In Store for Growth
From boutiques to backroom operations, the retail niche has opportunities for patient, marketing-minded distributors.
BY SUSAN KEEN FLYNN
Tony Mendes used to sell to small grocery stores, but as the market changed, he moved uptown and upscale. One of the distributor's top retail clients is a fur store. Mendes, president of distributorship Enterprise Business Forms, Riverside, R.I., sells tags, labels, envelopes, commercial printing and more to one store in Rhode Island. But he sees potential for more business: The fur store, owned by an international conglomerate based in New York, has several locations in New England.
Penetrating the account takes patience, Mendes says, just as securing the first order five years ago did. "I had to persevere, start out small and prove myself numerous times," he says. Enterprise Business Forms recently landed some of the furrier's premium printing business, including commercial printing for its Deluxe Club Plan. Customers who buy fur coats, priced on average from $20,000 to $90,000, join the store's Deluxe Club Plan for maintenance, storage, free pickup and cleaning of their furs, plus a 3-year insurance policy that includes coverage against fire, theft or accidental damage.
Two pieces Enterprise Business Forms provides for its client's Deluxe Club Plan are brochures and rack cards. Mendes supplied 1,500 trifold brochures featuring information on how to care for fur garments, terms and conditions of the sale, services offered by the fur store and more. He also sold the customer 25,000 4-color rack cards depicting a model in a fur. (See samples, left.) The 33ˇ4 x 87ˇ8-inch cards fit in a presentation folder and include details on the client's Deluxe Club Plan. The folders are handed to prospective fur buyers. The rack cards contain data on the appreciation value of furs and the importance of insuring the coats.
Enterprise Business Forms, Riverside, R.I., sells brochures, rack cards and other products to a fur store. The distributorship recently landed some of the furrier's premium printing business, including commercial printing for its Deluxe Club Plan.
The information on storage, insurance and garment care is critical for high-end products such as furs. So is the presentation. "Color is very critical," Mendes says. Recently, he discovered just how critical while working on promotional post cards. The 71ˇ8 x 45ˇ8-inch post cards featured a model on the front. "We call the post card 'The Lady in Red' because the model is wearing a red chinchilla," Mendes says. Designing and producing this simple post card was laborious, he says.
Enterprise Business Forms relied on a graphic designer to create the post card. Getting the fur store to approve the overall design and give the OK that the red on the red chinchilla looked just right took approximately 15 proofs, two sets of MatchPrints™ and two months. "It was quite a learning process for me," Mendes says.
What's in Store?
Mendes considers himself "married to the account." And just like a good spouse, he supports the furrier. This month, the store is playing host to a "Business After Hours" event for the local chamber of commerce. Enterprise Business Forms, also a member of the chamber, will help attract businesses to the event, where the fur store will serve drinks and hors d'oeurves. Models will circulate in furs.
Mendes has a special relationship with this specialty retailer--a smart move, according to industry trends. Specialty retailing is the single dominant retail format. More than half of the top 200 retailers worldwide operate specialty stores, according to the 2004 Global Powers of Retailing report by Deloitte Touche Tohmatsu and STORES magazine. These retailers include Home Depot, Best Buy, Gap and Toys 'R' Us. Conversely, department stores and discount stores, with their one-stop-shop approaches, only make up 27 percent and 18.5 percent respectively of the top 200 retailers.
If you focus on retailers, you should know the trends that will affect your livelihood. So what's in store for stores? Here are three movements in retail and ways distributorships can capitalize on the trends:
* The de-malling of America. For years, regional malls were mainstays of retail. They were bigger, decked with parking lots and close to highways. But the tide has turned, and "Main Street" shopping has returned. Many communities are building hybrid developments, with a mix of commercial and residential establishments. In these streetscape environments, park benches replace parking lots.
The good news for distributors is that while mixed-use centers include chic national chains, such as Banana Republic and Williams-Sonoma, they also feature local retailers. Smaller mom-and-pop stores add to the neighborhood feel and are often easier accounts for distributorships to land.
* Stores within stores. According to the Global Powers of Retailing study, more retailers are expanding their venues to increase sales. RadioShack has opened stores inside TrueValue Hardware stores, and Payless ShoeSource announced its first Express store in HEB Grocery Stores. Many retailers are adding food lines so shoppers can eat and remain in the store. For example, Wal-Mart is testing Krispy Kreme donut stores within some of its supercenters. Distributors already selling to the main store may be able to penetrate these secondary stores.
Some retailers also are appearing in novel locations: Starbucks is opening full-service shops inside banks. Distributors who sell to those financial institutions should consider targeting the coffee shops as well.
* A technology surge. "Companies continue to invest in technologies that allow them to better target consumers and to more effectively set prices," says the Global Powers of Retailing report. Plastic loyalty cards, a key offering of distributorships, continue to gain popularity as a customer retention tool. But many printing professionals miss a great opportunity to help retailers integrate the information obtained when stores scan those cards to better buying decisions. Savvy distributorships link software, hardware and print solutions, allowing retailers to more efficiently market to consumers and buy and track merchandise.
