MISTAKE #16: You don’t understand the speed of retail

While the phrase ‘moving at the speed of retail’ typically refers to how quickly companies need to respond to market dynamics, it should not mislead people to believe that all aspects of retail always move fast. 

In fact, the process of gaining distribution can be one of the slowest and most painful experiences vendors face.  It can take vendors far longer than they ever anticipated to get on store shelves…and in some cases, the duration of the process can jeopardize the stability of young or small companies.

KNOW THE TIMELINE

For most retailers and most categories, the modular (the shelf) is updated just once a year. 

Some categories may also do mid-year refreshes, but this tends to be rare.  And it only applies to categories that are (1) dynamic enough to warrant changes in assortment more than once a year and (2) have enough sales volume to offset the labor and markdown costs of resetting the shelf a second time.

This means there is actually a fairly narrow window when your product has the opportunity to gain distribution.

Contact the buyer too soon, and your product is far from top-of-mind as they’ve heard from a hundred other vendors by the time final decisions are made.

Show up a little late, and you’ll have to wait because you’re really 11 months early for next year’s line review.

Line review timing is staggered across categories so they are happening throughout the year.  The same category can have very different schedules across different retailers.  And retailers frequently shift their timelines year-to-year based on changing priorities.  

So you need to do some homework to know when each retailer will be making decisions for your category.

HAVE PATIENT ANTICIPATION

 You need to anticipate all the time lags that follow line reviews and distribution decisions and the ultimate rollout of new modulars:

There is the time from deciding you want to pursue distribution at a retailer to presenting your product.

There is the time from presenting your items to being asked to deliver them to the retailer’s layout center.

There is the time buyers spend designing and testing and redesigning the core modular.

There is time to decide how many trait- or store-specific modulars are justified.

There is time from communicating preliminary distribution decisions to finalizing those decisions.

There is time to determine specific store counts for each SKU.

There is the time to get your item set up in a retailer’s fulfillment system

There is time to fill the retailer’s distribution centers.

There is the time from having the first store in the chain reset the category until the last store has its rest.

There is the time spent getting all modulars into compliance and all items in stock.

There is the time it takes shoppers to discover the category has actually been reset and new items are available for purchase.

And there is the time it takes for shoppers to go through a full purchase cycle which ensures the majority of category buyers at the retailer have been exposed to the new modular and they can start registering repeat purchases or loyalty.

LIVE IN REAL(istic) TIME

Be sure you are approaching your growth plans with a realistic timeline.  Realize how long it can take from the moment you decide to pursue distribution at a retailer before you see any revenue:

In the best-case scenario (assuming your decision to pursue distribution aligns perfectly with the retailer’s line review timing), you might start to see your item transact sales in 6 months.

Worst case scenario, it could take 18 months before your product has any opportunity to ring a register.

On average, a company should assume it will take 12 months to start realizing sales once they start pursuing distribution at a retailer.

And this ignores the risk of a retailer initially putting you in a small sub-segment of stores that is nowhere near the chain-wide distribution you had anticipated.

GET TIME ON YOUR SIDE

Has any of the above surprised you?  Have you ever laid out the sequence of events that need to happen before your item starts selling?

Do you suddenly realize that your core strategy of expanding distribution this year probably won’t produce any meaningful sales until next year?

How long did you think you’d be paying that $10,000 per month retainer you just signed with a broker before it started to be offset with new sales?

Consider your goals for the next few years.  Identify any retailers you are considering pursuing new distribution with.  Now get on the phone with their buying desks today to find out when they have line reviews and will be making their next round of distribution decisions.

Knowing this will help you prioritize your efforts and make more accurate sales projections.