition of the tangible results a customer gets.
◦ Prospective customers should be able to visualize exactly what
value you and your product could bring their organization.
◦ In order to engage your prospect, your customer, there must be
some form of interest or perceived value on their part.

Simply put; a retailer is looking to
drive business TO and THROUGH
their store.

 Want products that turn over at a price that will make
them money.
 Want to know the repeat purchase potential, and can it
be replenished quickly and reliably.
 The repeat purchase and sale is the profitability of the
sku for the retailer.
 Repeat sales are ‘through put’ and one of the most
important applied benefits of your product or service.

 How can I keep my customers in the store longer?
◦ Increases the average sale per customer; sales/transactions.
◦ It’s a proven fact that the longer a customer stays in the store;
the more money they will spend.
 Look at products through the eyes of consumers to meet
leading trends for impulse sales.
◦ Start with demand-driven insight; present ideas on how the
consumer benefits. Applied benefits.
◦ Increased impulse sales means increased average sale per
customer; most often with profitable ‘new’ product mix.

 Confidence is the #1 factor
◦ in determining what, from who and why retailers buy...
 Quality is #2,
 Service is #3
 Selection is #4
 and Price is #5
◦ PRICE IS PRICE; VALUE IS THE TOTAL EXPERIENCE

Stop ‘selling’ and help your
customers buy. Learn to listen;
don’t focus so much on you and
your message. Focus first on your
customers.

 How they benefit, how they profit, and how they
produce sales will provide value.
◦ Your customer (buyer) wants to know what’s in this for them
and their customer (your consumer)?
◦ Focus your efforts on helping your customer to make a
difference in their customer’s experience, not just on you
getting a sale.
◦ Consider the Life Time Value of a customer and think
customers for life, rather than as a single transaction.
◦ Get great at sales planning to engage and build a
relationship to position yourself as a trusted advisor.

 Chain retailers like to act like IND’s
 IND retailers look for products not in chains
◦ Dominant relationship at chain retail is with large company brand
suppliers.
◦ Dominant relationship at IND’s is with independent suppliers and
wholesalers.
◦ Chain retailers rarely consider a product that hasn’t been tested
and proven in a local market small retailer.
◦ Chain retailers will often test market or pilot new products in a
handful of stores.
◦ With most IND’s; you can deliver product on the spot (i.e. from your
vehicle); and they pay right away.

 There are four basic ‘currencies’ in all peoples lives
that are motivators, which create needs, wants,
desire and value.
 How can you?...
 1. Help them make money
 2. Save them time
 3. Make them feel safe
 4. Make them feel special

Do you sometimes wish you could
just read your buyer’s mind?

 1. Complexity and information overload brings them to a
screeching halt.
 2. They subscribe to the “ If it ain’t broke, don’t fix it “
philosophy.
 3. They think making risky decisions is career inhibiting.
 4. Most options seem like near clones of one another.
 5. Not tolerant of stupidity or incompetence in other people.

 Focus on their challenges
◦ Your prospects only care about their challenges, not your
products or services. They don’t care how awesome you are.
 Share outcomes
◦ Give examples of similar customers that you’ve worked with in
the past and the results they achieved.
 Engage in Conversation
◦ Plan your questions ahead of time because it’s impossible to
think of good ones on the spot.
 Suggest Next Steps
◦ Make sure to recommend a logical follow-up to this initial
meeting or conversation.
Source: Snap Selling-Jill Konrath

 Keep things simple
◦ Show them how you'll make it easy for them. Give them fewer
decisions to make.
 Demonstrate strong biz case
◦ Help them see how they'll achieve their primary business
objectives by working with you.
 Minimize the risk
◦ Propose smaller initial contracts, deals or opening orders.
 Prepare, prepare, prepare
◦ Think everything through in advance. Leave nothing to chance.
Source: Snap Selling-Jill Konrath

 Avoid the temptation to leap to solutions; it is often
the single biggest barrier between you and your
prospective customer.
 The answer is no...
◦ If they feel pressure from you
◦ If they feel like you're trying too hard to be liked
◦ If they don't think you understand their business
◦ If they think you’re focused on what’s in it for you
◦ If they get overwhelmed by what you're saying

In addition to mentally preparing
for the meeting, here's some of the
things a retail buyer may ask or
expect to see at your presentation.

 Number of years in business
 Your Financial means
 Your business background
 Geographical limitations--What area can you physically
cover and ship to?
 Sales qualification isn't an event - it's a process
 The position you hold in your customers mind determines all
reactions and interactions with you.
 Make me feel safe you will survive beyond the first time I buy.

