BRAND SECRETS AND STRATEGIES

PODCAST #10

Hello and thank you for joining us today. This is the Brand Secrets and Strategies Podcast #10

Welcome to the Brand Secrets and Strategies podcast where the focus is on empowering brands and raising the bar.

I’m your host Dan Lohman. This weekly show is dedicated to getting your brand on the shelf and keeping it there.

Get ready to learn actionable insights and strategic solutions to grow your brand and save you valuable time and money.

LETS ROLL UP OUR SLEEVES AND GET STARTED!

Today, I thought it'd be fun to do a show around the theme of Halloween, so welcome to Retail Horror Stories, and don't worry, you don't need to listen to this with a friend, and it won't give you nightmares. At least, I hope not. Perhaps I should put in a disclaimer some place. All brands go through growing pains, and you'll be surprised to hear that some of the stories between one brand and another brand are very similar. Today, I'm going to share with you real-life stories, things from my past, things that I've seen with other brands that I've worked with, and brands that I've worked for, problems that they've had. Hopefully, you can relate. This is not only to show you that those problems happen with other brands, but I also wanted to share with you stories about things brands could have done to help avoid some of those problems. I will protect the names of the innocent, if you will, but again, these are real-life stories.

I hope you can relate, and I'd love to hear from you afterwards to see what resonated with you. Perhaps you'd like to share your story with me or even come on this podcast. I'd love to hear your thoughts and get your input. Before we get started, I'd like to share some harsh realities with you. First of all, if your brand, if your name is on the outside of the package, consumers are going to look at that, and everything or anything that happens to it, whether they can't find it or whatever, that's going to be your fault, the brand's fault. The simple reality is that consumers are not going to blame the night stocking person because they didn't get the product on the shelf, or the truck driver that got stuck in the snow, or the ingredient supplier that perhaps wasn't able to meet your last-minute demands for ingredients. The point here is simple. Brands need to take complete responsibility for their products. As a retailer, it is your job to keep that shelf full to make it possible for consumers to buy your products when they go into every store.

Consumers don't want excuses. What they want is your product, and if they can't find your product, then they're going to choose another brand. Think of it this way. You've worked really hard to come up with an amazing product. You've put a lot of love, a lot of time, a lot of blood, sweat, and tears into it. Now, you have an opportunity to get it on the shelf, your dream, but when your consumers cannot find your product, then they have an opportunity to choose the competition. You've probably heard me say time and time again that you never get a second chance to disappoint a consumer. Remember, this show is about you and for you. These are stories and strategies that you can use to help get your product on the shelf and in the hands of more consumers. Now, back to our story.

The first horror story I'm going to share with you is about a brand that spent a lot of money and a lot of time developing a product that would have been a real game-changer in the industry. They had tested very well with consumers. They put a lot of time and energy into the branding, into the messaging, into the packaging, and they thought that they had a real winner. They even produced all the different sales collateral that we needed at retail. We were ready to go. I remember the kickoff like it was yesterday, and all the hype and all the media that they had lined up to support this product. There were three different versions of the product that we were going to sell. The primary product that was going to be a surefire win in every single retailer. At least, that's what they shared with us. There was the sample version that we were going to give out at product demos and to share with retailers. Then there was the other product that did not test well. It was in a different form that consumers really weren't comfortable with.

Anyhow, long story short, the brand launched the product. We were ready for the big day, and then we started going to retail. The challenge was, the product literally did not fit on store shelves. It was much too tall by a couple of inches. This was a huge issue. Okay, you can stop laughing, or crying, depending on how this affects you. Long story short, we had a real problem. We just came out with a huge product. We spent a tremendous amount on the launch and all the prep work to get ready to launch the product, and now, all of a sudden, it wouldn't fit on store shelves. We had a choice to make. We could either go in as a brand and modify, literally, every single shelf or in every single category, every single retailer store, or try to come up with a plan B. Well, since modifying every shelf in every store was horribly expensive, plan B was to use the odd item that was in a form that people weren't really comfortable with.

