LimeMinds - A Fresh Approach to Business » Business Advice

Business Advice: Working with the big retailers

admin — Mon, 06 Sep 2010 10:05:18 +0000

Often for those who run businesses selling consumer goods the big retailers are seen as some kind of holy grail. True they can deliver great economies of scale to your production, they can get your product out the widest audience and yes they can help you break out into being a mainstream product. But is trading with these big national retailers everything it’s cracked up to be and are the challenges and stresses they exert on your business worth the reward?

Working with large retailers such as Asda, Tesco and Sainsbury’s can help get your product out to the widest market possible, lets face it who doesn’t shop in a supermarket at least once a month? These operators can help you turn a fledgling niche business into a big operator overnight. You can go to zero to hero in days! So what’s the issue, sounds great? Big retailers, big orders, your product in the reach of thousands of shoppers what could go wrong? Well a number of things in truth and some you will have no control over at all.

Firstly getting into the big retailers is no mean feat, getting time with the right person can be challenging enough for big manufacturers let alone some small independent producer no one has every heard of.

Lets imagine you got that meeting and its going well, they love your product, but they have a few questions. They have margin targets and your product won’t deliver in its current format, can you reduce the cost or re-engineer the format? Competition is tough on their shelves have you got the marketing budget to make it work? If it does go into high distribution and demand is high can you meet production requirements and will you make them the number 1 priority over your other small but long standing customers?

Of course these were all questions you’d thought they’d ask and deflected them beautifully, now you need to work with their product development and merchandising teams to make sure the product is delivered and packaged in a satisfactory way. The product is tested for scanning at till and despite a few minor hiccups long the way it all gets through.

Supermarkets can have your products in the reach of thousands

So a month or two down the line and your product is set-up, in depot, on-shelf in store and ready to be scanned. You’ve agreed a launch promotion to help get the word out (of course there is a ticket fee for running it and you will be expected to fund the promotion to keep it margin maintained). Your first product is sold and over the coming weeks and months so are many more. You couldn’t be happier and everything in the garden is rosy, before you know it other retailers are taking your product and you are well on the way to being a big deal in consumer goods.

So where is the real problem? Well often further down the line you will need to invest in your infrastructure to cope with the increased demand, you’ll need more people to support and manage the growth. All good things for any healthy growing business. The challenge comes when you need to increase your prices to support this investment and when the retailers demand support on margin because they’ve decided to move the retail price down.

Further pressure comes when they expect you to promote your product to ever increasingly deep mechanics such as Half Price or BOGOFs. You can quickly escalate into spending huge sums of money in driving your product through the retailers, supporting their margins and watching yours erode.

Your brand equity can be destroyed instantly if they choose to crash the retail price or promote to excessive levels. Of course you can stand firm and refuse to promote to these levels or force the price increase through. The result at best a reluctance to work with you and your brands, a decrease in the levels of distribution. At worst de-list!

We would never say working with the big grocery retailers was a bad thing in fact it can often be the best thing for a product or brand. All we would say is manage your expectations and be wary of potential issues and pitfalls of trading with these big players.

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Is Your Business Ready For 2010

admin — Mon, 14 Dec 2009 15:35:54 +0000

There is no doubt that 2009 has been a tough year for the economy and an even tougher year for small businesses. Reduced consumer spending, increased cost of borrowing, less credit available and political uncertainty have all contributed to making it a tough year for those in business.

2010 unfortunately looks to be just as tough if not worse as taxes look set to rise and credit still remains thin on the ground. Consumer confidence is low and as food prices start to increase, the reality of inflation will start to hurt people’s contracting wallets.

For some businesses however the year will be a bright one. Those firms who position themselves correctly by having a clear strategy, reduced cost base and a determined management team will do well as their competition struggle. History shows that those businesses who invest in tough economic times thrive and grow, often to become powerful companies in the stronger economic period which follows.

Investing in a company can come in many forms, it may represent an upgrade of IT systems or manufacturing equipment. It may mean recruiting some high-caliber personnel or investing in training to enhance your skill base. It can also mean investing in the goals and direction of your business through a strong, clear and focused plan of attack.

Any business with strong leadership and a clear goals always outperforms one without but often taking time to evaluate your position and future direction is the last thing on your mind when the day to day challenges consumer all your time. Help is at hand…

Limeminds are offering the best value investment you can make in your business through our recession busting Business Report E-Package where we will evaluate the health of your business and most importantly provide a clear strategy for 2010 and beyond. This fantastic offer is only £66.00 including VAT and is available until 31/01/2010.

The E-Package contains:

5 Page Business Report – evaluating current sale and financial performance and provides a suggested plan for success in 2010. The report will highlight the strengths and weaknesses within your business, areas to make cost reductions and high growth opportunities you can utilize in 2010.
2 months of free E-consultancy to help implement the plans in the Business Report
Future discounts on a range of our services and products

As an E-package you will not have any consultants spending weeks walking around your business which can often interfere with the day to day running. Information required to complete the report can be submitted when you want rather than needing to arrange meetings during your busy working day.

