Big box retail is a demanding sales channel for consumer products brands. Before you expand into big box retail distribution, you need particular operational capabilities.
Because Costco, Walmart, and other big box stores such as Target command considerable market dominance and work with so many brands, selling through them requires more than many sales channels. These retailers give great exposure for your products, but they come with strict vendor requirements that stress the backend systems of consumer products firms that aren’t prepared for big box sales channels.
There are several capabilities you need before expanding into big box retail. Here are the eight capabilities that matter most.
Big box stores come with high-volume orders and strict compliance requirements. To successfully sell through this channel, your business must transition from “selling products” to operating a retail supply chain ecosystem. This requires several specific capabilities from your cloud enterprise resource planning system (ERP).
Big box retail outlets penalize late or incomplete shipments, so your consumer products brand needs a firm grasp on supply chain dynamics.
To meet the reliability requirements of big box retail, you need real-time tracking of inventory across warehouses, retail partners, and channels. Your ERP also must help you manage complex supply chains with multiple nodes, accurately moving products from manufacturing to distribution and ultimately the shelves of these big box retail stores.
You can’t afford stockouts when working with the likes of Walmart, so part of this supply chain visibility includes predictive supply chain insights for ensuring correct stock levels without incurring overstock at the same time.
The need for predictive analytics goes beyond managing your supply chain intelligently. To successfully compete on big box store shelves and handle peak retail sales periods, your ERP must unify company data and enable holistic, real-time decision-making.
Your organization needs in-memory analytics and AI-driven analysis for instant insights into sales, inventory, and operations. Dashboards should help bring a real-time understanding of finance, retail, and supply chain performance. Your ERP also should have extensive automation capabilities for alerts and updates as dynamics change.
Correctly managing seasonal variation at big box retail outlets also requires advanced forecasting and demand planning.
To optimize stock levels, your ERP should have AI-driven demand forecasting based on historical and seasonal trends, and automated replenishment planning. You also will want to have in place advanced scenario modeling capabilities for handling promotions and retail spikes.
All big box retailers use EDI connections for electronically placing orders and managing compliance with vendors. Your consumer products brand needs robust EDI interconnection support for communicating with your big box retail partners and sharing data in a way both you and the retailer systems will understand.
So before you expand into big box retail distribution, your ERP must seamlessly handle EDI transactions such as 850, 856, 810, and others, and be able to automate order-to-cash processes. Your system should also have built-in compliance capabilities for meeting retail requirements and chargebacks.
While manual order processing might be possible when working with smaller retailers, automated order management is essential for selling through big box retailers.
Omnichannel inventory visibility and streamlined fulfillment are a necessity when juggling big box retail distribution with your other channels.
Your consumer products brand should have a unified view of inventory across direct-to-consumer, wholesale, and retail sales channels, and the capabilities for dynamically allocating inventory based on channel priority.
At the same time, your ERP system should support the various retail fulfillment models such as dropshipping and DC fulfillment that are necessary for serving these big box retailers.
Big box retailers come with specific product requirements that require strong data and product management capabilities.
Consumer products brands will need the capability for centralized product master data such as GTINs, packaging hierarchies, and compliance data controls, as well as the ability to support retailer-specific product requirements.
To successfully handle big box retail sales channels, brands also must have fast onboarding of new SKUs and the ability to add new retail partners quickly to their system.
Without complete financial visibility, big box retail sales growth can hide margin erosion.
When preparing for big box sales channels, you will want to make sure your company has robust and comprehensive financial visibility and profitability analysis capabilities. This includes real-time financial reporting across SKUs, retailers, and channels, and margin analysis factoring in trade spend, logistics, and deductions.
For scaling consumer products brands, you also will want to make sure the financials side of your ERP system natively supports multi-currency and multi-entity financial management.
Selling products through big box retail will most likely grow your consumer products business, so a final capability you’ll need is infrastructure and backend systems that can scale and automate this expansion.
As sales volumes and complexity rise, you need a modern ERP with end-to-end automation potential and easy connectivity with cloud services and a diverse range of third-party systems.
This ERP system should be scalable, so you don’t need to re-platform later as you grow, and it should be based on industry-standard best practices for consumer products companies so new capabilities can come online fast without operational disruptions as you grow.
Legacy and small-business ERP solutions will struggle with supporting big box retail distribution. Spreadsheets and a patchwork of point solutions will not support big box retail sales at all.
If your consumer products business is contemplating expansion into big box retail and you don’t already have a capable system in place that meets the above criteria, consider SAP Cloud ERP for Consumer Products businesses. This prepackaged industry solution comes with all you need both for supporting big box retail distribution and future-proofing your backend system for continued growth.
Not only does SAP Cloud ERP for Consumer Products level up your business with all the applications and functionality you need for continuing your growth journey, including integration with the latest AI models from OpenAI and Anthropic, it can also be rolled out in as little as 90 days with our Ready Set GROW package for fast adoption.
Learn more about what you need for expanding into big box retail or find out more about our SAP Cloud ERP for consumer products solution by contacting one of our experienced consultants at (801) 642-0123 or by writing info@nbs-us.com.