As partners in a firm that specialises in retail launch strategy, we observe that new brands often face disappointment at the last mile because they are unable to identify the key triggers for retail entry. While the marketing aspects are usually taken care of and product quality is good, the trade partner feedback is not incorporated prior to launch.
Theoretical knowledge and conference room discussions are important, but need to be supplemented by hard facts from the trenches. By incorporating the requirements of trade prior to an expensive brand launch, brands have a higher chance of success.
Here are a few pointers for MNCs and smaller Indian firms to consider prior to retail launch in India. They are mostly related to trade and retail requirements as we assume the brand already has an identity and other marketing material in place.
It’s not just about the margin Many new firms believe the trade will stock any new offering for a slightly higher margin. This is a fallacy. Trade partners know their store space is limited and take a long time to decide on whether to invest in a new product. They concerns beyond the margin are the brand in question, potential ease of conducting business and whether it will appeal to the end consumer. The margin is always important, but secondary off-take and stock availability is equally critical.
An established biotech company wanted to launch a new line of personal care products. While the founder was willing to offer a generous margin to complement his wide range, he was unable to appoint a reputed distributor. This was because his offering lacked packaging visual appeal and a well planned POP support campaign. Trade partners were sceptical of secondary off-take due to low appeal in a competitive environment.
Relationship with trade While reviewing a new brand, trade partners want to get familiar with the company behind the offering. Their questions cover the promoters’ background, production facilities, supply chain investment, product benefits and much more. Usually we find their conversation shifts to understanding how the new offering is differentiated from competition and whether it will be relevant to their customer base.
Retail partners are concerned about the product’s safety and efficiency. If a new product does not work, it is the trade partner who faces the consumer’s wrath.
Positioning in competitive context Prior to launch, most brand owners review the competition and establish a positioning from a branding perspective. Theoretically this seems adequate. However, the trade is already selling these brands and it evaluates all new offerings with a discerning lens. Trade looks for real benefits to consumers, rather than simple marketing claims.
Appropriate marketing support In a market filled with global brands and established Indian players, new brands need to ensure they have base level marketing support to begin conversations with trade.
This means they have to meet hygiene requirements with respect to packaging aesthetics, POP material and other marketing material in-store. Unless these basics are met, trade partners are hesitant to engage with brands. Firms also need to prepare themselves for the longer haul and spend money for secondary offtake once distribution is in place.
Sales support systems New brands need to demonstrate their capabilities in terms of quality, supply chain investment, product launch commitments and marketing support. Trade partners hesitate to stock products with fluctuating quality, or brands that do not invest in marketing support for offtake or where availability is an issue.
The trade views these functions as essential aspects of sales support and need concrete answers to their queries prior to launch.
Sales team and old-fashioned face-time
Brick-and-mortar retail sale is a high-intensity activity with a significant amount of footwork and trade partner face time. Tech support helps but cannot replace the warmth of a face-to-face interaction. So the sales team needs to visit trade partner outlets, share information, request space and accept feedback. They may need to provide local store activation support and work on secondary offtake.
The role of a well trained and properly managed sales team that works in a disciplined manner to achieve sale targets is a critical trigger for retail success.
Commitment to a well-thought business plan Retail success is, at times, a long-drawn process. It involves a detailed distribution plan, retail growth markers, product investments and marketing support.
Trade partners are quick to identify firms who do not exhibit long-term commitment to mutual growth. By staying the course and demonstrating through action, a new firm can establish the foundations of a long-term relationship.
There are costs to retail entry. It’s not just the product and marketing expenses, costs include fixed expenses (warehouses, transport, technical support, software, and so on) and variable expenses (salaries, marketing support, trade campaigns) Working on a realistic business plan with accurate break-even horizons and an appreciation of the magnitude of investment is critical for success.
Rini Dutta is the founder of Centric Brand Advisors, a brand positioning and communication firm