Here we are again: Another amazing season has closed, and now it's time to start getting ready for 2017.
To use the table above, start with the wholesale cost of a product you may be considering adding to your lineup. Find your desired gross profit percentage (or margin) from the left hand column, and then multiply your cost by the corresponding cost multiplier in the right hand column. The resulting figure is the price you would have to get for that product to maintain your desired gross profit margin.
"What, already?" you might wonder.
Yes indeed ā the best time to start preparing is when the previous season is fresh in our heads. And for many retailers, that preparation comes down to deciding what new products to bring into your store, a choice that for many involves attending one of our industry's many trade shows.
No matter which show(s) you like to attend, be they national, international, regional or local distributor shows, your tactic for choosing what to sell needs to be the same each year.
Walking into a trade show can be quite confusing at times. You'll see manufacturers and suppliers that you know, some that you have never heard of and some that you just walk past without batting an eye. There are thousands of different products strewn about a couple hundred-thousand square feet. So how do you choose from all of this?
Here are a few product acquisition secrets.
Be Prepared
The first thing you need to do is come prepared; you need to be organized while traversing the trade show floor. The easiest method is the tried, tested, proven method of the notebook and pen. I still carry a pen and paper everywhere I go ā and those who know me well understand that I hate paper ā but it is quick, easy and efficient and inexpensive.
The first thing you should do when you meet a vendor is immediately staple their business card to the notebook page, write down their booth number and take notes on the products or services they offer. This way, when you're sitting down at lunch or dinner reviewing your day, you can quickly reference what you saw and who the contact was. And if you need to revisit the vendor, you have the booth number right there. This method has saved me tons of time both at the show and when I am back in my office and need to do follow-up.
For those of you who are more digital savvy, try using Microsoft One Note. You can take a picture of the business card and type or write the notes next to the picture within the program. Both iOS and Andriod also offer their own notes apps that can help you do similar things. Whatever method you choose, being organized is the key to building a successful product program.
Hit the Floor
As soon as the ribbon is cut on the first day of the floor, there's a mad dash to hit the show floor.
So here's a tip that's easy and will save you a ton of time and frustration: Go left. Studies have shown that 80 percent of your customers will turn right upon walking into your store ā and that doesn't change on a trade show floor. When everyone is heading right, don't go with the flow ā go left for the least amount of traffic at the show.
My strategy is to start my walk from the back left corner of the show floor and work my way toward the front in a zigzag pattern. Not only is the traffic thinner, but booth staff have more time to fill you in on their new products and services.
No matter where you are on the floor, make sure to look at each vendor's booth, even if you initially think that booth does not pertain to you. Like sifting for gold, you'll sometimes be surprised by what you find in each booth.
Finally, be courteous to all the vendors. Thank them for being there and spending time with you. They spend a tremendous of money, time and resources coming to these shows to support you and our industry.
Careful Product Selection
Now that you are at the show, prepared and on the floor, it's time to start looking at individual products. Do yourself a big favor and make sure to visit the suppliers with whom you're doing business to see what they're offering ā many companies wait until show season to premier new products and pricing for the next season. So this is the perfect time to see, feel, touch new products, ask questions of your current supplier and get the low-down on pricing on the new products and programs.
When looking at new products or suppliers at the show, keep my 7 P's approach in mind:
1) Product: How does the product you are looking for complement your current offering? Complementary products are a great way to increase average consumer spend in your store and sell more products without spending an abundance of resources promoting a new product line.
2) Promotion: How are you going to promote the product that you are looking at? Is this a complementary product that requires fewer marketing resources and a more impulse approach? Or is this a new product line or offering that will require a lot of marketing to launch and sell?
3) Price/Profit: Can you make an adequate margin on the product? When considering this, focus on the difference between what the product retails for and what you are paying for the product (cost). Always look at what you can sell the product for instead of focusing on the cost of the product. If you can make your margin, that is the most important way to look at the pricing. (To learn more, check out my margin calculator, right.)
4) Placement: Where will this product go in your store(s)? If it's an impulse item, do you have room near checkout or the water testing lab? Is the product large enough to require its own dedicated space in the showroom? Will this product replace or add to an existing area? Understanding how much space the product requires, and knowing if you can provide that space, is extremely important to its success.
5) Plan-o-grams: Does the supplier have planograms, bundles or POP displays for their products? (Often, suppliers offer packages or bundles of the manufacturer's most popular products, or products that are bundled and sold to a particular region of the country. Make sure you ask and, if they don't, ask if they have a list of their top 25 or 50 products.) Special displays can help catch your customer's eye help get new product out the door.
6) Protection: There are a lot manufacturers, distributors and suppliers who offer exclusive products for brick-and-mortar stores only. These products can come with an extended warranty for retailers, MAP pricing or a protected territory. Understanding this and its complexities protects the profitability of your business and differentiates you from online only retailers. I can't stress to you enough the importance of partnering with suppliers who help protect you and your business.
7) Value-add: Does the supplier you are looking at provide value add? Do they have co-op programs or marketing assistance, store displays, training, referral websites or merchandising assistance? For those who don't know, "value-add" refers to a service in which the supplier partners with you in selling their products or product lines. I always love to do business with suppliers who help me sell and promote their products, since we both win!
There is a lot to see and do at trade shows. If you come with a group, I always find it best to divide and conquer. Split up the tasks between people and meet a couple of times during the day to discuss and share what you saw. Be sure to make time in your schedule to go back and revisit vendors if you need to or schedule a follow-up appointment with a supplier back at your store.
In the end, we are a niche specialty industry built on relationships and trust, and that philosophy is truly on display at trade shows. As such, be sure to communicate openly with your suppliers about your opportunities, challenges and goals ā they're here to help in any way possible to see you, and the rest of our industry, be successful.
Comments or thoughts on this article? Please e-mail [email protected].
Ted Lawrence, POOLCORP corporate retail category manager, has been in the specialty swimming pool industry for more than 24 years and is known as a leading authority on omnichannel retail. With his experience and proven methods, Lawrence coaches hundreds of small independent as well as large multi-store chains on how to skyrocket revenues, increase consumer loyalty, plan for the future and reach the next level. He is an award-winning international presenter at dozens of industry events globally.
