A Special Series from North American Wholesale Lumber Association
BY SABRINA SECCARECCIA, GRACIOUS LIVING
Getting your product into a big box retailer can be a huge boon for your company. The potential for increased, consistent sales is appealing, but there are also plenty of challenges to consider before going into business with a large store.
Big Box Benefits
The advantages of working with big box retailers are manifold. From a sales perspective, if you get a large initial order with reorder potential, you will see a consistent profit throughout the year. In that scenario, you are always producing and selling, even in the off season. In the off season (winter), you are building inventory, and in the spring, summer and fall, you are constantly selling and shipping material.
From a marketing perspective, working with a big box retailer can dramatically increase your brand awareness. When you pair with a large retailer, you have access to marketing tools such as:
- Flyer programs – Your product and brand are readily available and promoted in flyers that are distributed in newspapers locally and potentially nationally.
- Online presence – Once you land a product with a big box, they generally set you up on their website, creating more visibility for your product and brand in the consumer mind.
- Social media – This is an increasingly important vehicle to gain brand awareness and consumer favor. When you are featured through a social media outlet, you are capturing even more consumer minds and positive brand recognition.
There are, of course, challenges to working with big box stores, chief among them pricing. As a manufacturer or producer of items being sold in a big box store, you need to always appeal to the buyers on a pricing level. If you can’t beat the existing price, generally you will not win the business.
Another challenge is getting allocated retail space. The trend for big box retailers is to carry as little physical inventory as possible, so they push a special order or selling only online programs. These types of programs make it easier for stores to keep the least amount of inventory in stores but also allows them to have the product available to customers at any time.
This is a challenge for manufacturers because these programs put the onus on the manufactures to package and ship items to store. This, in turn, drives up the cost of the product that we are trying to keep down to land the business in the first place.
The best way to convince big box retailers to allocate space for your product is through showing sales history and displaying consumer demand. If your product has a couple years of sales history within that retailer and within others in the same market, it is easier to display customer demand through sales data. Showing concrete demand for the items you are attempting to allocate space for in store programs is very beneficial.
As a general rule, big box retailers today are working to cut down the amount of SKUs stocked in store as cost-saving measures. If you can present a limited, core product offering that is proven to be in demand in their markets, that display consistent sales growth year over year and show positive reordering data, it is usually a great start to further conversations.
Further challenges occur after you’ve landed the big box business. Quality, service and marketing are always important, but once you start working the big box account is when you get to start showing your worth in these realms. However, you still need to be aware that price increases or shifts can very negatively affect your relationship, even if you rank high in quality, service and marketing.
There are also times where, as a manufacturer, a term of selling with a particular retailer is that you must have your material distributed through a specific distributor. You may have your own functioning distribution channels but are required to work with someone new.
There are growing pains with this, as you need to establish and define a new working relationship. But, in the end, working with a new team can always work to your advantage in growing your connections within the distribution field.
Ultimately, successfully working with a big box retailer comes down to your people who present and position your product, your customer service and support staff that work with the actual locations to offer the best service possible. Price is always a big factor in the game, but if your team manages to create a relationship with the people they interact with on a regular basis, no matter what level of the retailer they work for, it is an additional pull to keep them wanting working with you.
– Sabrina Seccareccia is marketing coordinator with Gracious Living Innovations, Mississauga, Ontario, and a member of NAWLA’s marketing committee.