Congratulations
You made the best new organic granola bar the world has ever seen. Yet your friends, family, and kitchen are the only ones who have ever seen it. It needs to move to bigger and better places by landing on retail shelves. With hundreds of competing brands that have the same goal, how do you stand out?
Lucky for you, this is the perfect time for a small business to enter the market. According to Information Resources, Incorporated (IRI), small and midsize companies are gaining market share for consumer packaged goods sales every year. Since 2011, the market share has increased 2.7 percent to account for almost 47 percent of total sales. This translates to an $18 million market shift to smaller companies. Furthermore, many retailers are looking to compete against Whole Foods and its imitators for the growing health-conscious market that has opened in recent years. Stores are focusing on healthy brands to target this emerging consumer market.
Unfortunately for startups, the entrenched brands are fighting back with their not-so-secret weapon—money. It’s time to outline the strategies smaller companies can use to make that sale to retail stores.
Beginning basics
First, identify your buyers and think about how to target them specifically. No matter the size of the retailer, a strong product pitch takes meticulous planning and research. Regardless of who you are presenting to, follow these basic guidelines to build a strong case.
- Research: Visit the stores and departments you are targeting. Learn what others are doing, how they are doing it, and how you can do it better. Know your consumer’s niche interests and desires, as they apply to the branding and production of your product.
- Positive production history: Know your production limits in case a retailer requests large quantities. Prepare a history of your current production statistics and a detailed plan of future possibilities. One clothing brand sold in Walmart waited five years before presenting its product to the retailer. The company knew it couldn’t keep up with manufacturing demands until it was ready and wanted to guarantee success. Finding a good manufacturer that helps increase product production is key.
- Positive consumer interest: Get your product name out there by advertising on a small scale. Send samples to retailers, give freebies to influential people, or captilize on direct marketing. You want people to know your product and ask for it in stores. Ideally, a positive online presence, however simple, can go a long way toward influencing a potential buyer. They don’t want to think it will sell; they want to know it will sell.
- Presentation: Compile all the evidence that shows your product has high potential to succeed and prepare to present it. Highlight the subset of consumers you are targeting and explain how they will be a platform for growth into mainstream areas.
Who are your buyers?
To best target a store, you must understand the details of how it selects products to buy. You must know who to pitch and what they are looking for, which can differ vastly from store to store. For example, Krave Jerky had a history of talking to salty snack buyers in most stores. But after consulting with employees at one Whole Foods, Krave learned the meat buyer was the point of contact for jerky products at that retailer. The motivations of these two buyers are quite different, so it is essential to understand who you are targeting. Here are some store-specific tips for getting purchases.
Local businesses: start small
- Focus on local businesses. They may be your most important target because they are often the beginning of the product’s potential. Success in these stores will give you the statistics needed for expansion.
- Take advantage of the places you shop and the people you know. Places with a personal connection to you will be more likely to consider your product.
- Identify the store owner. When targeting smaller stores, it is common to present to the store owner directly. Figure out what the owner wants in his or her store and strategize how to target him or her accordingly.
- Create buyer interest in your product by sampling it to locals who will ask for it in stores. When you present to the store owner, he or she may already be familiar with your product.
- Offer in-store demos for increased brand awareness and sales. A study by Arbitron proved that in-store demos drive sales up to 475 percent.
- Be mindful of negotiation issues such as slow payments, small batches increasing delivery costs, and unpredictable demand.
Big corporations: big competition
- It is extremely important to research store policies. You can do it online or in store, but it is an essential first step before preparing a presentation. Making a misstep with a large corporation can cause your products or applications to gather dust for generations to come.
- Many stores have vendor applications, specific times, and/or specific contacts for presentations. The bigger the company, the more detailed the vendor application may be, so pay close attention to the details. A few weeks after your application, email the retailer to follow up if necessary.
- Many retailers have buying circles that direct you to a specific department for your pitch. Know which department to target, what its buyers are looking for in products based on current trends, and how often they look at new products. Consider seasons of products as well. Hopefully, the retailer asks for a meeting and you will move into the presentation phase.
- Position yourself as the buyer’s teammate. For example, offer a chain exclusivity for a particular product, such as a new seasonal flavor, to drive consumers directly to those stores.
- Look for big corporations with local producer opportunities. If you need to get your foot in the door, identify chains that are attempting to differentiate from the competition by using the power of local products. Check out Bartells and Whole Foods for examples.
- Watch for negotiation challenges like hidden marketing or promotion costs, high demand straining production, and distribution requirements reducing profit margins.
Distributors: the backdoor
- Find a good distributor, which is often a connection to the retail space that works to sell your product with you. For example, the drink company GuS was picked up by the major drink distributor Big Geyser and soon after could be found in Whole Foods and Fairway.
- Retail buyers will trust their long-term relationships with distributors more than their interactions with independent sellers.
- Find a distributor that knows the consumer you are targeting. The distributor’s additional knowledge and networks can connect you to the right retailers.
- Be mindful of potential negotiation challenges, including high costs due to distributors managing sales and delivery, lower priority for small brands, and weaker relationships with buyers.
Trade shows: easy access
Finally, it’s time to look at the center of all sales and networking—trade shows. Here, companies present their prepared material to potential big buyers over several intensive days.
- Trade shows are an easy way to get your products into buyers’ hands and onto stores’ shelves.
- Attendance is increasing. At the 2017 National Product Expo West, a popular trade show for food makers to get noticed by retail chain buyers, 74 percent more companies made an appearance than in the previous year.
- Be mindful of potential challenges during the sales process: respect people’s time at the show, and prepare an organized follow-up if you generate interest.
When it all comes down to it, the most important tip almost every company will give you is this: expect to be rejected and don’t let it dissuade you. You are in a competitive, difficult industry, and you must be comfortable hearing the word no.