How to Build a Retail Empire

How to Build a Retail Empire

The Importance of Retailing

Entrepreneurs can build a business with a great product, a great team, and great
funding, but without the knowledge of how to retail effectively, their business may find
it difficult to break into the market. Retail stores can help small businesses in this by
promoting their healthy product(s), allowing them to gain more exposure and greater
product distribution. Although it may be challenging, this guide will help you understand
how to enter the health food retail market and ensure that your healthy product gets
the recognition it deserves.

1. Merchandise in the field

Whether you are still merchandising in the field yourself or have expanded to the
point where you no longer have time for personal in-field merchandising across all
your retail points, it is beneficial to have at least one person advocating for your
product at the point of purchase. Field reps are the solution to this- they are the
primary point of contact, support, and services between your company and the
retailer. Having a team in the field ensures that (1) your product is positioned for
success, (2) you can quickly find and fix out-of-stock problems, and (3) you can
easily collect details about competitors’ activities regarding in-store promotions
like sampling and display set-up. You have two options for creating a field team to
represent your product in retail:

Build your own team

Your own people are the most aligned with your goals and are as passionate about
the brand as you are. They will be your “Evangelists,” doing their best to make
your product a success. For a smaller company that doesn’t require broad
coverage, this may be a good idea as it is a highly personalized approach. Hiring
and training a team can be expensive as well as time consuming, but this team will
be completely dedicated to your product’s success.

Use an intermediary - Third Party Merchandiser

These organizations take the burden of hiring and training off your shoulders. They
often spread the expense of payroll and mileage across the brands that they
represent, resulting in a much lower cost. With a TPM, you can get broader
coverage faster and for a smaller investment than if you built your own team. The
only caveat is that third party merchandisers won’t have the same passion that you
and your personal team would possess, as they will be dividing their enthusiasm
and focus among all of their customers. You may find, however, that the larger
your company grows, the more sense it may make to hire an intermediary.

Whether you choose to build your own team or to hire a third party merchandiser,
make sure that the team is using Field Activity Management solutions and that you
have direct access to the data that is collected in the field. Field Activity
Management solutions are systems that give you visibility into the actions taken
by your field representatives, and give them the tools that they need to efficiently
collect and report customer data from the field. Field Activity Management not
only encourages accountability, but also gives you real time visibility to what is
happening with your products and competition in the field. With this software, you
can see what your reps see. This allows for you to virtually be “in the field” with
them, helping and directing them as needed. Ongoing management and
communication are imperative for building an effective sales team, and Field
Activity Management is an easy way to do both.

“Regular, consistent two-way communication is critical to keep the field staff
informed and connected to the home office, as well as keeping the home office
informed regarding issues in the field.” - International Franchise Association

2. Location, location, location
How many times have you wandered the aisles in
search of a product, only to give up and grab a
competitor’s product instead? If your product is in an
easily accessible place, you can avoid that scenario.
Ensure that customers see your product by placing it
at various locations throughout the store: in the
health products aisle, next to the registers, at the
front of the store, etc. The more places you have your product, the better- if it is
readily available, customers will be more likely to buy it. It is also ideal to locate
your product at points where it slightly interrupts the consumer’s trip through the
store: for example, in an aisle display.


Where you place your product on the shelf also has a considerable impact on
sales. According to an University of Chicago Retail Merchandising study, moving a
product from the “worst” to the “best” vertical position (eye-level) increased sales
by an average of 39%. Combined with a horizontal movement (from the front of
the aisle to the center), this resulted in an average increase of 59% in sales.

Another vital aspect of retail location is to ensure that your product does not go
out of stock. If your product is not available, customers are not going to wait until
it comes back into stock to purchase it; they will buy your competitor’s product
instead. OOS is a problem for everyone- big retailers like Best Buy, Wal-Mart, and
Nike have lost anywhere from $100 million (Nike) to $3 billion (Wal-Mart) due to
OOS issues. According to a study funded by Procter & Gamble, OOS issues have
significant strategic impacts. They result in a direct loss of brand loyalty and
equity, encourage the trial of competitors’ brands, and lower the overall
effectiveness of sales team resources. On the operational side, OOS “lowers the
potential impact of promotions and trade promotions funds, distorts true store
demand, and increases overall cost of the relationship with the retailer” (Gruen &
Corsten 2007).

According to this same study, 25% of OOS were situations where the product was
in-store but not on shelves, and 47% was due to errors in store ordering and
forecasting (Figure 3). These numbers are significant because it increases the need
for your field reps to double check the retailers where your products are located,
because you cannot necessarily rely on the retailers to be correct.