Well, you guessed it. The product that should have been a radical game-changer, a huge, big win for this brand, actually became a huge failure. In less than six months, the item that we had really pinned a lot of our hopes on had failed. You probably guessed by now that I was a salesperson working for the company. This is before category management came about. The moral of the story is, had the brand involved category management, they would have talked to the different retailers and found out what the size requirements, what the retailer schematic requirements were for that category. They would have known that the size of the product would not fit on any retailer shelves, and we probably would have had a very different story as a result.

The second retail horror story I'm going to share with you is very similar and along the same veins. A national brand decided to redo their packaging. What they did is, they came up with a very thin package. It was only about a half-inch thick. On top of that, the package was about nine inches tall. Well, retailers, because of the way they merchandised the product, would have to put the product on end. Problem was, the product would fall down easily, and so it didn't really represent itself well or the brand well when it was on the shelf.

The other issue was, unless the shelf was completely full, you couldn't see the product, because it was always laying on its end. The moral of these two stories are that you really need to understand what your product's going to look like on the shelf, how retailers are going to merchandise it, and how consumers are going to be able to find it. If they can't find it because it's not on the shelf, if they can't find it because it falls down on the shelf, because the packaging doesn't stand out, then as a brand, you failed.

Now for the next retail horror story. Have you ever found a brand that you truly fell in love with? This brand was the single greatest thing in the world. You would ... not literally, but somewhat kind of trade oxygen for it, it was that good. Well, I found such a brand. It was the flagship brand for a budding company. It was amazing. I absolutely loved it. In fact, I remember on many occasions where I would go to several stores looking for just this product. It was that good. Problem was, it was always out of stock. I even talked to the brand about it when I showed up at a few different trade shows, saying, "Hey, I never can find your stuff." I called them a couple times. As a committed evangelist for their product, I was telling everyone about it. Here's the problem. Because the shelf was always out of stock, they mistook out-of-stocks for slow product sales. When it came time to do national category reviews, this particular SKU, this item, failed to meet retailer expectations, and it was eventually discontinued.

In its place, they put the brand's number two item. The challenge with this item is, it didn't sell anywhere near as well. Didn't taste as good, either. They were trying to build their legacy off their number two SKU. The product didn't taste as good, and the consumers that were buying it would not go out of their way, as I had previously, to buy their primary SKU. The moral of the story is this. You need to know what your sales are on the shelf. Don't assume anything. If your sales are the same every single week, that probably means that you have a serious out-of-stock problem. If you have a product that's out of stock, it's not the retailer's fault. It's your fault. It's the brand's fault. Me, as a consumer, remember, I traveled to several stores looking for this product. It wasn't at any of the stores, and I wanted it. Boy, do I want it, and I truly wish it was still available today. Their number two item, it's not as good.

The sad part about it is, is that the brand believed that the number one item just really wasn't resonating with consumers. That was far from the truth. What should this brand have done? When you're a new brand starting out, you don't know what your sales are going to be. You don't know what the shelf takeaway's going to be, so you need to be in the store on a regular basis, even if it means you go and sample different stores every single day. Out-of-stocks are the death of a brand. You cannot afford to be out of stock, not even for one day. In this situation, I would have highly recommended that the brand either rely on consumers like me to give them feedback, or to have someone, a merchandising company, we talked about that in episode number seven, going to the store every single day to make sure the product was on the shelf and make sure that there was no excuse, no opportunity for a consumer who really wants your product to switch into the competition's product.

Again, that's where these advanced strategies come into play. You need to know your numbers. You need to understand exactly what consumers are buying it, when they're buying it, how they're buying it. You need to know whether or not you have an out-of-stock issue. Imagine this. You have an out-of-stock issue now, and then you put the product on promotion. You've just compounded your problem. By the way, the brand that we're talking about had the same problem several different times. They would have side stacks of the product that would be empty in almost no time at all. Then the retailers, because they didn't want to be embarrassed, would literally put the competitor's items on their side stacks and eventually put the competitor's items on the shelf in the hole left by this brand.

