Are You Retail Ready for Large Grocery?
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How were your spring and summer sales? Did you fair well at the Farmers’ Markets? Do you have some product in local restaurants or independent or specialty grocery stores?
If you can scale up production, it may be time to look at expanding into larger retail. To be successful, that’s going to take some planning and preparation.
Most distributors and potential grocers work in the same basic way. They want to know your product and packaging is compliant with CFIA regulations, that the product fulfils a gap or need in their merchandising, what their margins will look like, and that you’re ready to consistently supply product.
The Playing Field
Can you estimate how many actual products there are in the grocer’s store? Consider that there are many suppliers and distributors vying for the store manager’s time.
If you can get an appointment and they say 15 minutes, then only take 15 minutes. Their time is precious. So, prepare for this! Research and work through the key topics or questions that you can discover on your own (online or through your existing network of experts).
It’s also a structured process.
It may take a 2-stage process, where you gather info at the first meeting, and then come back when you’re fully prepared for a sales call.
Either way you need to do some research and plan out each type of meeting.
Let’s start with the Sales Call.
Sales Call Preparation
Typically, food buyers look for the same general information about your company and your product in a logical process.
Elevator Pitch – approximate 1 minute
Introduce yourself – your name, company name, type of product(s)
Then share your brief story of when you started, how you evolved, where you’re selling, why your product is better or different, and how much it sells for.
Note that retailers are intrigued by background stories and your niche.
Be prepared to identify what is your number one seller, if it has a UPC (universal product code) Bar Code, and how much the retailer’s cost will be. Retailers are looking for products that have repeat sales, so there is less cost and effort to promote them.
Know Your Numbers
Just like on TV shows like “Dragon’s Den” or “Shark Tank”, you need to be able to confidently express your numbers.
- What have your sales been over the past 3 years? They’re looking for progressive growth and potential.
- Understand your margins when selling directly to the retailer and if you need to add a distributor into the mix, who also takes a cut. Be prepared that the retailer may want to sell your product for less.
- Note: If you’re challenged by the cost of a distributor, calculate the cost of your time in taking you away from production when you are doing the distributing. Also consider that a seasoned distributor or broker talks the same language and may be the final step in securing a large retailer
- Have your monthly sales available with a list of retail outlets currently carrying your products.
Showcase Your Professionalism
- Know what competitors are selling on the retailer’s shelf and where you fit in or stand out.
- Do you meet regulatory and retail compliance (CFIA – Canada Food Inspection Agency) – i.e., labels, package, etc.?
- What’s your capacity to produce a consistent quality product? Can you commit to supply a consistent volume on a regular schedule?
Good food spying can position you with a well seasoned approach to retail and all business-to-business relationships. Give purchasers the feeling of confidence that you know what you’re doing and that you will manage things like a well seasoned, large supplier (i.e., you don’t have to be babied). At the same time, if you can use help, the research side of things is where you can learn where the gaps are, then you go away and close those gaps, readying yourself for the true sales pitch.
Leave Behind a Good Impression
So that you can reinforce the information you shared in this brief meeting, have a Sales Sheet prepared to leave behind for the Retailer. It should present you, your business, and your products in a professional light, to reinforce the impression that you are a vendor with great potential.
If you don’t feel that you’re quite ready for a sales call, it’s still advisable to research and prepare for future opportunity. You could still ask for a 15-minute meeting, but this will be an Informational Interview to gather some details. It is NOT a time to pitch your product!
In fact, sometimes smart and focussed questions lead to a positive impression. They can intrigue the purchaser and set you up well for a sales call.
Be concise and clear. Don’t ask questions about the retailer that you should already know including:
- How many stores do you have?
- Who is the Retailer targeting? How do they position themselves?
- What makes them stand out?
- How do they promote themselves?
- What competitors of yours are in their store?
Instead, ask smart questions like:
- What do you look for in a local provider?
- How do you handle different distributors? Do you prefer a distributor in this grocery category?
- What’s a typical margin for your particular category?
- Would you put new product in all your locations? Or do you prefer to scale up in phases and start with a few stores?
- Does your grocery chain have expected compliance requirements in this category, beyond CFIA? (this could be some pre research as well)
- What types of joint promotional opportunities are there?
Try to get nuances of how you might fit, and importantly, assess if they are a fit for you.
Purchasers are usually expecting a sales call. If you’ve clearly indicated that you’re just gathering information and have presented yourself professionally, they just might ask you some sales questions.
You can manage that, one of two ways:
- If they’re ready to talk numbers, as in the Sales Call info above, be sure to ask them if they have the time for 5 or 10 minutes more. Be respectful of their time.
- “Those are great questions. Could we book another meeting to discuss product; I want to make sure I’m prepared to talk about the numbers you’ll be interested in.”
What Retailers to Approach?
So, how do you know what retailer is a good fit for your product?
You have to know YOUR product and business first.
- Is your product for an artisanal niche, or is it a general grocery consumer product?
- Is it family-friendly, or more suited to a specific generation buyer?
- Who are you trying to target? Does the retailer look like they have a similar shopper?
For the specific store or chain, do some research and gather information:
- Is this retailer focused on foodie people, or everyday shoppers?
- Does this retailer promote local producers? Do your homework on how they merchandise/display local products (separate section or by category), and how they promote local. What vendors are currently listed?
- Do they already have 5 hot sauces similar to yours? They may not be a good fit.
Once you’ve done your research, take a structured and professional approach to develop a strong plan to approach those large grocers. Be confident with the details and then refine them so you can better present the story and personality of your food business.
If you feel you’re ready to jump into larger retail, contact us to discover what your next steps should be.
Thank you to our friend and colleague Rob McCowan, who provided details and insights for this post. Rob is a Managing Partner at Focus West Management, a packaged food broker serving Western Canada. https://www.focuswestmanagement.com/Focus West Management