Successful brands today know how important it is to make their products available online (headline-grabbing meal replacement drink Soylent managed to raise $75 million after four years of only online selling), and see the value in building a loyal local following (Nantucket Nectars had to fight for success on Cape Cod and the islands before launching into the national spotlight). Yet, breaking into (and mastering!) regional or national retailers remains the most common path to success for food and beverage brands.
In this post, we'll outline the most important steps brands can take to grow their retail presence and sell more.
Of course, retailers supply new products to the masses. But remember, these stores also have a product all their own - with its own supply, demand, and eager market - that product is shelf space.
Just like any other large corporation, retailers have a bottom line to meet. Savvy retailers carefully monitor which products bring in the most revenue and which should get the boot. Shelf space is a limited resource and the competition is cutthroat. To survive on the shelf, you must bring in more revenue than your competitor.
Since retailers charge businesses based on the amount of space they want on the shelf, bringing in high returns is critical to your brand’s success. One important step to make before jumping into the shelf space competition is to seek out a patent attorney. If a product or its design is unique and not yet trademarked, it can be very easy for larger retailers to simply take ideas that work well in their locations. Be sure to cover your basis on the legal front first.
Another way to prepare for negotiations with retailers is to join the organization GS1 US. Joining this nonprofit is how you get a GS1 Company Prefix - an essential part of your products' unique barcode. There is a one time fee to join the organization, and after that, there is a maintenance fee which depends on how many unique codes are needed for products. Here's a link to help you get started.
In the example below, Health-Ade's GS1 Company Prefix is 851861. Combined with the check digit that follows, the complete number is the product's Global Trade Item Number.
UPC codes are only one of the factors to take into consideration when considering the costs of bringing a product to retail. Shipping, packaging, and returns (if the business plans on shouldering return costs) should all be considered before entering negotiations with a retailer. The more research and preparedness that suppliers bring to the table, the more leverage they will have against retailers in negotiations.
For the same reason that bringing in high returns for retailers provides leverage in negotiations, having clear plans for how to create demand for the product is a surefire way to show retailers they aren't wasting their time on your product. This includes how the business will avoid stocking problems, such as shortages or product returns. Large retailers are only interested in brand-new products with a proven track record. Therefore, its critical you build a strong support plan.
Convincing retailers you're invested in making sure your product sells well at their store begins with your introduction to the buyer. To get off on the right foot, try reaching out with a personal note (or even delivery!) rather than just an email.
For example, Clean Energy Organics sent buyers fruit baskets to introduce themselves and their products. Not only were these a memorable way to prove the brand is committed to building a profitable relationship, but they associate the brand with the fresh, organic ethos they'll bring to the category.
Once you've gotten a buyer's attention and familiarized them with your product, it's time to prove to them that you have a plan for driving success in the store. Proving simply that your products have sold well at other retailers is a great first step, but the most successful companies go beyond sales data and show retailers how exactly they've supported and influenced those sales in the past, and how they plan to do the same going forward.
If you have a team that represents your brand out in the field, this is the perfect time to highlight their work. From setting up new displays, to merchandising your shelves and holding sampling events, your field team not only supports your brand, but also drives traffic and sales for the retailer.
This is also a great time to showcase any relationships your brand has with brokers or distributors. Who will step up when a product goes out of stock? Who's going to deliver the products to support sampling events or seasonal displays? Prove to retailers that you and your partners will be there to support their store, as well as your products.
We talked to the co-founder of Nantucket Nectars and emerging beverage investor, Tom First, to find out how brands can work with retailers to make sure the relationship is profitable for both parties. To see the exclusive interview, check out the video below!
Another underestimated aspect of the retail process is product packaging. Only 11 percent of consumers worldwide are completely satisfied with packaging in products they purchase. This leaves huge room for improvement in package design and consideration should be taken depending on the type of product a business is bringing to market.
Not only is packaging vital to attracting the attention of potential customers, but retailers won’t want to stock a product which has dull or plain packaging. The same MWV study found that 64 percent of consumers who purchased new products did so because the packaging caught their eye. Create packaging that pops and seek outside opinions before sending it to the press.
Plus, people love posting photos of beautiful products! Label design that matches your target shoppers' aesthetic can gain you a ton of fans on social without you having to do much work. Just check out the post below (and the 7,000+ others tagged with #HealthAde) for proof!
If you're interested, check out this guide to retail packaging, where we outline how to determine a budget for a packaging redesign, how to identify and connect with your target audience, and how to track packaging trends in your category.
Once you’ve locked in a committed retailer, it’s time to nail down the details. Shelf placement can make or break your product and should be one of your first points of negotiation. Shelf location, both horizontally and vertically, directly affect your product’s visibility and, in turn, your sales. The following charts, taken from a 2010 study conducted by Erjen Van Nierop and Dennis Fok, show the effect of varying shelf locations.
Impact of shelf number (varying from 1 to 5) on marketing effectiveness parameters (dashed lines show 95% HPD).