Retail horror story number four is about another brand that managed to get distribution at a huge national chain. What a windfall. A small, natural brand being given the honor of being on the shelves across multiple stores, multiple states, and actually, I think even in multiple countries. A dream come true for any brand. The problem here was that the brand could not keep their product on the shelf. I reached out to the brand several times while this was going on. I begged them and pleaded with them to go get the product and physically carry it in the front door of the retailers. They kept saying, "No, no, no. Our distributor's going to handle it," and again, this is not a knock on the distributor. Their problem was, there were out-of-stock issues and other issues with not being able to put their product on the shelf, and so they were busy blaming everyone but themselves. Remember, it's your name on the brand. If you can't keep the shelves full, who's going to get the blame? Not the distributor, not the broker, not the night stock guy, etc. Eventually what happened was, the brand was discontinued.

As a result, it's going to be extremely hard for this brand to get any product back into that retailer. Moreover, why would any other retailer, especially a large national retailer, want to take a chance on a brand that cannot keep their shelves full? Moral of the story, you need to know your numbers. You need to make sure that you can keep the product on the shelf at all times. Don't accept distribution from a retailer unless you can actually maintain your product inventory. You've heard the expression, "Biting off more than you can chew"? Well, that's what this brand did. They bit off far more than they can chew. It would have been a lot smarter for the brand to sit down with the retailer and say, "Here's what we can give you. Here's what we can commit to," and not commit more than they had capacity for. It would have been a lot smarter for the brand to build slowly and strategically over time. Again, that's why these strategies are so important. That's why I do this. That's why this is so relevant to all of you.

Now for your next retail horror story. I've seen this with a lot of brands. I especially see this in natural brands. The problem is that, as a brand, you're so excited to get your products on the shelf, you don't think about what products should be in what stores, and then what your top items are, and which items you want to build the foundation of your success on. For this example, there was a brand that had 11 different SKUs. Instead of saying that, "Items one through five are the top-selling items in the category. Therefore, those are the items we're going to gain distribution on first in every single store," instead of doing that, they decided they'd let the retailer pick and choose which flavors they wanted in their stores. The problem with this is that they didn't have a sturdy foundation to build their sales success on. As a result, the slower-turning items, the less popular items, could not maintain the distribution, could not maintain the sales to warrant remaining on the shelf. They were eventually discontinued. Similar to the other stories, once you get discontinued in a retailer, it's hard to get back in.

As a result, it was hard to replace those items that were discontinued, with the top-selling items. As a result, this made it very difficult for the brand to grow their sales, not to mention making it much harder for this brand to promote their products. When you promote your products, you want to put your best foot forward. If you can promote your number one, your number two, and maybe your number one SKU across all retailers, that gives you a strong promotional product set to build your brand on. The moral of this story, you need to know your numbers. You need to invest in these advanced strategies from day one. They're a critical component of everything you do. In fact, I would argue that they're probably more valuable than a lot of the marketing, a lot of the other things that you probably do as a brand.

How could this brand have done something differently? If the brand had properly developed a KPI strategy, remember your KPI's are your key performance indicators, and put their top-selling items on every shelf in every store, and then built their secondary items or secondary KPIs so that you would gain incremental distribution wherever that store, whatever would fit given the store's size, that brand would have had a really strong promotional base that would have had a really strong foundation to build their brand, and they would have been able to fend off competitive products. They would have had a lot more runway to grow and build their brand and excel and build into other categories and other channels. As a result, this brand lost distribution at key retailers, and it ultimately hurt them. They're still doing okay today, but they're nowhere near as strong as they could have been. Again, I cannot emphasize enough that this is not just a story that affects small brands. It affects large brands as well.

