Merchant Tip: Vendors as Personal Consultants

In an earlier blog, I commented that bullying your vendors is not a synergistic business paradigm (see Nov 29th blog). Win / Win is the highest form of cooperation and this blog builds on that philosophy.

Vendor’s are SME (Subject Matter Experts).  Don’t think you have to know it all; there’s too many competitors, listings and programs out there and likely your portfolio is huge. 

So here’s how I would position it to vendors: “I’m new to the category. But good news! I’m hiring! And you are getting a new title to boot…you’re a Personal Consultant!”

Enlisting Vendors to educate you, including: plant tours, product tastings (always fun) and conduct complete business reviews will grow your category and personal knowledge.

Vendor Personal Consultants, ask them the following:
– Line listing – do I have your top skus for MY business? Which ones should I delist (they don’t like but that’s ok)
– Am I promoting right items at the right times?
– Are my retails competitive? Ie you do the market research!
– How much money is there in the pot for me to promote your items? Ie how much will you invest?
– What listings can we create together such that I have ‘exclusivity’ for these listings?
– Create a planogram for me based upon Consumer Behaviour shopping habits

Engage your vendors. Hold them accountable. Work together.

When you do business reviews (at least quarterly), review the sales. If the results are bad, they can only look to themselves and their recommended programs. Good vendors are happy to do this consultation; bad vendors don’t want to do the work nor want that accountability.
Strategic and effective, Vendor Personal Consultants are a great way to go. But wait! There is still the best part! Its FREE and unlike other consultants, Vendors have to stick around and LIVE the results.  And if they don’t get the results?  Well you’ve done your due diligence and can comfortably source a vendor that will grow your business.

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Merchant Tip – Set yourself up for success!

One of my favourite mantra’s I expound to students at the University of Toronto is set yourself up for success.  But let me be clear from the onset: it’s not meant as a selfish act (ie looking after only number 1).  No, rather it is about thinking before jumping. 

Setting yourself up for success means enjoy the journey, not just the cheddar at the end of the frantic rat-race!  Specifically, for a Merchant, it is about developing programs, products, ads/promotions etc that have long-term sustainability and decrease the amount of stress in our lives. 

Proactivity: Many times in our careers we are conditioned to respond in a particular way to a particular stimulus (ie sometimes we react immediately when we have poor sales, low basket sales, beaten on a front page ad, etc).  Stephen Covey, renowned author of self-help books, defines ‘proactivity’ as:  having the awareness that between stimulus and response is our greatest power –  the freedom to choose!  There is a time lag so use imagination, self-awareness, introspection before you respond!  

Let’s take a practical example.  The all-to-familiar scenario: Sales are down.  Your boss is on you…his/her boss is on them.  Pressure is mounting, so, you are anxious to react.  Perhaps list new products and get immediate sales?!

 Sound familiar? 

But before you launch your program/products in every store – stop and think – think about the demographics, the scope of your product and of course, how can you set yourself up (and the products) for success. 

In my experience, sometimes it is prudent to just launch the program in a small area or a few stores and monitor.   Small launches allow Merchants the pleasure of the following:

–          Tweak your listings ie delist or list more, maybe different pack size?

–          Do the stores have the correct demographics?  Maybe target a specific area?

–          Get Operational or customer feedback

–          Adjust retails – not competitive?

–          Adjust Promotions – maybe invest in the program to see if it is successful to gain customer trail.  Incent them to buy it and try it!

You don’t have to make a killing on the first launch nor do you have to do a national launch every time.  Devoting merchandising shelf space is critical to your business…so, remember the following:

When it is a few stores, few people are watching.  When it is all stores, all eyes are watching.

So set yourself up for success.  Between stimulus and response, you have the time to think and choose before reacting.

Brand Management – CL vs NB (Part II)

Last week we reviewed the differences between national brands (NB) and Control Label (CL) products and we answered a consumer-conundrum question: Can we get more for less?

Answer: YES! 

We discovered that Control Label products (i.e. President’s Choice, Kenmore, Life Brand – also called private label) can develop products that are premium (i.e. premium ingredients) to the comparable national brands…. yet CL products maintain better value because of National Brand overhead.  Recall, NBs have many  people working on only one brand and spend millions and millions in marketing and promotions! 

