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 tome 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 liitle. 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
You cab get right to the consumer. Few wholesaler. But very restrictive in regards to products and a lot of work for little or no profitability and category review once a year, but if something cool comes along they will make room. Expensive to get in and keep shelf space
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 sakes and awareness goes up.
Grocery: well planogrammed center store, perimeter is open, but highly competitive. Hard to get appointment or stay on shelf for more than 6 months Store surveillance for OOS necessary, Expect to see finished products, not mock up and immediate delivery, not waiting two three months for imported products. Expectation of slotting, free fills or marketing support is huge. Category review and planogram changes once a year.
Big potential top scale up, can go direct, but investment of special packs necessary and demo support
Can be very profitable, very cost effective, but need strong sales pitch based on data and turns, your track record in other channels. Timing for category reviews 2 years
More and more packaged foods, but very fragmented broad distribution and planograms too mutable
Need broker support to get in,and get merchandising assistance, local market knowledge, knowledge 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