Another point to discuss is facings. According to a 2010 study, adjusting facings vertically has nearly twice the effect on sales compared to making changes in your horizontal position on the shelf. By effectively placing the product in retail locations, businesses can further the already high returns that packaging and planning ahead have provided for the brand.
While shelf location and packaging are extremely important, if you want to optimize your returns in retail channels, look to your in-store promotions.
Once the consumer is engaged, it’s me to seal the deal. Window posters, drink-cooler stickers, door stickers, hanging signs, and in-store radio ads are great examples of effective retail merchandising. According to James Maskulka, associate professor of marketing at Lehigh University in Bethlehem, Pennsylvania, unplanned in-store purchases “are likely motivated by a variety of in-store marketing communications: coupons, sampling, end-of-aisle displays, etc..”
While retail outlets often limit the amount of promotional material a certain brand can put in-store, and will certainly ask for some form of compensation for the ability to do so, it is up to each individual business to decide if the extra sales from the materials will outweigh the costs.
One reason some brands hesitate before investing in promoting their products in-store is that it can be tough to measure and prove return on that investment (ROI). If that sounds like you, check out this blog post, where we offer a free toolkit brands can use to track the success of their in-store promotions.
For food and beverage products, there are even more options for promoting directly to potential customers. Having field representatives in-store to give out bites of a candy bar or sips of soda can help new customers familiarize with your product. Giving out samples and promotional items not only helps to get your product off the ground, but can go a long way to building customer loyalty (we explain how in this related blog post).
According to a study conducted by independent researcher Knowledge Networks PDI, it can also boost sales for established brands significantly. The study found that products in certain categories saw day-of rises in sales up to 475 percent! It also shows long term effects with an average of 57 percent increases in sales over a 20 week period.
For newer brands with less footing, it’s wise to set up very specific guidelines for retailers.
One thing all brands should discuss is cost. Ask: what is the forecasted cost for increased advertising, prime in-store positions, or more prominent displays?
Another point of discussion is retail staff education. Educating store employees on your product can be extremely effective. While maybe less so in a gas station or convenience store, the benefit of arming employees with information is that they become walking, talking advertisements for your product right in-store.
Another area of discussion should be product returns. If a defective product or unsatisfied customer comes back with the product, will the retail outlet shoulder the cost or will you? Deciding on the way to handle situations such as these early on will avoid future conflict with retailers and maintain healthy relationships.
Finally, it’s important to discuss the boundaries of promotional materials and store presentation. In order for a consistent, positive brand image to stick to your product, you need the retailer to be on the same page. Make your brand’s personality loud and clear to retailers, and be sure to include this in your relationship agreement as well.
Healthy and formal relationships between retailers and suppliers encourage a long-lasting relationship with high returns for both parties involved.
It certainly takes a village to break into the retail market. Teams of field representatives are a necessity for a brand to create buzz and grow quickly. Build a strong team of representatives who are dependable and familiar with your product. If it’s not financially possible to hire a team of representatives, then consider a third-party brand ambassador services that offers street promotion.
Consider positioning street teams on the busiest local streets, or in areas with a high traffic of your target demographic. Play on your environments to get the most out of street promotions; If it’s an especially hot day, consider promoting your product near a beach or pool. Insure the brand is reaching the eyes and ears of pedestrians around local retail outlets to give the product better coverage coupled with in-store promotion and better returns.
For example, DRINK Maple partnered with Hubway to bring free samples and coupons to their bike stations near Whole Foods on a hot day in Boston. Not only could they target active Bostonians (their ideal shopper), but they could encourage purchases next door to a primary retail location.
Stop by @hubway for samples, swag and prizes thru 3:30pm outside of @WholeFoods ink block boston 🎉#drinkmaple pic.twitter.com/xkFUeK7jH5
— DRINKmaple (@drinkmaple) May 21, 2017
It’s the responsibility of the brand manager or field representatives to gather valuable data from the field. Pay close attention to the retailers’ compliance with agreements made regarding product placement, sales, consideration, and metrics of competing brands.
While many people think that data collection is only useful for online retailers and websites, according to Tim Callan, Chief Marketing Officer for RetailNext, brick-and-mortar retail outlets may soon have a better understanding of their customers than online forms do. He goes on to say that “decision making capability is infinite, while there are only so many things they can do online.” Using the correct tools to collect and analyze data from the field will ensure that the established system is functioning properly, as it was set up in the first place.
The old adage goes, "you can’t manage what you can’t measure." As your brand grows and your product becomes more successful, data collected from field representatives will begin to show trends across different retail outlets. Collect as much useful data as possible. Using these data in conjunction with some form of field management software helps managers create a “big picture” of what patterns are occurring within different types of retail outlets, locations, and consumer demographics.
Customizing forms for data collection, using in-field order management software, and evaluating each retail outlet individually are just some of the benefits that new technology has afforded businesses hoping to break into the retail market. Using these data will help maximize returns and provide even more leverage when negotiating with future retailers.
If you need an easy way to track your team's most important metrics, try using this free KPI tracking template. It's a customizable spreadsheet with everything you need to establish baseline numbers and track progress for your most important KPIs.
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