Conversely, Control Label products do not spend close to those dollars on promotions – don’t believe me?….Just think how much Coke spends on a single commercial for a Superbowl advertisement!

So why do Retailers develop control label brands?  

  1.  More profit!  While some retailers may say different, the major impetus for control label innovation/sku proliferation is better Penny Profit (more immediate money in the bank).   

Therefore the higher the control label sales penetration, the better the profits!   They want you to have more of their private label products in your basket.

A fast nickel beats a slow dime

Anonymous

        2.   When you enjoy a Retailer’s private label product, the Retailer gets an intangible benefit called Consumer  Loyalty.  Priceless.  A retailer can gain our devotion and “repeat visit” if you love their Control Label Brand.  How?  Because you won’t be able to get it anywhere else but at that retailer!   And they are hoping you will do a full basket shop while getting their unique brand only available through them.

But retailers still need a balance of National Brands to compliment Control Label on the shelf.  Let’s face it – you can try to knock off Coke – but it just ain’t a Coke at the end of the day.  Even when it’s cheaper we consumers buy what tastes best (usually!).  Or perhaps it is prestige/image thing?  Does one look better serving to your guest Perrier or San Pellegrino or a generic brand?   

Just make sure you are checking the ingredient deck and comparing apples to apples to get the best value.

Brand Management: National Brands vs Control Label – Can we really get more for less? (Part I)

If you are a consumer, read this! Of course, knowledge is power and what you choose to purchase can save you and your family money.

The more that you read, the more things you will know. The more that you learn, the more places you’ll go.”
Dr. Seuss

Today, we will learn more about the Brands we buy and attempt to answer the consumer question –can we really get more for less?

So, you enter the grocery store and now you have a plethora of choice on what brand to buy. So many choices! Well this week we will try to make the decision a little easier and will ponder some questions that you may have asked yourself:
           – What is a ‘Control Label/Private label’?
            – Is there a difference in sensory profiles (taste) across all these brands? For example, at Loblaw do you purchase No Name, President’s Choice or a National Brand equivalent?
           – Or maybe you asked yourself why is there a difference in price between these brands? What’s the best value?

These are some of the questions that continue to mystify consumers and today we will attempt to debunk the Brand-choice mystery!

This will be a TWO-part blog. In Part II (next week) we will continue to explore questions such as:
           – Why do Retailers want us to buy their Control Label ie Kenmore, Master’s Choice, Life, Rexall Brand, etc?
           – Why do retailers have National Brands then? And how do National Brands compete if a retailer’s Control label is strongly entrenched in a Retailer/Merchant Planogram?
           – Why are control label initiatives at the forefront of a Retailer strategy?

So let’s begin.

What is a Control Label? Control Label is a brand that a Retailer owns and quite literally ‘controls’ – for example: the marketing, the name, the spec, the size, the flavour, etc. It can also be called a Private Label and these products are managed in-house. Manufacturing/producing the products, however, is not a retailer’s core competency and thus they team-up with Vendors to produce Control label products. National Brands (ie Kraft, Pepsi, Dove, etc) are not controlled by the retailer and operate independently.

So what’s the difference in all these brands? Some companies have two-tier Control labels. Loblaw, for example, has the discounted No Name and the premium President’s Choice (PC). No Name is developed to ‘match’ the National Brand in terms of specs used and deliver a similar taste experience (albeit some No Name products succeed, some don’t!). PC will use ‘premium ingredients’ versus the national brand and despite the use of premium ingredients, PC’s price image is still less than the National Brand!?

So why and how is control label less expensive? The major cost differences between a control label product and a national brand is ‘overhead’. National Brands spend lots of money on R&D (research and development) and marketing and consumer studies. Moreover, consumer packaged goods companies (CPG) that develop the National Brands, have a team of people (Brand Managers) working on each brand. Conversely, Retailers have only one Product Manager/Developer working on several control label products so their energy is spread, while CPG focused.

Thus the value proposition of control label – ‘more for less’ – does resonate well with consumers! And therefore, Control Label products really can provide more for your dollar!

Stay tuned for next week’s part two edition.

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