Location, location, location. Prime real estate for any retail product is shelf space. And for smaller companies with a narrow product line, in-store display space is at a premium.
That's why one bootstrapping Central Ohio entrepreneur went so far as to develop an entire line of swim product accessories just to get access to premium retail shelf space.
"Early on, we were a single line vendor," explains Paul Reeder, founder and president of 5-year-old Zura Sports Inc. "We may have had one or two products. It's painful to get shelf space if you don't have a line of product."
So Reeder's Westerville-based company developed four or five related items to market with its signature streamlined kickboards.
"It forced us to have products we might not have done, but it strengthened the category for us," Reeder says, noting Zura now offers the same type of aquatic cross training products as Speedo.
Two years ago, Zura was able to get shelf space for four of its items at Leslie's Poolmart, a specialty chain throughout Ohio. To keep that space, Reeder had to make some serious merchandising changes.
"First, we co-branded our product for Leslie's," he explains. "All the packaging is specific to Leslie's, and we developed a brand called Hydrogym by Leslie's. That appears on the packaging. Zura is on the packaging and on the product."
Reeder says co-branding Zura's products allowed the company to move from four to nine items -- and to take over the entire line of swimming and aquatic aerobic training products, excluding goggles, stocked at Leslie's.
"We doubled our shelf space," he says. "Before, Leslie's was buying from different vendors. Now, we make all those products. We've gotten to be the bully to shove the single line vendors out. To do that, we had to make a commitment to Leslie's by packaging, discounting and dating. We gave them longer than normal payment terms. We agreed on four months, which kills small companies."
But if Zura hadn't done it, someone else would have.
"Someone else would have come along and cut us in half," Reeder says, noting Speedo once had all the goggles on display at Leslie's, but wouldn't co-brand; Tyr came along, did it and got all the shelf space for goggles.
Taking the high road
Robert Rothschild doesn't like to play those games with national retail chains, or any store, he says.
The owner of Robert Rothschild Berry Farm in Urbana sells his berry-inspired sauces, dips and vinegars to 4,000 high-end, niche outlets nationwide with the help of 100 specialty reps. He found the reps by going to the International Fancy Food Show, a convention held in San Francisco, Chicago and New York each year.
"Our main business is selling to specialty retailers," he says. "We do not pay for shelf space. You do not want to buy your way in. You want to have a good enough reputation and quality product. You develop a demand for your product without begging to be in a situation."
Rothschild sells to Kroger specialty stores, but deals directly with local managers rather than the national buyer. He also sells to The Kitchen, a gourmet food store on the grounds of the Longaberger Homestead; Greenbriar Resort in West Virginia; Ritz-Carlton hotels worldwide; and Anderson's General Store locations in Ohio. Sales also go through florists, as well as clothing, furniture and hardware stores -- "any place where it's unique and different where they want something special in their store," he says.
To get his products on the shelves at specialty stores, Rothschild provides his own display racks, which gets him good positioning. He also provides demonstrations or product tasting for customers.
Although being carried by large supermarkets might give Rothschild's products broader exposure, he's unwilling to pay the "slotting" fees requested by many of them.
"We do sell to specialty grocery stores like Wild Oats in New England, but not in Ohio. The minute people start asking for [a fee for] shelf space -- slotting -- we don't work with them."
Working the local angle
Being a local brand has helped Hoster Brewing Co. get its beer on local store shelves, says John Weixel, who was hired as sales manager of the German Village-based brew pub specifically to get its product in grocery stores.
He's done just that -- and without having to hassle with slotting fees.
"For alcohol, it's illegal for them to accept money in any way for putting you on their shelf," Weixel says. "The most profitable aisle in the store is the beer and wine section."
When Weixel signed on with Hoster Brewing almost five years ago, the company averaged $1,200 in retail sales a week or about $62,400 for the year, he says. That came from about a dozen specialty store accounts selling 22-ounce bottles and about 10 restaurants pouring draft.
Now, the company sells six-packs in 260 retail outlets and is on track to retail more than $350,000 worth of product this year alone. That figure does not include tap sales at the 85 restaurants and bars that have draft accounts.
Weixel has accomplished this with the help of distributors.
"You are only as strong as your distributor," he says. "There's a lot of politco that goes on with this. I'm not going to the same distributor as the other local brewing companies. The distributor most aggressive in approaching us bought the brand from us by purchasing a year's worth of profits."
That distributor was Columbus-based Robins Wine and Spirits.
"They have the right to distribute it," Weixel says. "It's like a marriage. You know you'll have a few difficulties along the way, but you work together to make the brand work."
In Franklin County, Hoster beer is carried by Kroger, Big Bear, Meijer, Anderson's and Hills Market, to name a few.
Before he decided to use a distributor, Weixel knocked on a few doors himself.
"I have to understand each and every beer item [already on the buyer's shelf]," he says. "I equate it to paying rent. If you don't pay rent, you either get leniency or you get evicted. I know the [competitors'] items close to getting evicted -- the dogs or slow movers. If you find some dogs on the shelf and point them out, ask for that space and that location for your product."
In addition to knowing the competition, Weixel suggests the following to increase your odds of getting shelf space:
- Start with your most popular product. Once that starts to sell, retailers will be interested in another selection.
- Be prepared to offer seasonal discounts. Work with the distributor and the retail location at least a month in advance of the sale.
- Provide the right incentive to your distributor to keep your product at the top of his list. This could mean bonus dollars based on volume, or awards like TVs or a trip to Las Vegas for top producers.
Finally, let retailers know you are a local business, Weixel says. "Being a local brand helps."
Andria Segedy (firstname.lastname@example.org) is a free-lance writer for SBN.