As a former corporate buyer and executive of one of the largest and most successful retailing and mass-merchandising chain store company in the world, I have people frequently ask me the "true key" to having a corporate buyer select their item over others for a market test.
I always manage to try to convince them to expect only a test initially, and to make certain that their product or innovation is packaged professionally, has a value that is perceived to be fair to both the end consumer and the corporate buyer, and to make certain that their product will enhance both the gross margins and the overall appeal of the department the product will be sold in.
Also, they must understand prior to making their merchandising presentation to the prospective buyer that there is a divergent ratio between the MSRP and the true landed cost of the item — this is known in retail circles as gross margin.
You see, every corporate buyer will view every new product as a potential liability, even though he may see the potential net worth of the product. To him it is an un-proven commodity, until and unless it can be proven otherwise. If the gross margin is unfair to the rest of the department, it is also unfair to the store unit as a whole, as it has a detracting value, lowering the gross margin of every item in the entire store.
You must make the initial presentation keeping that thought in mind, and be ready to negotiate to a landed cost that the buyer is comfortable with, but that you can still profit from. Once your product has proven its worth, some of these factors will change, but your key goal at this stage is to merely insert your product into his retail unit.
A typical average for a "hard-line" item or product which is determined to be durable goods would be in a range from 35%-45%, depending on the retailer. Softline goods, with the exception of basic undergarments, shoes and shoe products, and domestic items, are primarily fashion-oriented, making them less durable, and these type of products must command a higher margin as they are directly related to a higher liability factor.
Another factor that makes a great difference in your overall presentation to the corporate buyer is the psychology of colors that are involved in your packaging scheme. A good exercise is to visit the some of the retail units you propose to make your presentation to, and study the packaging of the products that are already on the shelf. The possible exception to this would be a "fad" item.
Remember, if it does not excite the end-user consumer, it will never be seen on the shelf, because the buyer you make the presentation to is well-versed in the common appeal of the masses. He will not be interested in purchasing for resale a product that is not synergistic with other products in the department because of faulty packaging, or packaging that does not reflect "friendliness" to either the retail unit or the end use consumer.
Another point to ponder. Retail merchants have computerized the bulk of their operation — thus allowing them greater ease in tracking those things needed to survive in a high-tech, sharply competitive retail world. Computerization gives them the ability to scrutinize with crystal clear detail in real time such operational details as gross margins, turnover, sales per square foot, sales per lineal foot, sales per square inch, advertising costs related to cost-to-sell factors, and on and on.
The computer is a wonderful tool for corporate retailers. I can well remember the RTC Factor (resistance to change) when the first computerized inventory tracking system was installed in the first store of the chain I was with. We had all watched countless times as inventory services had came into the units to inventory the stores, carrying their small computerized units and inventorying a forty-foot gondola in twenty minutes when that same gondola would have taken us two hours via the old paper method. But little did we realize at the time just how streamlined the computerized system could be, and what it would save in labor costs alone, not to mention paper costs and postage.
But the one thing it took forever to understand was the computer's keen ability to be totally objective, to immediately spot trends and store them, thus making the buyer's job much easier. If the computerized sales showed an item was moving, for example, ten items per week, and paying only a 30% margin, it was quickly identified and dropped from the inventory. There were and are still exceptions to this, such as a riding mower that is a large-ticket item, or a product that some vendor had subsidized the advertising program through a cooperative agreement, but it would almost invariably catch up with new products struggling to make their niche in the marketplace.
One final thing that really irked me during my buying days. If your product has stood the tests of positioning, the demographical work and market research is completed, and you are ready to launch into the marketplace, don't make the mistake of mailing out samples to prospective corporate buyers.
As a buyer, I would routinely visit with 300-400 representatives of various products in the course of a normal week. Those who presented via postal service were seldom read, if ever. Unfair, probably, but the prevailing thought was and still is that if it is good enough to sell in "my" chain, it is good enough to be presented in person. Anything less than that is substandard, and it greatly diminishes your opportunity to tap into that particular market.
Another thing you should consider also is that most inventors do not make really good negotiators — they are intrinsically tied to their product very closely, and don't handle rejection very well. Do not be afraid to retain the services of a competent professional, but first, of course, ask for references of companies he deals with on a routine basis, and what his or her background qualifications are. Chances are good if they cannot sell themselves to you, they can't sell your product line into the marketplace.
As a former buyer, I have found that former retail buyers and intelligent women make the best representatives you can use, as the former buyer can identify with the prospective buyer from a unique position, and there are increasingly more women being placed in corporate America's buying offices.