How do I launch my products into Tesco?
So you have an amazing product? But are you ready to change the world…?
Launching your products into a major retailer is an incredible (and important) step into turning your product into a sustainable, profitable business. Once you are on the shelves of a major retailer, you can start to generate ‘volume’ sales - that is the high volumes required to sustain a fast moving consumer goods business that typically has low margins. Without high volumes, you may find you either need very high retail prices (perhaps higher than your brand can justify) or you might struggle to deliver the margins needed for your business to be viable.
But, launching into major retailers comes with major risks. You will need stock to deliver the pipefill orders (the first order that fills the shelves), you will need cash (they are not going to pay for this order up front!), you will need to negotiate an invoice price and promotion plan that works for both businesses, you will need a brand and marketing plan that will deliver rate of sale in-line or ahead of your competitors, you need a logistics provider that can deliver pallets to an hourly delivery window, you are going to need insurance, EDI ordering systems, Brandbank set-up, barcodes, cases, forecasts and a thick skin. Launching is exhilarating and exciting, but can also be a quick end to brands without a second chance.
Make your mistakes early
Every supplier will have weaknesses across their business and supply chain. Before you launch into Tesco, you need to find out what these weaknesses are.
Stress testing your supply chain can only really be done in real time - often the bottlenecks don’t appear where you expect them to - and the best way to do this is by scaling your business through smaller stores first. Get some listings, test out your capability for delivery, stock management, customer service (both consumer and account) and understand the strengths and weaknesses of your team.
If your 3PL (Third Party Logistics Provider) is great at shipping D2C (Direct to Consumer) but unable to fulfill pallets you need to know this before launching into a big retailer. If your manufacture has a 16 week lead time and no capacity for growth then you need another option. If your Invoice Financing limit is maxed out then you need to find more cash. Often you don’t know what the issues are likely to be until you start scaling up - but thinking about them all in advance will help mitigate problems.
Many of your earlier retailers will be far more forgiving, and willing to talk to you, than the big Major Multiples. Making big mistakes with big retailers is the best way to get your products delisted.
Focus on Rate of Sale
There is nothing worse than doing all the work of getting your products listed only to see them fail to sell on shelf. The question you should ask yourself is: “Why are my products going to sell in this store?”
The packaging has to stand out, the messages must appeal to consumers, your pricing must be competitive. Do not expect a shopper to invest into spending more on a product they don’t understand, have never heard of and can’t afford. Most people will not care as much as you do about your ingredients, packaging or story - you have to make it super simple for them.
Get everything lined up for the launch, don’t wait 3 months after your products are on shelf to start focusing on rate of sale. You must have a well thought through promotion plan, a way of getting your products displayed in store, the retailer investment required to get visibility, your digital campaigns firing and anyone interested in your brand must know where to find you
Track Results and Be Honest
Demand EPOS results from your retailer, you may need to pay for them if you want them regularly. Without EPOS you cannot plan, adjust or understand. Never expect your buyer at Tesco to be the one keeping an eye on your SKU sales - they have enough things to manage without having to dig into the detail of your brand.
Ideally you should have a benchmark of success already understood before launch - what does the number one in the category do? If the brand leader can do 3 units per store per week then you can understand what to aim for. You should also be aware of what failure looks like - the buyer will give you an indication. If the products you have replaced to 0.5 units per store per week then you will need to do better to beat the next range review.
From launch, you should be watching the results, and sharing them with your account. Explain when things have gone wrong (stock shortages, promotion failures etc.) Keep a clear record of what is happening in store so you can explain any anomalies. It is better to have regular, open dialogue with your account than waiting until the next range review to explain why things hadn’t gone as hoped.
The Curse of Major Distribution
Getting into Tesco’s is only the first step, staying there year after year is the real challenge. You only get pipefill once (the stock required to fill the shelves and DC at launch) - don’t be surprised if you re-invest all of the revenue from this back into the retailer for growth.
Brands often chase distribution as a route to growth - relying on big early orders as a route to growth. But as always, all that matters is how many shoppers are buying your products. Every step in distribution requires a leap in shopper numbers, which requires a jump in marketing reach - often outside your tight (and limited) audience that have been buying your products so far.
Your competitors are likely to wake up at this point as well - don’t be surprised if they increase promotions, or copy your products. As flattering as it is, you need to be ready to fight. Your margins and cash requirements are going to be tighter than ever.
However - winning in Tesco means you are winning at a National level, your brand is on its way to being a Household Name, and once you start selling high volumes you may finally have a sustainable business with some real value.