To access this package please email us at consultants@limeminds.com before 31/01/10, you will then be sent a business questionaire to complete and receive a call to discuss your current position. This package can also benefit those businesses in the pre-startup phase just as much as a business which has been in operation for 20 years.

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Managing Your Key Customers

admin — Mon, 31 Aug 2009 19:59:44 +0000

Managing your large and key customers is an important yet often tricky act for many businesses, especially smaller ones.

By their very nature your key customers can place you as a supplier (of product or service) under much greater pressure than your smaller customers. Large customers deliver the much needed revenue and often prestige for your business or brand but they are also able to apply pressures to your supply chain, margin and time.

How you manage these customers can be vital to the future success of your business, manage them poorly and they can ultimately be the downfall of your business.

Know their business - Allan Leighton (former CEO of Asda) once said “If you don’t know my business, you don’t have a business!”. Find out everything you can about their operation, understand what pressures they may be coming under and build your service around that knowledge.

Relationships are key – People by from people, it might be a cliche but its true. If you need a customer to get behind a new product or to implement a change it all happen much faster and smoother if you have a good relationship with your buyer and the team around them.

Have a plan – Take time to write a 2/3 year plan for your key customers and option build for possible future scenarios. Be clear on your strategy to develop these accounts and understand where you want them to be in the future. Look to have a ‘What if?’ solution ie: What if they go bust? What is the impact and alternative for my business?

Move from being Transactional to Collaborative - If you spend all your time with your key customers talking about investment, prices, deals, service levels, margins you have a transactional relationship. Work on moving the relationship to a more collaborative one by bringing more to the table than just price. Look to discuss joint business plans, offer strategic insights and thought leadership, demonstrate your understanding of their business and trading environment. Make yourself a strategic partner and position your product/service as far away from being a commodity as possible.

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Customer Loyalty Will Drive Growth

admin — Wed, 01 Jul 2009 20:05:06 +0000

Businesses large and small who have a loyal customer base out perform their competitors time and time again, but so many firms never take the time to understand what their customers think of their service and products.

We suggest you ask your customers one simple question – How do you rate our service from 1 to 10?

This one question will give you a great understanding of what your customers think of you, those who rate you 9 or 10 a loyal customers and advocates of your business. 7 or 8 is a moderate score these people are content but they won’t be shouting about your business to their friends and family. Anything below a 7 is the area of concern and where you should look to dig deeper. You should look to interview a handful of these low scorers and find out what is really hurting your business. Research has shown that you will gain more of an insight by interviewing in depth a handful of customers than surveying a vast number.

Once you have all your results build a plan based on the in-depth feedback and record your score (number of 9 & 10′s – number of 6 & belows). Keep gaining feedback track your score and adapt your plan to build customer loyalty.

If you need inspiration or motivation to take action and address your customer loyalty just take a look a the likes of Apple I-Tunes or Amazon for examples of businesses that have out grown their competitors off the back of customer satisfaction, just imagine your business could be next.

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Can Independent Retail Survive the Downtown?

admin — Tue, 30 Jun 2009 22:08:51 +0000

Over the last 10/15 years the pressure on independent retailers has increased as the dominance of the supermarkets has expanded. The numbers of independent retailers are at an all time low and those who are surviving are finding profit margins squeezed more than ever.

Now the arrival of a severe economic downturn and un-relenting pressure on the high street, will independent retail survive?

Supermarkets have changed the retailing landscape for ever and the dominance of the big four is greater than ever – 1 in every £3 spent in retail is spent in Tescos. Price wars have eroded profit margins and independent stores just can’t compete with the stack em high, price em low mentality that the grocers are displaying.

Its been a painful trend for the small shopkeeper and it doesn’t look like improving much in the near future, so what can the independent retailer do to survive in this market?

1> Understand your role – What role does your shop play in the consumers routine? Are you mid-week top up? Weekend beers and snacks for a big night in? Tobacco and a paper on the morning walk to work? Find out what the majority of your shoppers use you for and make sure you have the products and the layout to make the most of your consumer demographics.

2> Don’t go toe to toe with the supermarkets – If Somerfield down the road are hammering the price on beer and wine, don’t throw all your profit away by trying to compete head to head on price. Look for a point of difference, range, pack formats, service. Whatever you can make your USP use it.

3> Make the shopping experience a pleasant one – It might sound basic but the number of independent retailers who have dirty shelves, cluttered aisles or a confusing layouts is astounding. Today’s shopper expects high standards, don’t let your shop disappoint, and remember your personality and attention to your shoppers needs will make you stand out from the supermarkets – make the most of it.

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