 What’s happening in the marketplace?
 Come in with some facts & market research.
 Sales trends in the category, consumer research.
 Trend watching; help me with what’s hot and what’s not.
 Tell me about something new.
 Be an information resource.
 Make me feel special; help me.

 How will you educate my customers about your
product and get them to try it?
◦ There needs to be a clear, confirmed match between what
customers need and want and what you are offering.
◦ You need to know what it is about my customers that will make
your product sell in my store.
◦ I need to know your advertising and promotions plan to ensure
your product will survive in this competitive environment.
◦ Buyers want to see that you are committed to your brand and that
you will promote your product so that people will become aware
of it and then come to the store to ask for it.

Products need support for the long
term. You have to give consumers
time to buy it, try it, consume it and
hit the repeat button.
Help me move it; and promote it.

 Inventory is the retail gamble. It’s easy to turn cash into
inventory...the challenge is to turn inventory into cash.
◦ Moving it and repeating it; is cash flow. And cash flow is the life
blood of the business.
 Inventory is one of the top two controllable assets in the
business. Constantly scrutinized and measured.
◦ Will your product replace sales of what I currently have?
◦ Does your product fit my current market mix?
◦ Do I have the space to merchandise it?
◦ Do I have the money (cash flow) to pay for it?
◦ What happens if it’s not moving and I’m stuck with it?

 Where else are you selling this product?
◦ What makes it sell? What problem does it solve? Will my customers look
for it? What does it ultimately help my customers achieve?
◦ Is there a need or a market? A need alone does not mean there is a market;
desire does. Desire is the sweet spot where the market is.
 How will it bring new customers to my store?
◦ Beware the myth of being different and unique. Being unlike anything else
on my shelf is not always enough. Being different and unique; doesn't
equal desirable; and desire is what moves the customer to purchase.
 What does the product do or how does it work?
◦ Must be easily understood by store staff and consumers.

 Push or pull product?
 Is your product future proof?
 What is the life cycle of product?
 Is there a barrier to entry? For me; my competitors?
 Will this item make my store more appealing?
 Will it add to my average sale per customer?
 Will the retail price point of this item be in the range
of what my customers will spend?

 A retailer’s shelf space is their commodity.
◦ That’s why they are careful about what inventory they put
on them.
◦ They need new products that add interest, value and
‘excitement’ to their stores.
◦ Just because you are new, doesn’t mean you are not worth
the chance.
◦ Retailers need new mix to create new; engage and keep
customers to increase impulse sales and profit.

Setting the right price for your
products and services requires
balancing merchandising, pricing,
placement, packaging, and
promotion.

 Know your competition’s pricing.
 Do not compromise on your price
◦ Negotiate the price you deserve
 Know your taxes; PST/GST/Tariffs; include in your price
◦ Is your product vulnerable to currency fluctuations?
 Wholesaler upcharges
◦ Include upcharges in your quoted price to retailers.
 Include all your costs
◦ Packaging, shipping and your operational expenses.

 Mark up & margin are different.
◦ Mark up is % of profit on cost
◦ Margin is % of profit on selling price
 These terms often get confused in the conversation...
◦ Gross profit percent; GP% (markup)
◦ Gross profit dollars; GP$ (markup)
◦ Gross margin percent; GM% (margin)
◦ Gross margin dollars; GM$ (margin)
◦ Note: “Gross Profit” is often used as a generic term by retailers

 POP is important
 Display racks and trays
 Off shelf areas for new mix
 Plan-o-grams & compliance
 Package size/dimensions; and photos of your product
 UPC code; if added later make sure stays on package
 Effective packaging; must fit on shelf it is going to be
merchandised on; ‘tamper’ proof; anti theft tags

Supply chain channels consist of
some combination of producers or
manufacturers, agents or brokers,
wholesalers or distributors,
transportation, importers, and
retailers.

 Can you replenish quickly; do you have a solid supply chain?
 Speed to market is just as important; if not MORE important;
than the shelf price or cost of an item.
 If your product goes on a “run” or a “heater” can you supply?
 Your supply chain to the manufacturer becomes part of my
supply chain and I care what it is.
 An empty display or shelf space is deadly to you as a supplier.
It won’t last more than a few hours. And your space will be
gone. Something else will fill your selling space.

