Once upon a time, if you were an up-and-coming brand, getting your foot in the door of a department store or multi-brand retailer was the stuff of dreams. Now? It’s a much-changed world where the relationship status often reads, ‘it’s complicated.’ The truth is that in today’s retail environment, the risks can sometimes outweigh the benefits of getting into bed with a retailer of scale. But there are ways to assess the likelihood of a successful partnership, aside from looking solely at financials and store counts.
So to go it alone or get into a relationship? Here we give you some tips if and when you set out to identify the right partners to grow your business. Think of this as pre-emptive couples counseling.
How’s Our Chemistry?
There’s a sweet spot here when it comes to identifying whether the target market makes sense for you; you want the right mix of access to your core consumer but also to fresh new markets. Like any successful relationship, there needs to be enough similarities and differences to keep things interesting and sustainable. So with that in mind, don’t close the door of opportunity on consumers who might be on the fringes, especially if gaining access to them introduces you to a world of adjacent opportunities and partnerships.
Perhaps it goes without saying, but coming to the table armed with intel and data on who you are and what you value gets thing off on the right foot. For example, being willing to share what your core consumers’ brand and retailer preferences are, their prevailing social media habits, and disposable income and time prioritization, will help both sides identify whether this relationship has that certain something. (Perhaps this relationship analogy diverges a bit as we haven’t elicited quite the same enthusiastic response with this first date tactic.)
Am I The One?
Are you really that special to the retailer? The only way to know that is to do your homework and understand precisely what currently exists in the assortment at your target retailer. Given their existing product mix (and other suitors, if you want to think of it this way), what's your 'je ne sais quoi?' Who do both the consumer and the merchant consider as the next best thing? (They’re not always the same, and the answers might not be what you expect.) An ideal situation for both parties is that your product tells a story that is uniquely compelling, yet fits in with the overall value proposition that retailer offers. (You complete me.)
To be exclusive or not? The best way to address this age-old question is to look at costs versus benefits. (You can blame the harsh reality of online dating for this.) The immediate benefits can cloud the long-term view of a relationship's health. Is your retail partner sufficiently invested in the future of technology, product development and discovery, and new target markets? If they seem merely the safe choice, well, you might be wise to find a partner who is more finely tuned to the needs of not only today’s but tomorrow’s consumer. However, if and when you do find ‘the one,’ there’s much strategic goodwill to be gained by partnering up with someone who shares your core values.
Do You Like Me Just For My Looks?
Today your product is hot, but tomorrow? If retail’s history tells us anything, it’s that perfect product-to-market execution inevitably falters at some point. And while certainly no one sets out on this path with these difficulties in mind, you’d be remiss to not consider how you will work through the inevitable challenges that a market relationship will entail. You are partners who, at the end of the day and despite being separate entities, need to work together to achieve shared goals. Therefore, you need to be looking for signs from the beginning that you will have unnecessary and unwanted curve balls with which to deal.
Let’s look at one scenario, a scenario many major brands find themselves in presently. Their retail partner frequently engages in promotional messaging. Okay, that’s great, they’re getting themselves in front of consumers on a regular basis, but what are the details of that conversation? Is it a continual promise of discounts, or is it one that highlights fresh and exciting product? Needless to say, as a brand you will likely find yourself caught up in this conversation, and once in it, it can be difficult to either extract yourself or reverse its course. The scenario we hinted at previously? Well, it can result in, amongst other unpleasant side effects, your brand being sold at the slimmest of margins with a side of diminished brand perception. While promotions might not be a deal-breaker, you must consider the advantages and disadvantages of being party to this marketing tactic from the beginning.
Okay, so you have gotten over all of those relationship issues and are starting to get, like, really serious about things. What's next? Well, hopefully you’re making this official, and while things are looking good, you still need to be careful. This is because being a small vendor to a larger player can oftentimes come with a contract that has painful and debilitating terms. In the same way you shouldn’t sign a prenup without reading it, you should be very careful to ensure the terms of that contract don’t impede your ability to pay the bills and continue business as usual. Make sure to look at the type of sale requirements, payment terms, shipping and handling details, and discounting for early payment. If your cost structure isn’t built to sustain these requirements, you may need to consider whether this relationship is worth the hardship.
Where Do We Grow From Here?
So you’re really doing it. It’s a done deal, and you’ve never been more excited about the future ahead. It’s going to be hard work, and as a brand, you want to be the best possible partner to that retailer. The way ahead means keeping a pulse on changes in the consumer market, taking advantage of opportunities to expand your horizons whether that be via new products or markets, and always, always being willing to make changes when they’re needed.
Oh, and for those of you forging ahead solo or not in an exclusive relationship? Keep your eyes peeled. This is a brave new world of uncharted retail territory, and you have more opportunities than ever to make this thing work on your terms.
Looks like our time is up. See you next week.