The Right Retail Channel
Retail Channel Costs — Which retail channel is right for your brand?
It depends on whether you’ve done your homework.
Grocery stores, gourmet/specialty food stores, coffee chains, natural/health stores, club stores, mass merchandisers, discounters, airport kiosks, hotels, gas stations, vending machines.
What do buyers in each channel want? #1 complaint: sellers do not take time to [research and] understand the retailers’ and buyers’ needs.
Many new market entrants fail to appreciate that they have to speculate to accumulate in this industry. You need to “open your wallets” and “pay to play.” And not too little. The food industry is not blackjack where you can pay a little and earn a little. It’s more like you put a bunch of money on the table and then it’s gone and you have to claw it back little by little.
Natural Channel
You can get right to the consumer. Few wholesalers. But very restrictive in regards to products and a lot of work for little or no profitability. Category review once a year, but if something cool comes along, they will make room. Expensive to get in and keep shelf space.
Specialty Gourmet
Planogram not a big issue, constant change and in-out. Great place for trial and error. But: limited audience/sales per store and frequent market spend. Graduate to grocery if sales and awareness go up.
Grocery
Well-planogrammed center store; perimeter is open but highly competitive. Hard to get an appointment or stay on shelf for more than 6 months. Store surveillance for OOS (out of stock) necessary. Expect to see finished products, not mock-ups, and immediate delivery — not waiting two to three months for imported products. Expectation of slotting, free fills, or marketing support is huge. Category review and planogram changes once a year.
Club Store
Big potential to scale up. Can go direct, but investment in special packs is necessary and demo support is expected.
Convenience Channel
Can be very profitable, very cost-effective, but needs a strong sales pitch based on data and turns, and your track record in other channels. Timing for category reviews is every 2 years.
Foodservice Channel
More and more packaged foods, but very fragmented. Broad distribution and planograms are too mutable.
You need broker support to get in, and get merchandising assistance, local market knowledge, and understanding of what marketing and trade dollars need to be spent — where, how, and how much — to pull brand levers.
Selling to large supermarket chains
It can take up to 2 years to get listed at national accounts. This will depend on:
- Access to the buyer
- Timing on category review
- Broker and wholesaler involvement
- Convincing sales presentation
- Payment of listing fees and promotional allowances
- Delivery terms and timing
- Terms of import
For specialty food products, it usually takes 2–5 years of consumer trial and building a credible sales record at specialty food stores before you have a chance to make it to the "big league." You need an experienced local broker representative to coordinate all activities and gain access to buyers.
— Ian Kellerher, Peeled Snacks in Food Navigator.com