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store and about how you want your product to be displayed. This is part of the up-front negotiation with the retailer that will determine your product’s presentation and display location.
Negotiating the terms of your contract with a retailer may be easier with a smaller store. Larger stores don’t have the same flexibility as their smaller counterparts. However, Cooper says determining product placement in chain stores is tough because “the design of the selling floor is not up to each individual location.”
Be aware that technological requirements, such as radio frequency identification tags, may generate additional costs. In some cases, RFID tags are mandatory for vendors that do business with large retail companies such as Wal-Mart, Target, and CVS.
Many entrepreneurs depend on a deal with a major store to be the lifeline of their product. However, as some business owners have discovered, negotiating with large retailers can take several months to a year before the product ends up on the shelf. Melissa Perkins owns Columbus, Ohio-based Uzuri Kid Kidz (www.uzurikidkidz.com), a line of multiculturally themed party items that include napkins, plates, and favors. She’s currently in negotiations with Wal-Mart. Perkins points out that product placement can depend on the time of year since retail shelf space changes with the seasons and holidays. “As new seasons come, retailers will make changes by replacing slow-moving items on their shelves with new items,” she explains.
Perkins, 43, began formu
lating the idea for a line of party items in 1999 when her then 5-year-old niece came to live with her. Perkins saw that there were very few mass marketed African American characters with which to decorate a child’s room. She researched the bedding industry and found that the overhead and liabilities for infant bedding was too costly, so she decided to launch a line of party items instead. Perkins invested $50,000 and launched Uzuri Kid Kidz in July of last year.
It’s not impossible to get Wal-Mart to sell your product, says professor Cliff Schorer, director at the Eugene M. Lang Center for Entrepreneurship at Columbia Business School, but large retailers will want you to prove that your company is stable. This means presenting adequate sums of cash and assets, he explains. Schorer recommends finding out what’s going on in the marketplace and how the marketplace works before you sell your wares to a particular retailer. That would let a business owner know, for example, that Wal-Mart does not allow walk-ins. Most major retailers require you to schedule a meeting with one of their buyers first. If the retailer decides to purchase your product, only then would you start to make distribution arrangements.
In addition to Wal-Mart, Perkins is in negotiations with a Kroger grocery store chain in Columbus. She’s working with a category manager who is interested in selling her product line. As part of the deal, Perkins has to create her own display for her products. Dealing with several retailers simultaneously can be frustrating, she says: “As a new business owner, it’s hard to anticipate