For next retailer horror story I want to share a story about a legacy brand that had a huge promotion within a local chain. The promotion included a deep discount and it did not have a limited amount of product in the store the consumer could buy. Now to set this up and to give you little more background, there're several other retailers in the state that also sold this brand. The chain that we're talking about in this situation did not have the product on every shelf. So what happened was consumer demand was great but the retailer wasn't completely prepared for the success of this promotion. As a result of the branding, the retailer reached out to the distributor begging them for everything they could send them.

Not only was there a lack of market in the product to support this promotion even after this request, but it all also created huge out of stocks with other retailers as well. So what happened was a lot of customers were disappointed. Store shelves across multiple retailers were completely out of stock as a result in fact they were completely out of product for a couple weeks afterwords while it took time to replace the stock. The moral of the story is that of the brand who ran the promotion actually had a really good promotion but they did not adequately prepare and as a result it was a colossal failure. Not only in the retailer that had the promotion, but every retailer within the market. This is again another reason why brands need to own every aspect of their sale success.

You've heard me recommend time and time again that brands need to go to retailers and give them the support that they need. Help them understand what you expect to takeaway with the a promotion. Help to ensure first, that the product is available on every store shelf where the product will be promoted. Make sure that there's enough back-stock in the back room of each store to be able to support the promotion. The result of this failure disappointed a lot of consumers and retailers any probably cost the company a lot of money not only for the promotion at that specific retailer but in terms of loss sales for the next couple of weeks.

For our last retail horror story, I'm going to share with you something that I, again, have seen a lot. You've all heard about how some brands buy their way into shelves. Well, throughout my entire career, the brands I've worked with, brands that I've supported, etc., I've seen brands come in and literally buy shelf space, literally kicking other brands off the shelf. They come up with stories about how the retailers need to use their product for whatever reason. This is a story about a brand that has a history of buying their way into the shelf. They're a big brand, so they can afford to do that, but that's not always the best solution for a retailer. In this situation, what happened was, the brand gave the retailer a lot of money to have their competitive brand kicked off the shelf.

The challenge was, that the retailer was looking at the instant gratification of the big check, and not looking at what discontinuing the other brand would do to their overall sales. Well, after some work and some analysis, what I learned was that the brand that they wanted to kick off the shelf was the brand that was helping to drive sales in their category. In this situation, having both products on the shelf really made a difference. In this situation, the brand that they wanted to kick off the shelf was in most of the market baskets. Remember we talked about the importance of a market basket and the items that are in the market basket? The brand that they wanted to kick off the shelf was in most of the market baskets that represented the items that they wanted to sell. The meat, the produce, the items that they were known for in the marketplace. Discontinuing that brand would have dramatically and negatively impacted their sales and their ability to compete within their community and in their market.

The moral of this story is that you need to be aware of what's going on in the category. You need to be able to defend your shelf placement. You need to understand who your consumer is, how they shop your category, why they buy your product, and when they purchase your product, what else are they buying? You need to be a value-added resource to the retailer, and you need to be on top of what's going on in the market, what the trends are, etc., so that if a competitor ever comes up to a retailer, offers them a big check to kick you off the shelf, you can defend yourself properly.

Remember, at the end of the day, if the consumers can't find your product, they can't buy it. That's your whole reason for being. That's your sole purpose. That's your sole job. Make sure that you understand your numbers. Make sure that you leverage these strategies, the strategies that you hear on all these podcasts and throughout all of my content to help you drive sales sustainably and compete more effectively against the big guys and against anyone out there. The freebie this week is going to be the Merchandising checklist To Grow Sales and Shopper Loyalty, you can text merchandisechecklist to 44222 or download it on my website. You can get today's show notes at brandsecretsandstrategies.com/session10.

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Until next time, this is Dan Lohman with Brand Secrets and Strategies where the focus is on empowering brands and raising the bar.