Supermarket Merchandising

It is tough out there, there’s no end of testimony to that. But maybe that means there’s never been a better time. Out of chaos comes opportunity.

For an independent drinks brand, getting onto the shelves of a mass-market supermarket or wholesaler is not easy. Even for the very successful brands, it isn’t a simple or quick journey, no matter how good their liquid is. Our reason for being, as drinks logistics experts, is to give drinks creators valuable time and energy they need to work on getting on shelves and staying there.

What is merchandising?

Merchandising is anything that contributes to the sale of a product, like marketing and distribution. But no aspect of merchandising happens in isolation. Everything aspect is linked, and the first thing to know from the off, are the limitations to that merchandising. Shelves are filled once a week, with enough for that week, for that product.

Putting yourself in the place of the buyer

To appreciate the world the buyer, or trading manager is in, you need to see through their eyes, and know the four goals they live and breathe:

·       Gain market share

·       Grow revenue, or cash in the till

·       Differentiate the offer and grow customer numbers

·       Improve margin

There’s a careful mix to manage to achieve these. A retailer may need to drive margin through a mix of sales of core and private labels, because the mix hits their KPI for margin. However, cash in the till is key so differentiating the offer to entice more customers into the store to increase bottle turnover is also vital.  

Several private labels might be needed to balance having hundreds of core labels. It’s this mix for the retailer that is crucial to understand; it’s hardwired into their day-to-day performance.

Getting an account and RTM (route to market)

You need a way in, which means having an account, or access to an account with a retailer or a wholesaler. You may be able to distil your own whisky and get it in bottles, but how it is going to get to your customers? Your RTM is vital, and part of this could be affiliating yourself with someone who is trusted in the market.

Rock-solid data and insight

You may believe in your product. But this isn’t enough. You must have insight, and rock-solid data the market exists for your brand. You need case studies, taste tests beyond just your friends and family and brand testing.

The idea you can present a product to a mass market retailer, along with the big people you’re up against, without doing the hard yard in product and brand development is fanciful.

Seeding in on-trade

As part of the process of the RTM, seeding in on-trade is critical. You want to ensure your liquid is being consumed, in the places that reflect your iconography, styling and brand. It’s an essential part of getting your drink recognised by consumers and the trade.

Learn from what’s been done

There are some great examples of brands. Take Kraken – a mass market dark rum, widely distributed with global reach. Wind back ten years to when they started, and they were literally going door to door. They built the brand, seeded it in on-trade and built an incredible following of people who associated themselves with its subculture. The strength of their user-generated content has been fundamental to their success. They only offer one product, but they’ve defended their territory very well.

“An empty bottle is a good bottle”

Not everyone wants world domination. Maybe you want to get into several wine bars, or just a geographic area, but you want your liquid on lips. Your bottle needs to get emptied for it to be good; it’s not a museum piece. You’re looking for returning consumers who come back time and time again for more.

Standing out on the shelf

When a supermarket is racking up, the general rule is products are placed so price flows from left to right and upwards with consideration to tempo, or consumption rate. With spirits it is common that vodka will be at the bottom, then up to gin, rum, whisky, with luxury or specials at the top, such as a super premium vodka or tequila.

It doesn’t matter what the shape, height and width of your bottle is, because in terms of placing on the shelf, it will flow with price. But your product must aesthetically appeal to buyers, so it must look different on the shelf and hold its own. Don’t forget about security tagging.

Take AU Vodka, which has been super successful. It doesn’t appeal to everyone. But what they’ve clearly identified is highly polished metallic bottles and bright-coloured liquids equals lots of potential buyers. Instagram-ability is a thing for their customers. Again, it’s about turning back to the insight and research, and understanding what triggers people.  

Research the wall of bottles

A top tip is to look at the amount of space given to a subcategory of a drink to know what’s going on in that market. For example, coloured gin – the more variations in the range, the more buoyant the market. If there are only a couple of brands, stay clear. What you’re looking for is good churn.

Look at the retail architecture, price and increments, these give you a good indication of where you should be. Look at your competitors. Who do you want to be like? Decide where you want to be on the scale.

Do you know Sainsburys sells nothing in spirits – as a rule - over £30? That tells you a lot about their market. If you’re above that you immediately take yourself out.

Understand the numbers

If you don’t understand VAT, and duty, your meetings with buyers will be very short. Understand how your product may balance their books. Know what your contribution and margin expectations are in terms of cash profit but also margin as a percentage, and what your figures represent to the buyer.

The crucial trade plan

A trade plan is not just price cuts, but knowing when to promote, for how long and how deep is essential. Your trade plan must take in the calendar year and related peaks and troughs, events like Easter, Valentine’s Day, summer holidays and says what you will do and invest, not only promotions, but activities that elevate your brand and relate to your customers.

Selling one bottle in each store per week is ok

You would always start off with one display in one supermarket. And this is fine, if you have a trade plan.

It is tough out there, there’s no end of testimony to that. But maybe that means there’s never been a better time. Out of chaos comes opportunity.