Larger retailers are testing radio frequency identification (RFID) solutions. Suppliers install antenna systems on pallets and cases that will be shipped to stores' distribution centers. These RFID tags allow companies to track items anywhere along the supply chain. Stores hope that enhanced inventory management and reduced shrinkagewill lead to significant savings. Wal-Mart has dictated that its top 100 suppliers provide RFID-tagged products to the superstore's distribution centers by 2005.
The Back Door Approach
Forget the glitzy store aisles and gleaming countertops. Distribution centers are where Jim Wesley focuses his attention. Prior to the bankruptcy of Kmart, and its subsequent emergence from Chapter 11, Wesley sold corrugated boxes, tape, labels, forms and other products to the discount retailer's distribution centers. He still supplies many products to distribution companies, which sell their goods to retailers for resale.
"The key is to realize the whole world supplies products to retailers," says Wesley, president of Forms & Media Products, a distributorship in Purchase, N.Y. "The retail niche sounds so glamorous. But all distribution companies upsell to retailers or sell products that will eventually become part of the retail chain."
Wesley supplies millions of warranty cards to several jewelry companies that sell necklaces, bracelets, earrings and more to Wal-Mart and the Home Shopping Network. The 2-color textured cards, which are about the size of business cards, include data about the lifetime warranty of the jewelry. They rest inside jewelry boxes on top of puff pads (padded inserts that hold the jewelry inside the box).
Although Wesley's client is the jewelry distributor, its customers lay down the requirements for the warranty cards and other printed products. For example, Home Shopping Network (HSN) must approve all warranty card designs, including colors and paper selection, so they look nice inside the packaging.
In addition, HSN and other retailers set conditions for bar codes. "Retailer requirements are so strict," Wesley says. "You have to know and meet their specific needs; otherwise, there are charge-backs." For instance, if the bar code appears in the incorrect position on the back of the puff pads, they could be sent back and the jewelry distributor charged.
Despite the stringent requirements that vary store by store, Wesley prefers doing business with distribution companies that sell to numerous retailers. "You're dealing with a company that may sell a million bracelets that go to multiple retailers rather than a smaller Mom-and-Pop store," he says. These distribution companies rely on Forms & Media Products' expertise on everything from product design to shipping.
One niche the distributorship serves is the flavor and fragrance industry. Wesley's clients provide flavors for food products and scents for perfumes, shampoos, soap and more. Aside from forms and labels, Wesley supplies data collection equipment, including scanners and readers. He also sells packaging products, such as tamper-evident tape for corrugated drums that contain flavors and fragrances. If the tape is removed or repositioned after it's applied, the words "removed" or "tampered with" appear on the drums.
Wesley assisted one fragrance company when it switched software programs. He conducted an on-site survey, helping the client ascertain its hardware needs. The client has three locations in New Jersey and uses approximately 50 scanners at different points in its warehouse. Wesley sold the client the necessary data collection tools, plus the aluminum labels attached to each vat of fragrance. Providing this breadth of products "takes us from concept to completion," Wesley says. "Companies are downsizing. If they have a vendor that can provide everything, it makes [the supplier] that much more valuable."
Forms & Media Products' focus on becoming more valuable to customers echoes a sentiment in the introduction to the Global Powers of Retailing report: "The retail environment continues to be challenging, with intense competition and pressure on prices, but it still offers growth for those with the right offer."
The Shopping Buddy
Many shoppers dread entering the supermarket, whether they're weary moms or overworked executives running into the store after work. Standing in line for deli meat, searching for coupons, waiting in the checkout line--all are tasks most folks dislike. And all are tasks that Boston-based supermarket Stop & Shop is trying to improve with its Shopping Buddy System.
The Shopping Buddy is a cart-based wireless shopping aide being used in several stores in Massachusetts. These "smart carts" rely on Cart Companion software from Cuesol, an IBM business partner, to act as personal assistants to grocery shoppers. The system includes a touch-screen IBM computer on the shopping cart handle, equipped with a laser scanner. Users scan their loyalty cards when they arrive at the store, thereby linking their personal shopping history to the 8 x 11-inch computer tablet.
The wireless browser and ceiling-embedded sensors enable the computer to send and receive data to speed up and simplify grocery shopping. Here are a few of the functions the Shopping Buddy performs:
* Alerts shopper to sale items and items with special prices specifically for that shopper. Paperless coupons appear on the screen when the shopper is in the aisle where those products are shelved, and users touch the screen to accept the offers.
* Places the shopper's deli order so it's ready when he or she arrives at the counter
* Scans items as users place them in the cart, eliminating the need to wait in line at the checkout counter
* Allows customers to create shopping lists at home and email them to the store, so they can skip the paper list
* Tracks the shopper's loyalty points and reward programs
After a successful pilot program, Stop & Shop plans to roll out the intelligent shopping carts to 20 additional stores in the first quarter of 2005. By the end of 2005, it hopes to have an additional 150 installations in Stop & Shop and its sister chain, Washington D.C.-based Giant.
