Posted: March 11, 2013, 8:45 p.m. EST
By Barry Berman
To recommend, or not to recommend, that is the question.
Should each staff member be encouraged to recommend the items he or she prefers? Or should all employees favor certain brands when answering customers' questions about pet products?
I recently discussed his topic with the general managers of two of the country's most successful regional pet supply chains. The two companies each have grown, in the years I have known them, from about 10 stores to roughly 20. The two companies are about the same size, their markets are roughly similar in demographics and their stores even look similar.
However, these two chains have opposing views as to who—the store or the employee—should decide what brands to recommend. Despite advantages and disadvantages to both philosophies, the benefits of the store choosing favored brands outweigh those of letting the staff recommend whatever they like.
The ‘Store Recommends' Strategy
If your store is going to favor one or two brands, you need some requirements. First, ask around among reps and other retailers about the brand's reputation for quality and safety. Second, you should have confidence that the brand won't be sold in the retail channels that are most competitive with your business. For example, if you are an independent, you should be assured it won't be sold in big boxes or on websites that discount aggressively.
Exclusivity and consistency are benefits of taking the “store recommends” approach.
If there is a nearby competitor that sells at low margins, see if the manufacturer will promise not to sell the product to that store. If the manufacturer can give you an exclusive for the area around your store, grab it. Ensure that the answers you receive are not just the promises of a local rep who could be working for someone else next week, but are supported by the company's policy.
Such arrangements can offer huge advantages. In the short-term, you can build a secure volume without worrying about customers getting the brand at another store. You also can make a higher margin on any brands you have an exclusive on, because you set the pricing. You'll build volume with that brand, and even though your store might not be very large, you'll ultimately qualify for better deals with the company, further increasing your margin. In the long term, the “store recommends” strategy protects you from today's competitors, as well as from new ones you don't know about.
Consistency is another sizeable benefit. The manager of the chain that recommends a store brand was shocked to hear that at the other chain, which allows employees to recommend their favorite brands, a customer asking about a low-fat dry food on Friday could get a different answer to the same question at the same store on Saturday—or a different answer at different stores on the same day!
A Staff-Driven Strategy
My friends in the “staff decides” camp are not focused on current nor future competition,. This strategy is aimed at empowering the sales staff, and it might make the company a more attractive place to work and contribute to lower turnover. Spreading business among more brands also might allow these retailers to qualify for more deals.
Spreading out business to different brands might have its disadvantages. Managers in the “staff decides” camp tell me that for a brand to succeed in their stores it must have an active local rep who visits often to train store staff, as it is difficult for management to train staff on every brand carried. This can shut out smaller brands that could offer the retailer protection from competitors, as these brands might not have a rep in every market.
Followers of this strategy might think they gain some protection from carrying a lot of brands: If any major brand starts to sell at another chain at lower prices, it would only be a small part of the business. On the other hand, these retailers are not protected if new competition arrives carrying many of the same brands they do, which I have seen happen in several markets. Click here to watch a panel discussion on differentiating your store.
Plan for Future Competition
Blockbuster, Borders, Circuit City—These are names that filled thousands of retail spaces but ultimately were replaced by stores from other categories. All were victims of an ever-growing pace of change.
Competition for pet retailers will continue to grow in intensity, both from the Internet and from brick-and-mortar stores. This is because there are vacant stores almost everywhere, billions are invested in venture capital funds looking for investments and non-specialty chains are expanding their pet departments and their geographic reach.
Many store owners have told me, “My market is too small to support a big box store or more independents.” Now they are up against multiple big boxes and new independents. No matter how big you are, even if you are now about the only game in town, it won't last.
One way to protect yourself is to partner with food brands that can offer you an exclusive and that your staff recommends. The exclusive and the recommendation go together, because you are likely to get an exclusive only from brands not already well-known in your market and that need your recommendation to succeed there. And you can hardly expect a product line that already sells well in your area to take it away from your competitors!
To learn more about staying competitive, click here.
Barry Berman is president and co-founder of NexPet, a co-op for independent retailers, and Grandma Mae's Country Naturals, a pet food company. He has served in executive positions for Central Pet and Brinks and entrepreneurial positions in the home furnishings industry. A graduate of Harvard Business School, he is a member of the World Pet Association board of directors. Contact him at 888-653-8021 or firstname.lastname@example.org.
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