 Three main logistics channels...
◦ Different cost structures to ship to your retail customer.
 Wholesalers
◦ Are intermediaries or middlemen who buy products from
manufacturers and resell them to the retailers.
 Direct Store Delivery; “DSD”
◦ When a supplier ships directly to the retailer’s door.
◦ Sometimes could be a ‘drop ship’ billed through a wholesaler.
 Self Distributors; Chain retail
◦ What is your cost to ship to the retailers distribution point?

 Is the product WMS friendly?
 Case and product UPC
 Can the box (case) stand up to wear and tear so you
don’t have to deal with concealed damages.
 Master case pack; are smaller minimum order
multiples possible? Especially for IND’s.
 Insurance
 Logistics or ‘transportation’ charges. How are they
determined?

Retail Categories Retail Channels
 Department
 Mass & Big Box
 Specialty & Discount
 Catalogue & Internet
 Grocery & Drug/Pharmacy
 Convenience
 Within each retail category;
3 types of stores…
 Chain stores
 Banner stores
 Independent stores
 Pick one category and one
channel and work it.

A successful marketing plan
doesn't have to be complex or
lengthy, but should contain enough
information to help you establish,
direct and coordinate your
marketing efforts.

 The 4 P’s of marketing
◦ Product, Price, Place and Position
◦ Core elements of all products or services.
 The 7 P formula for marketing success
◦ Include Promotion, Productivity and “Profit-unities”
 How will your product generate incremental sales for the
retailer? And repeat. Again and again.
 It’s all about moving product and how you are going to
help the retailer move your product.
 What will you do to support and help make that happen?

 Provide a line sheet
 Sign a vendor agreement
 Provide a listing allowance
 Prepay freight; delivery to door
 Endure long receivable cycle; risk not being paid
 Provide dating and /or a prompt payment discount
 Have a plan to deal with payment by credit card
 Clear up damages and returns; have a plan for recall

 Carefully consider consignment
 Value in a short term incentive
 Becoming the retailer & go online; e-commerce
 The use of online business media to promote
 Using a wholesaler or broker that specializes in your
product category
 Almost all national chain retailers have their own
import department. Why do they need you?

 Consider a professional agent, broker or wholesaler.
◦ When you don’t have your own sales team or sales is not
your strong point.
◦ Make sure they really understand your business and have
contacts at retailers where you want your product to be.
◦ There is a cost; however they have connections and already
established relationships.
◦ Royalty or a % of sales; factor this into your Cost Of Goods
◦ Some wholesalers have their own sales dept. that you may
be able to “tap into” for representation.

Now what or what now? …
Your outlook is a matter of your
positive attitude and willingness
to help.

 Define your unique value proposition and keep it
current. Keep crafting and working on it.
◦ Focus on applied benefits not just features.
◦ Value is the bundle of perceived benefits offered at a given price.
◦ Your UVP should include what you bring to retailers.
◦ Why should my ideal prospect ( or the group you intend to serve)
buy from me instead of a competitor?
◦ Your product and you need to be better on at least one value than
anyone else; your unique point of distinction (difference).
◦ Plan, Execute, Learn, Adjust, then Go Back to Execute.

 Start a strategic sales & marketing plan as a blueprint.
◦ Establish a market first, not a product.
◦ Understand where your target market is, who your ideal
customer is and ideal consumer buying motivators.
◦ Consider what you can do to help retailers minimize risks and
maximize profitability.
◦ Decide first if you want to approach IND’s, banner or chain
retailers. Then determine your ideal retail customer and
method of supply chain distribution.
◦ Figure out what it will cost you...can you make money?

 Smart retailers are always looking for new products to
differentiate, add excitement, drive customer traffic
and create new sales in their stores...
◦ However, they don’t have time to find them…
◦ IND retailers tend to work IN the biz rather than ON the biz...chain
retailers tend to work ON the business rather than IN the
business.
◦ They need you to help them find the products and then help them
“move” the inventory... This is your opportunity!

