What You Need to Know To Get Your Products Into Meijer
Here at Saddleback, we sell our BBQ sauce locally and have had discussions with Meijer to get our products into their stores. Many local businesses have similar desires, but getting into such a retailer comes with challenges. Meijer is concerned with two critical factors in determining whether to take on a new product: velocity and productivity.
Velocity in a retail setting is generally defined as the rate of sales that a brand or SKU achieves through a store, group of stores or market area over a defined period of time:
V = Sales per Time Period / Unit-of-Distribution
Velocity is all about how fast your product sells, which is of major importance to a large retailer like Meijer. A strong velocity shows a retailer that your existing base of stores is experiencing growth, and instills confidence that your product will sell similarly in their store. Here’s an example of how it works:
Let’s say a particular retailer is interested in your weekly velocity, or number of units sold per week per store. Assume further that you have sold 12,500 units over 6 months across 25 stores.
- Start by calculating units per year: 2 * (12,500 units) = 25,000 units per year
- Next, get your weekly sales: 25,000 units / 52 weeks = 480.77 units per week
- Finally, divide this number by the total number of stores: 480.77 / 25 =19.23
- Velocity = 19.23 units per week per store
A high and increasing velocity is a sign of brand strength, and demonstrates to a retailer that you’re gaining new customers, obtaining repeat purchases, and that your product makes overall business sense.
Productivity in a retail setting is generally measured by multiplying the total sales of a particular product by that product’s price:
P = Total Sales * Retail Price
Productivity is all about the value of the product you're selling - customers want it and will pay a high price for it. From a retailer’s perspective, while they want your product to have a high velocity and sell quickly, they also want to maximize their margins and profits. Combine a high rate of productivity with a high velocity and you are a large retailer’s dream come true. Building off the example above, here is how productivity can make or break your product:
Let’s assume, as above, we have a product with a velocity of 19 units per week per store. At 25 stores, this is 475 total units per week on average. The weekly productivity of these total sales will depend on price:
- The product retail price is $1.99: P = 475 * $2.50 = $945.25
- The product retail price is $24.99: P = 475 * $24.99 = $11,870.25
- The product retail price is $99.99: P = 475 * $99.99 = $47,495.25
One sees quickly how pricing can significantly affect the productivity rate. That is why it is important to be thinking not only about selling quickly, but selling a high-quality product that is going to bring in meaningful dollars to the retailer.
The bottom line is that both factors are of equal importance. If you are a business trying to grow a product, your goal should be to get into as many retailers as you can, with an end goal of getting into a large-scale retailer. Any major retailer is going to care deeply about velocity and productivity, so understand these factors well and prepare substantial data on them in advance of any meeting with a retailer.