What are the retail margins for juvenile products at major Mass and Specialty Retailers?
While running and exploratory P&L on a business idea, I am looking for the % of margin that is asked by mass and specialty retailers.
Industry: baby bottles, sippy cups, pacifiers.
Targeted retailers: Target, Babies R'Us, but any information is greatly welcome.
Thank you.
Answers (2)
Al J.
Business Growth Veteran
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It varies not only by whether they've decided your item is one they have to price aggressively to draw new store visitors or whether it'll be sought out and price doesn't matter much. How frequently it'll turnover, as in needed to be replaced in inventory 4 times a year or once a week will affect the margin, slower it moves, the bigger the margin needed to justify the shelf space. Draw and turnover are quite often bigger factors than the gross margin in cash or as a percentage of the sold price. Juvenile products where the parents are buying them have a much lower price point (because the parents are drained of cash and credit quite thoroughly by their offspring) while if the grandparents are buying it, price is far less of an object while quality matters quite a bit more. That's much of the gap between a Target or Walmart buyer (parent) and a Toys R Us, Oshkosh B'Gosh, etc. buyer (grandparent.) Margin on a fast-moving item, advertised draw to a price sensitive parent in a big store where the shopper will buy lots of full-margin merchandise too before departing, could be as low as 8%-15% but big discounters average a lot higher margins on their goods than one would expect (it's targeted discounts to draw, not give away everything pricing.) Specialty store with an item that may be the sole purchase, at full price, a 40% margin is a typical target for the retailer. What you mention can also be priced as a system, in other words if they buy the pacifier and like it will they buy the baby bottles and a sippy cup from clearly the same brand simultaneously at full price or a bundled price? That's something to play with and test in many variations. If a store sees multiple items moving, that's good, and if some of them are quickly in need of replacement that's even better. Don't forget the way stores like to achive good margins is by having the manufacturer cover as many of the related costs, particularly advertising but sometimes clear down to shoplifting losses, while protecting a good price in the overall market and then steeply discounting in the sale to the storebuyer. So it's easy for the manufacturer to wonder why they were happy when they made that sale (the biggest retailers are particularly tough on mfrs. that way.)
Adrienne G.
President and Co-Founder of Pricing Empowered LLC
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Margin % should be irrelevant in your decision making. The key decision component for the savvy retailer should be margin $/linear retail ft/week or some similar metric. In other words, you need to be able to prove that your product will generate more profit per space allocated to it in a given time frame than their other options. So you could offer 20% margin vs. another products 50% margin, if your product will turn 10x as fast, then you still win!
I've worked with Target buyers, and they get this. When you get to less savvy retailers, the idea might confuse them. In that case, I've seen standard wholesale discounts ranging from 20% to 50% depending on the category. I don't think you can expect one single answer.