 Got questions? Get answers? Email me…

 Follow Twitter: @passion4retail
 Connect LinkedIn: Gerry Spitzner
 Web: retailSOS.ca
 Blog: gerryspitzner.com
 Email: gerry@retailsos.ca
 Online Biz Card: gerryspitzner.tel
 You Tube Channel: Gerry Spitzner

 Gerry Spitzner is a retail consultant and optimist with a curiosity for improving life and
business results. He believes in a bright future and our ability to build it together.
 Drawing on 40+ years experience in multi-site retail operations, store ownership and the
wholesale supply-chain; Gerry brings the leadership, knowledge and market awareness of
business development to retail owners and their suppliers, helping them achieve their
growth objectives. He teaches and inspires them to achieve results by aligning their vision
with marketing strategy and operational execution.
 Fascinated with a lifelong curiosity for why customers buy and a passion for retail; Gerry
guides organizations to create, engage and keep great customers by delivering the promise
of an extraordinary customer experience. He has devoted his life to sharing his thinking
with leaders in retail to manage market analysis and build business plans that increase
profitability through creating a competitive advantage.
 His company is retailSOS.ca, a Vancouver-based business management consultancy with
Strategic Operations Services to support retail owners and their suppliers to brand and
market their strategy for optimal growth through customer experience. With a clear
understanding of retailing he uses a solution oriented focus with ideas and alternatives that
clients can use to address the changing marketplace issues they face right now. Gerry
understands who they are, what they need, and where to find it.

 The difference between calculating markup and margin.
 1. 40% mark up is different than 40% margin. Using a 1 dollar cost of goods
example. With a $1.00 cost; & a markup of 40% = selling price of $1.40; using
same one dollar cost at 40% margin = $1.67 selling price.
 2. Markup is % profit on cost; means the selling price is 40% of the cost and then
added to the cost (1.00 x .40) +1=1.40. This is “markup”. (Apparel retailers typically
use this formula to set retails.)
 3. Margin is % profit on selling price; means the cost of goods is 60 % of the
selling price; profit is 40% of the selling price (or the retail); i.e. 1.00 divided by .60
=1.66666 equals 40% “margin”. This is margin.
 4. So, if a retailer needs a “margin” of 40%; the “markup” needs to be 66 2/3% for a
retail of 1.67
 5. You can now see from the example that although markup and margin may be
the same in dollars (.67 {cents}), they represent two different concepts as
percentages (66 2/3% {markup} versus 40% {margin}).
 More than a few new businesses have failed to make their expected profits
because the retail owner assumed that if markup is X percent, his or her margin
will also be X percent. This is not the case.

 For mfr agents info:
http://www.cylex.ca/vancouver/manufacturers%20agents%
20representatives.html
 For list of mfr agents; Google key words;
*manufacturers agents vancouver bc*; or *{your key word i.e.
food brokers} vancouver bc*
 For wholesalers; use Google key words;
*wholesale (your product category) vancouver bc*

 WalMart vendor agreement:
 http://www.walmartstores.com/Suppliers/248.aspx
 Canadian Tire vendor agreement:
 http://corp.canadiantire.ca/EN/JoinOurTeam/Suppliers/Pages/SupplierRequirem
ents.aspx
 Target vendor agreement:
 http://img1.targetimg1.com/wcsstore/marketing/ca/company/images/canada/p
df/Vendor_Online_Agreement.pdf
 Home Depot vendor agreement:
 https://homedepotlink.homedepot.com/en-
us/Related%20Documents/Canada%20Supplier%20Terms%20and%20Conditions
02-04.pdf

 For QR codes: www.qrstuff.com
 For bar code info; www.gs1ca.org
 Retail Pricing & Trade issues
◦ http://www.agf.gov.bc.ca/foodprocessing/documents/retailer/section4.pdf
 Retail associations:
◦ Retail Council of Canada: www.retailcouncil.org
◦ NRF - National Retail Federation; Global retail:
◦ http://www.nrf.com/

 Sales & Marketing
◦ http://www.raintoday.com
 Sales help and power questions
◦ http://www.gitomer.com/salesHelp/Sales-Help.html
 Sales help and power questions
◦ http://andrewsobel.com/
 Sales and personal development
◦ http://www.briantracy.com
 Sales strategy and value propositions
◦ http://www.jillkonrath.com/

 Trends: www.trendhunter.com
 Trends: www.springwise.com
 Trends: www.trendwatching.com
 Pricing and margin definition:
◦ http://en.wikipedia.org/wiki/Gross_margin
 Retail, sales & marketing and small business:
◦ www.retailwire.com

 Little Red Book of Selling or The Sales Bible;Jeffrey Gitomer
◦ www.gitomer.com
 Be Different or Be Dead; Roy Osing
◦ www.bedifferentorbedead.com
 Unmarketing: Scott Stratten
◦ www.unmarketing.com
 Enchantment: Guy Kawasaki
◦ www.guykawasaki.com/enchantment
 Any of Gary Vaynerchuk’s books;
◦ www.garyvaynerchuk.com/

SBBC Retail and Distribution 23Mar2015

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