You can remedy OOS by placing your reps in the field to perform regular retail
audits using Field Activity Management software. Through the use of this
software, field reps can monitor the products by collecting photographic evidence
of the availability of the product on the shelf. Field reps can also check price and
promotion. Although it may cost you more to have your field reps make these
extra stops, this will reduce your out-of-stock problems significantly. The profit
you make from always having your product in stock should balance out the costs
of the additional stops.

3. Make it short, simple, and sweet

Nobody likes reading a textbook when trying to purchase a product. Instead of
overloading the customer with too much information, catch their eye using direct
messaging and short slogans. Think about some famous taglines: “Breakfast of
Champions” (Wheaties); “The Ultimate Driving Machine” (BMW); “Save money.
Live Better” (Walmart). By making your tagline short and catchy, it will be easier
for your ad to stand out from your competitors’. Make sure to focus on your
product benefits (i.e. what value you are providing the customer with), but make it
memorable.

Direct messages are especially important at the point of purchase. Recent data
from Point of Purchase Advertising International suggests that 70-74% of
shoppers make their purchase decision in the store. Point of purchase materials
can vary from product displays to banners and danglers, so you have a variety of
choices to work with. With an effective POP display, you can convince customers
to buy your product instead of a competitor’s.
One thing to keep in mind about POP displays is that your ideals for the display
may not correlate with that of the retailer’s. According to some experts, up to 50%
of POP materials may not even be displayed. The easiest solution for this is to
have your field reps communicate with the retailer and set up the displays
themselves.

4. Get personal

Customers are more likely to buy a brand they trust, and businesses can build that
trust by creating a personal relationship with their consumers through two main
factors: the use of packaging and effectiveness of in-store advertising.

Packaging

Although advertising allows a business to prime the customer, packaging is what
customers remember. If a customer dislikes the packaging of a product, they will
be less likely to buy it, even if they enjoy the product itself. Packaging is also an
important way customers differentiate brands from their competitors. Consider
the yellow, red, green, and blue logo of KIND bars or the trademark rabbit of
Annie’s Homegrown. These products don’t get lost among the sea of health food
products because they are easily distinguishable.

The most effective way to package is through the use of images. Customers
recognize and remember pictures more easily than text, according to the Journal
of Consumer Research (1984). A prime example of creating a personalized
approach in packaging and brand image is Newman’s Own. The company brand
has Paul Newman’s face front and center, smiling and hand-drawn. This promotes
a sense of happiness and comfort; customers trust this brand because Newman
looks like a friendly neighbor.

Messages to the customer on the package also help personalize the product. Take
Clif bars, for example. On the back of each bar is a message from Gary, the owner
and founder of the company. He explains the company’s origins, referencing that it
was named after his father and that the product was born out of “Mom’s kitchen.”
This friendly, down-to-earth note makes the consumer feel more connected to the
brand on a personal level and builds helps build brand loyalty.

Packaging doesn’t necessarily need words in order to be effective. Take advantage
of color psychology. For example, the color green is a popular choice because it
suggests that the product is organic and environmentally friendly, while the color
white conveys purity and wholesomeness.

Don’t forget the actual packaging material- it’s beneficial to package your product
in materials that your customers appreciate (hemp, eco-friendly material, etc.) and
advertise accordingly using buzzwords like “handmade,” “home-grown,” and
“locally-sourced.” Not only do these words suggest a more personal connection,
but they also follow the current handmade trend spawned by the success of direct
selling marketplaces like Etsy.

The most important thing to remember about packaging is to keep your target
market in mind. If you understand your target market and what they want, along
with what they like and dislike, then you can adjust your packaging according to
their tastes, making them more likely to buy it.
For more information on how to package effectively, check out our other best
practice guide: Best Practices for Effective Product Packaging

In-store Advertising

Now that you know how to effectively package and present your brand, it is
important to advertise accordingly. It is often expensive to pay retailers to
advertise for you in their promotional flyers, but you can always give your field
reps flyers or posters and direct them to ask if the store managers will allow the
flyers to be put up. Ideally, these ads will be near the product- any advertisements
consumers see about the product will be taken into consideration as they are
gathering information during their purchasing process. Personalize this process
through in-store sampling, which we’ll go more in detail about below.

