Starting a new business and making an amazing product and you believe a grocery store chain is the best way to introduce your product to the public?
Well, then read on. The grocery store is indeed an influential force in product awareness, but is it the best choice for a start-up brand?
Typically, part of a client’s wish list to introduce and sell their new product, is to have a presence on the grocery shelf, however after sharing the rest of the story and saying to be careful for what they wish for, the client in many instances makes an about face and goes in another direction.
Why, because they became aware of the mandated requirements that come with being in the grocery store such as slotting fees, free fills and ongoing promotion and demo commitments.
The grocery stores typical product mark-up is 30% – 40% and if you’re not great at math, that’s 30 to 40 cents per dollar, clearly a respectable chunk of margin.
In return, you are provided the opportunity to display your product alongside other brands in the freezer including ice cream, plant based, water base and novelty items in a variety of serving sizes and case packs.
Being displayed on the shelf is not a guarantee of successful sales or immediate popularity.
Here’s the rest of the story and things to know before presenting to the grocery buyer.
- Slotting fee – for some chains, it’s cash money paid for the opportunity to be on a shelf
- Free fill – for some chains, it’s filling the shelf with product at no charge
- Guaranteed time on the shelf – no promises made and many times if a product is idle and not re-ordered within a few weeks, it can get pulled
- Coupons & promotions – most chains require you to offer 2 – 3 promotions per year and include dollars off or buy 1 get 1 or BOGO
- Committed to a specific space – your product will be allocated to a specific space, but no guarantee a competitor won’t attempt to encroach
- Demos & sampling – most chains require you to offer a certain number of on-sight samplings and product demonstrations
Managing a grocery location.
From the list above, one can quickly see that continued involvement and support, once the product is on the shelf is imperative and necessary.
Remember, simply because your pint of ice cream is nicely displayed in the freezer case, doesn’t guarantee it will sell and this is the piece that most clients do not take into consideration once entering into a grocery agreement.
I recommend to clients to look at the grocery store in the same way as real estate and not just a place to display goods. Grocery stores depend on additional non-product sale revenue that comes with the opportunity for a brand to have shelf space presence.
Grocery managers are not your supportive friend.
They solely represent the store and are in the business to make as much revenue in a store as possible and one way to achieve this is by inviting in new product lines.
A client’s call can begin like this, “Darryl I have some great news, I’ve been accepted into 100 chain stores”! My sole response, “condolences”.
Why not be more supportive you ask, because I know the client is anxious to sell their product and have zero clue on the rest of the story (see above) and part of my responsibility is to make sure they understand all that’s involved beyond simply featuring their product.
As a consultant, my primary goal is to provide the client with as much insight into any situation as possible, including all of the tasks and requirements from production to sales strategy.
In situations like the sell to grocery scenario, one of my goals as a dairy and plant based consultant, is to not make false comments like “O that’s amazing and congrats” as the initial response, because in doing so, will hide the full truth as the client desires to enter uncharted territory.
Simply feeding a clients ego
can inevitably result in client disappointment and finding themselves with an unexpected financial burden.
Once I meet and present the full picture and the client decides to proceed, only then will I’ll offer a voice of support and congratulations, because now they are fully aware of the potential risks in the road ahead.
If the grocery store is not the best outlet to introduce your product, then what is?
The opportunities offered in today’s selling environment are endless and look very different than in years past.
Back in the day, to be discovered, attract customers and create a solid book of business, a start-up was required to:
- Instill buyer trust
- Priced competitively
- Be unique
- Reliable and responsive
- Be relationship based
In my opinion, today’s start-up brand has a wider opportunity to create a sales channel, get exposed, create awareness and fan base.
- E-Commerce / internet sales
- Social media
- Customer feedback and endorsement
- Star rating
- Be business to consumer sales driven “B2B” and eliminate middle entities like grocery, brokers and distributors
In today’s business environment sales have the ability to be more Pull than Push.
What do I mean by that. A start-up can ramp up product excitement and generate hype, speaking directly to a fan base via social media and invite the consumer to become directly engaged, well before the business actually opens.
Once open, sales can be directly with the consumer by use of a website marketplace and direct delivery by mail or shared delivery services. Once awareness and fan base are established, then your customer has the ability to approach their favorite local store and request your product be featured there, thus creating a pull sale.
Push sales have been around since the beginning of time and essentially require introduction, face to face presentations, cold calling and knocking on doors to hopefully get invited to present your product.
Today, a lot of businesses continue to utilize push sales methods and can be seen by way of TV and website commercials, YouTube infomercials, phone calls and text messaging, there’s more, but you get the picture.
Personally, I find conventional push sales method very annoying, old school and in some instances misleading, but that’s for another article.
Sales and your message.
I believe and share with clients, that a sale is the consequence of a connection made through a message, purpose statement or company attitude/image.
In ice cream as an example, the consumer can make a purchase simply on the basis, the company donates a certain percentage to a charity (think Paul Newman brand) or they were the first of its kind dairy alternative (think Soy Delicious) or with attitude and quirky like Ben & Jerry’s and initial tag of “two real guys”.
The consumer is attracted to make a purchase for a reason of their own, when the message, purpose or image made a personal connection.
However, it’s also important to factor in, their second purchase will be based on the satisfaction level and merits of the product alone. Having both factors in place, makes for a winning business endeavor.
When I started Darryl’s Homemade Ice Cream Factory in Toledo Ohio, my sole interest and focus was to make amazing tasting natural products in flavors never considered before. In short, I wanted to WOW the customer with interesting quality products and an edgy company image.
My shop was not conveniently located, nor did it come with a high visible traffic area, but I believed which ended to be true, that if I solely focus on what I was doing, people would eventually find me and come back for more.
Wholesale sales and being offered at high end restaurants eventually came and by establishing a good reputation and word of mouth.
It took a little more than a season to become “talk of the town” and sought after brand, but it did happen, by pull sales.
If you are looking to sell outside of you local shop, then consider booking time with Darryl and suggest using our consultation services during the sales planning phase. You won’t be disappointed.
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