What Niche Beauty Brands Need to Know to Win Over Retailers
The number of new niche brands has reached unprecedented levels in the beauty industry, but many fail to recognise the pitfalls in getting their products onto retailers’ shelves.
Helen Miller, former Commercial Director for Boots Beauty, understands exactly what it’s like for new brands starting out. She’s seen so many newcomers fall at the first hurdle, because they failed to understand what the retailer wants. It doesn’t have to be that way.
At last week’s CEW Mentoring Event, she shared her experiences and gave valuable advice on how to build retailer relationships for the long-term.
Helen pointed out: “Retailers need brands to give their customers choice and brands need access to those customers, however it’s not a perfect marriage. But it doesn’t have to be a struggle if you’re aware of the essential rules.”
Important retail rules
Retailers manage categories, not individual brands. It can be whole categories e.g. total beauty, or parts, e.g. skincare - Talk about how your brand can play an important role for them.
Managing individual brands or products is often done by junior members or data analysis - Remember that senior buying management will be thinking at category level, so adjust your pitch accordingly.
Retailers focus on what their competition are doing. This can makes for reactive, short-term decision-making - Try not to get frustrated by this. Make sure you can talk knowledgeably about the competition.
Retailers want brands and services that their customers cannot get elsewhere - Offering exclusivity will put you higher on their priority list.
So what can aspiring brands to do make retailers take notice?
Helen advises: “Take time to understand where the power lies in the relationship. It’s not about struggle or win or lose. Retailers are keen to give as much support as they can.”
Think how the retailer sees the category –go shopping with them with your eyes open. Walk in their shoes
Identify what you have in your brand that the retailer wants
Discover what the retailer is missing and provide it
Look at what the competition is doing well and offer it to the retailer
Tell the retailer about the brand benefits in a way that is relevant to them, not just you
The Pareto Principle
We all know about the 80/20 rule, but how many brands really understand how it works in practice?
Helen showed how brands {and retailers} repeatedly get in wrong. “For most beauty brands it holds true that 80% of the profit comes from very few SKUs. Even top selling brands can sell on average only 4 SKUs per store per month. The problem is that 80% of their line sells on average just 0.25 SKU per store per month. That’s only 3 sales per year! So with 6 or more SKU’s filling the shelf, that could be 2 years worth of stock sitting there.“
When a brand is extended to second tier stores, their products might churn only one product per year or less. As a result, the display and stock looks tired and dirty. Best sellers can be out of stock but the retailer looks at the cash holding and sees that 80% of the brand is not selling. The brand is delisted after 2 or 3 years and is seen as a failure, not the distribution decision”.
Helen believes that understanding the principle of the rate of sale is crucial to a brand’s success. It can be a hard lesson to learn, because it goes against what most brands want –to chase new distribution.
Discover further analysis, consumer insights and recommendations on the niche brand explosion in the forthcoming Premium Market Report 2013.