How do I get retailers to stock my products on their shelves?
What margins do retailers expect to get when they stock your product? Is there an industry average and is it different for each area? I'm particularly looking at the beauty and cosmetic space.
If there are any experts here that can give some advice on how to get your product onto retail shelves and some advice on pricing RRP and the margins you can look to get from it, that would be great!
HUNTER LEONARD ,
FOUNDER AND CEO at BLUE FROG MARKETING PTY LTD
You need several tools to work this out.
1. What is that industry and channels business model - for a given retail price, what are the margins required by the retailer, the group(in the case of a franchise or banner group) and the wholesaler. Based on your costs, what margin do you need to make. In many cases the retail price will need to be 4 or 5 times the cost of a product to have enough margin for all levels in a distribution channel, and leave enough for you to market and sell it too.
For example - in the pharmacy channel, most retailers will want their stores to make 50% plus in markup/33% margin, at wholesale there may be 9-15% for head office, and you may be paying 15-20% for sales people to sell it in to individual stores. On top of that there will be other % for promotions, investment in catalogues, promotion periods, % for damaged stock, stock returns etc etc. You really have to look carefully into all the elements and know what a particular banner will want from you before you can decide if you can afford to do it.
Knowing all of this you can then start to calculate what RRP will help everyone in the channel make money.
2. Buyers - with most retailers there will be a head office buyer(in the case of groups) or a store buyer(in the case of single store retailers) and you need to find out from them a number of things including a) do they stock that type of product b) when do they make decisions on their ranges c) what do they expect in a presentation from you d) what support do they expect from you in marketing and other areas.
Hope this helps