5. Promote

When you go to a store and see two similar products side by side, which one do
you pick? The one that’s on sale, of course. Your customers have the same
mentality. By offering promotions such as BOGO (or variations of it like Buy 2 Get
1 Free, Buy 1 Get 1 50% Off), you can easily boost sales. These types of
psychological pricing drive up sales traffic, and according to this study published in
the Research Journal of Applied Sciences, Engineering, and Technology, 42.3% of
respondents who purchased products under a BOGO scheme were highly satisfied
and 46.8% had repurchase intentions (Maxwell Scientific Organization 2013).
You can also pay to be included in the retailer’s sale flyer. Although this may be
more expensive (in some cases, up to $3,000 for a square inch color picture), it can
pay off because the purchasing decisions of 70% of customers are influenced by
flyers. Manufacturer coupons are another (cheaper) option; stores like CVS will
often allow customers to combine your coupon with a sale to give them the best
deal, resulting in a sales increase.

Another good way to promote is through in-store sampling. According to AdWeek,
those who sampled a product were 11% more likely to purchase it again and also
were 6% more likely to buy another item from that brand. While these numbers
may not seem like a lot, sampling goes far in building brand trust and loyalty
because it allows customers to try the product at no cost to them. Retailers like
Whole Foods and Trader Joe’s practice this, as does the wholesale giant Costco.
Another perk of in-store sampling- the sample table will have your product for the
consumer to buy if they enjoy the sample, which is the ultimate convenience. This
allows the customer greater access to the product, making them more likely to
purchase it. The sample tables are good sources of marketing as well, because
human interaction increases the likelihood of purchase. The employee can direct
customers on where to find the product and can answer any questions the
customer may have. In most cases, customers who talk to the employee at the
sample table end up buying more products from the brand in addition to the one
they sampled.

6. Link back

You’ve put a lot of effort into building your social media following. When you
create that perfect video that gets hundreds of shares on Facebook or a popular
tweet that gets wildly retweeted on Twitter, your brand will get noticed on social
media, but it won’t be effective until you tell customers where they can purchase
your product. Always make sure to link back to your homepage or a “locations”
page that lists the retailers that carry your product.
As is seen by the social media funnel, social media creates brand recognition and
may generate leads to your website. In order to turn these leads into customers,
you need to link your social media posts back to your website.

When potential consumers visit your site after being linked there from Twitter or
Facebook, they may not necessarily buy your product right away. However, if they
liked what they saw, they will come back within a week to a month and make a
purchase then (Patel, “How to Build a Social Media Marketing Funnel”).
Therefore, if social media is the first step to converting strangers into customers,
the final step to this conversion (as well as an important step in retention) is
making sure that you link all social media posts back to your website. After you’ve
drawn potential customers in with social media, your website is your biggest
chance to convince them to make a purchase.

“Turn strangers into friends, friends into customers, and customers into
salespeople.” -Seth Godin, Flipping the Funnel

7. Measure and adjust
Each of these tips will impact sales to a different degree. Use Field Activity
Management software to collect data in order to carefully track how much each
change is increasing your sales. With this data, you can then analyze and adjust
accordingly; you can also identify distribution patterns and fix any problems that
may arise.

Measure the impact of each of your merchandising, placement and promotional
efforts, and carefully track how much each change is impacting your sales. Every
product appeals to a slightly different market segment, and each adjustment to
how it is marketed in retail will impact sales in a different manner. Success comes
from measuring and adjusting to maximize the things that work well, and
eliminating the things that do not.

Analyze the data. Data analysis can benefit you in
more ways than you realize. According to a
Babson research study, analytical tools help
reduce out-of-stock and overstocking issues and
determine which marketing investments you
should keep and which ones you should adjust.
Professors Marshall Fisher and Ananth Raman of
the Wharton School of Business and the Harvard
Business School, respectively, also encourage
data analysis because it can improve “supply chain agility, product assortment
planning and management, and price optimization” (Fisher and Raman, The New
Science of Retailing: How Analytics Are Transforming the Supply Chain and
Improving Performance).

Adjust, because the market is always changing and it is imperative to be able to
adapt along with it. By constantly collecting and analyzing data through the use of
Field Activity Management software and making informed adjustments to your
field activities, you will evolve along with the market and be able to keep up with
any changes.

Conclusion

What to take away from this: Helping your healthy product break into the health
food retail market successfully can be done by following the steps outlined above.
To summarize, in-field merchandising is ultimately one of the most important
steps, as you need people in the field to advocate for your product and ensure that
it is properly placed in the store.
Another one of your focal points should be in the store. Your product’s in-store
approach, location, and promotion are key factors to its success, as this is where
the customers are most easily influenced.
The last two steps are not physical, but still important nonetheless. Social media
and technology are a part of everyday life, and are easy ways to connect to the
consumer. By linking back to your product, you help customers make a connection
between social media and purchasing the actual product. Through the
measurement and analysis of the effects of each of these steps to success, you can
optimize your results and retail effectively.
Now that you know the 7 steps to winning at retail, you can be sure that your
healthy product is positioned for success!