In my last post I discussed that utilizing Specialty Food Distributors often means there are multiple levels of selling needed before your product actually reaches the shelf. Entrepreneurs, as well as large manufacturers, are frustrated when their products are ordered by a Specialty Food Distributor, and successfully authorized at a key retailer only to find that the product does not show up at the shelf. Welcome to the elusive sale that must take place at Retail.
First, when we talk about “Retail” in the grocery industry we are talking about all the activity that takes place at each individual grocery store. There are approximately 36,000 grocery stores that have sales over $2 million per year, according to 2010 data gathered by FMI (Food Manufactures Institute.) These are the key retail stores you need to work towards if you want to grow a national brand. The activity that takes place at retail includes:
- assure distribution
- cut-in new products
- replace tags
- rotate product
- assure correct facings
- assure correct plan-o-gram
Assuming you will eventually have a broker sales force, a typical sales rep working your product has dozens of items that they must service with the activities noted above, while making a call to an individual store. They will have a priority list that has been developed for them by sales leadership. As might be expected, the larger manufacturers with products producing the most broker revenue are the top priority. So, the first problem you may encounter getting your product on the shelf is being a low priority from your own sales force!
The next problem you may face getting your product on the shelf, is the fact that you are using a Specialty Food Distributor in the first place. Don’t get me wrong, I still think using SFD’s is your best bet, but recall that we have discussed the complexity of the SFD. The final sale is to the SFD rep that actually works each of the retail stores in a geography, and he is the one who often has the final discretion as to whether your product is going on the shelf or not. As it turns out, getting your product on the shelf comes down to some very basic things.
Does the SFD rep actually know about your new product? SFD reps are inundated with information. They can’t possibly keep up with all the new products the SFD and retailer are taking. Assuring you have a constant communicative system to all key SFD reps and their supervisors is an essential ingredient to success at the retail shelf.
Does the SFD rep think your product will sell? The rep makes money when his SFD products sell, and he is often faced with the dilemma of having to cut something of his to put your new product in. If your product happens to be in a section where he has all winners, you may be waiting a long time for him to actually place the bet on your product and forgo a product that he has steady income from.
Does the SFD rep like you and your company? If the rep has a reason to not place the item based on bad history with you or your company, then he may decide to leave your product off the shelf, even if it is a good seller.
Does the SFD trust that you won’t sell the product direct? This is a huge problem for all companies using Specialty Food Distributors. SFD’s like loyalty. They feel that often they build a brand and then lose it because they built it to a point where it had enough sales to go direct. For a SFD rep feeding his family from sales he makes in each of his stores, there is nothing worse than losing a good selling product to the retailer’s warehouse.
Does your broker rep have a good selling relationship with the SFD reps in the stores you are targeting? You don’t want to find out that the broker you are using does not have the relationship needed to influence the SFD reps in the retailer you are targeting. Make sure your broker not only has great relations in the targeted retailer but actually understands and maintains relationships with all key touch points within the SFD.
Have you done what is needed to get the product started at the retailer? Most SFD’s and retailers will want an introductory allowance to get your product sales going. That means you will have to offer some allowance on your product so the retailer can offer up an introductory price to the consumer. You may want to pay for an advertisement in the retailer’s weekly flyer, or offer to pay for an in-store display. The discussion of Trade Promotions and how you maximize what you spend will be the subject of many future blogs.
Has your sales force educated the SFD reps about your new product? You will need to build excitement about your new product and how it is different than current products. The SFD will periodically hold “table tops” where reps from a given geography meet to learn about promotions and new products. This is a great opportunity to educate about your product’s features and benefits as well as develop relationships with the SFD reps.
The key to overcoming the elusive sale at retail and getting your product on the shelf is the synergistic activity that takes place between you, your sales force and the key SFD reps that are actually placing the product on the shelf. Get that right and you will have a shorter wait to see your product on the shelf
For now, keep working,…to the grocery shelf!