Let’s say you have a new product that has been selling well online, and you want to take a shot at broadening your distribution by selling through physical retail stores. There are a lot of factors to consider in making this type of strategic decision. Do you have the margins to sell through physical retailers? Can you meet demand if your product sells well? Can you support and service retail distribution? Does your cash flow work under circumstances in which you have less favorable payment terms? There are a host of other questions that need be answered and analyses that need to be completed prior to making the leap into retail. Once you decide to take the plunge, it’s all about execution. One of the most important decisions to make for new products that are being introduced to the retail market for the first time is what to do about retail POP displays.
We hear from a lot of our customers that they have limited budgets, and they want to keep the cost of their retail POP display low because they have to “give the display away.” We understand and sympathize with this point of view; however, our view is that you have scored a touchdown if you are able to secure space within a retail environment for a point-of-purchase display. If you have a new product, chances are that you won’t be able to maximize your sales with an unknown new product if you are placed inline along lots of well recognized brands. Therefore, if you are offered off-shelf placement, we would advise customers to take it and embrace the opportunity to make a strong sales and branding statement. The reality is that most retailers won’t want to bake your new product into their plan-o-gram anyhow without first testing for sell-through.
We recognize that a lot of companies introducing new products have limited budgets so it’s important to keep your economics aligned with the retail value of your product. Don’t overspend on an over-built or overly fancy display in an effort to make a big splash. We would advise a relatively conservative approach that gives strong consideration to the total landed cost of the retail POP display and the return on investment it is likely to generate.
By way of example, we recently designed a set of countertop corrugated displays for the introduction of a new natural air purifier product called Pureboo. Pureboo pouches come in 2 sizes so we created some very attractive and cost-effective displays to get the product and brand introduced to retail. You can see our designs below.
In creating a display program for a new product, particularly if it is a product with a lower price point, there are a few things to keep in mind:
- As a general rule of thumb for lower priced products, try to keep your retail POP display cost in the 5%-10% range of the retail value of the products being merchandised on the display.
- Don’t try to put too much product on the display. There’s a natural tendency to add as much product as possible so you can amortize the cost of the display over a greater number of SKUs, but you also want to show the retailer that your product moves. For the program above, we built these displays to hold just 6 pouches because we wanted fast sell-through.
- Don’t cheap out on the graphics. Adding graphics to a corrugated display adds cost, but it is worth it because every product has a story to tell, and it is one of the most effective ways to build your brand assuming you don’t have the budget for a national advertising campaign. It may be worth it to spend a little extra to flood coat the corrugated displays like we did above to match the product packaging. This helps to create an attractive coordinated presentation.
Once you have a chance to measure your sell-through and run the economics on your program, it may make sense to pitch the retailer on a permanent display program so you can lock in off-shelf real estate. However, in almost all cases involving new products we advocate for a conservative approach that is routed in sound economics and merchandising discipline.
Jim Hollen is the owner and President of RICH LTD. (www.richltd.com), a 35+ year-old California-based point-of-purchase display, retail store fixture, and merchandising solutions firm which has been named among the Top 50 U.S. POP display companies for 9 consecutive years. A former management consultant with McKinsey & Co. and graduate of Stanford Business School, Jim has served more than 3000 brands and retailers over more than 20 years and has authored nearly 500 blogs and e-Books on a wide range of topics related to POP displays, store fixtures, and retail merchandising.
Jim has been to China more than 50 times and has worked directly with more than 30 factories in Asia across a broad range of material categories, including metal, wood, acrylic, injection molded and vacuum formed plastic, corrugated, glass, LED lighting, digital media player, and more. He also oversees RICH LTD.’s domestic manufacturing operation and has experience manufacturing, sourcing, and importing from numerous Asian countries as well as Vietnam and Mexico.
His experience working with brands and retailers spans more than 25 industries such as food and beverage, apparel, consumer electronics, cosmetics/beauty, sporting goods, automotive, pet, gifts and souvenirs, toys, wine and spirits, home improvement, jewelry, eyewear, footwear, consumer products, mass market retail, specialty retail, convenience stores, and numerous other product/retailer categories.