The Practical Manager
Your store's retail space is the best tool for creating loyal customers and generating sales. I am going to share some ideas to help you use this valuable real estate to its potential. What a shame it would be to own prime, fertile farmland in an area with a great growing climate if the only crops growing were dandelions and crabgrass. What a loss of potential. This same thing is true of many retail stores. Great potential—but results far below what they could have been. As an owner/manager/buyer, you control what "crops" are going to be planted.
A good friend of mine, a buyer for a major distributor, has this sign on the wall in his office: Buy More Good Stuff. Stop Buying Bad Stuff. It reminds him to plant the best.
What to carry
Establish and follow your ingredient standards. While the word "organic" means something definite, the word "natural" does not. It is important to decide when you look at natural products what ingredients you will carry and what ingredients you will not. This will require you to do some research, ask a lot of questions and be diligent when you look at products.
After some investigation, I found out the ingredient was used as a whitening agent in house paint.
Years ago when I was a retail buyer, a vendor wanted me to pick up an item. It had an ingredient in it that I wasn't familiar with. After some investigation, I found out the ingredient was used as a whitening agent in house paint. (Yes—I was in the natural products industry at the time.) I chose not to pick up that item. The vendor, who reformulated his product without this ingredient two years later, found five items on our shelves that had this same ingredient in them. We thanked him for his help and discontinued those five items. If your customers trust you to provide products at a certain standard, you will validate that trust by staying true to your standard.
What brands and items should you carry? To refer to my friend's sign, you only want the good stuff. A few thoughts on only having the good stuff:
Review your product movement. Use data from a point of sale system (if you have one) or from reports that you get from your vendors. Establish a threshold—a minimum volume that a product needs to sell for you to keep it on your shelves. I would bet that if you look at product movement, you would find items that you should get rid of to make room for new items.
Review best-seller lists from your vendors. Specifically, ask them for a listing of items you don't carry that could do well in your market, because these represent lost opportunities. Is there a guarantee that these will do well for you? No, but if they take the spot on the shelf of something that doesn't sell for you, it's a chance worth taking.
Visit with your brokers and reps. Discuss sales concerns you have about their items and lines. These men and women are merchandising specialists who are in more stores in the average week than they can count. They see what works and what doesn't. Listen objectively to their feedback about how to merchandise to create better sales opportunities.
Know what your key brands are. These are the lines that work best in your store—lines produced by companies whose philosophy is akin to yours and whose programs of retail support dovetail with your vendor programs. These bread-and-butter lines need to have prime shelf placement. You should focus on them when building endcaps and setting up promotions and demos. These companies want to invest time, effort and money to grow both your business and theirs.
Be aware of duplicates. In your vitamin section, you probably need to have more than one SKU of vitamin C, but do you need to have 39? You might need to have more than one chicken noodle soup, but do you need to have six? Duplicates give your customers variety in their choices, and while that's important, it can work against you. Six kinds of chicken noodle soup will take up space that you could have used for other kinds of soup. You have gained variety in that one area, but in doing so have lost it for the rest of that category.
Decide how to price it. Remember that SRP does stand for suggested retail price and that the first word is suggested. You do not have to use this price—it's a reference guide. Manufacturers take some pertinent things into account when setting this price, primarily the cost of the product and the pricing of similar products in the marketplace. But what they don't know are specific conditions in your local marketplace. Certain commodity products—such as soymilk or energy bars—might be promoted heavily and priced aggressively in your market. If you put them on the shelf at SRP, your customers will notice and some of them will choose to shop elsewhere. One of the first steps in pricing your merchandise correctly is knowing what your competition carries and how it is priced. For most items, you can be at SRP; for some, you can choose to be above it. But for those well-known commodity items, you need to have your pricing in line with that of the other retailers in your market.
Keep it looking good. Nothing is nicer for a shopper than a clean, well-merchandised store. My son and I were recently poking around a natural foods store. He and I have been in the industry for a long time, so we ended up checking out every aisle. We found an old, dusty product—stuff that I knew had been discontinued two years ago—sitting next to the new product, which had recently had a label change. It brought the look of the whole set down. I am sure the old stuff was left there to sell through, but sitting next to the new stuff, it didn't have a chance. We also saw an endcap—in the middle of May—with oatmeal and hot cereal. It was well-merchandised but out of touch with what was selling at that time of year. Walk your aisles and look at them through the eyes of your customers. How can you make the shopping experience more valuable and enjoyable to them?
Bill Crawford, director of retail custom programs at New Hope Natural Media, spent 12 years on the management team of a major natural products chain. Contact him at [email protected]
Natural Foods Merchandiser volume XXVII/number 9/p. 26-27