In our monthly “SKU View” series, Food Entrepreneur is tapping the expertise of mentors at SKU, a consumer products accelerator based in Austin, Texas, to deliver timely insights on issues that affect early-stage food and beverage brands.
AUSTIN, TEXAS — Entrepreneurs may be overwhelmed by the growing number of opportunities to sell products. Established retail channels such as grocery, club and natural or specialty and alternative models including pop-ups and smart vending machines all include advantages and challenges that emerging brands must navigate.
“There are several factors to consider when building a channel strategy,” said Scott Siegel, a SKU mentor and founding partner of MomentumCPG, an Atlanta-based consultancy. “Components range from where your core consumer shops, price, pack size, case pack, packaging, display vehicles, selling method, distribution model, shopping occasion, margins, regional or national distribution, and trade promotion strategy. The most important is knowing who your core consumer is. Who they are, where they shop, when they buy, and what they are willing to pay.”
Mr. Siegel partners with emerging brands to create winning sales strategies, sustainable sales processes and building teams. He began his career as a route salesman for Frito-Lay and has held roles of increasing responsibility in national sales, field sales, operations, marketing, broker and distributor management, direct-store delivery, omnichannel and corporate strategy at several consumer packaged goods companies, including Welch’s, Keurig Green Mountain and good2grow.
He shared insights on how brands can get on and stay on retail shelves.
Food Entrepreneur: What are the advantages and disadvantages of each retail channel?
Scott Siegel: When deciding which channel to start with there are advantages and disadvantages within each channel to consider.
Let’s start with e-commerce; advantages range from ease of entry and measurable customer acquisition. The disadvantages may be ship weight and costs depending on the category, or if you need to sell by the case, the price point may be too high.
Natural/specialty is where consumers look for product discovery and innovation, and they expect to pay more. The biggest challenge there is the limited number of stores.
The grocery channel is where consumers traditionally shop, so there is high foot traffic, and the stores are located throughout the country. The cost of entry and the competition can both be high. The mass channel, like grocery, has a large national footprint, high foot traffic, and a wide variety of shoppers. The challenges can be the cost of entry and supply chain.
The last channel to take into consideration is club. The club channel sells large-size packs and has high-dollar rings. The challenge can be finding the right pack size for the brand's core consumer.
What are some alternative or emerging channels that brands should consider, and why?
Mr. Siegel: There are also emerging or alternate channels to consider. Alternate retail, which is a blur of physical and digital, can be a way to reach consumers. Think of pop-ups, smart vending and micro retail. This allows you to meet consumers where they are.
Another emerging channel is hyperlocal retail. The reason behind the hype is clear because the hyperlocal delivery model offers both convenience and efficiency to the seller and the buyer. Since products are delivered to customers in a comparatively shorter period, the popularity of the hyperlocal marketplace model is increasing rapidly.
Once you identify the key retailers you would like to get into, what are some tactics for getting in front of buyers?
Mr. Siegel: Once you have identified the right channel, how do you secure a meeting with a buyer? There are multiple ways. The first is to partner with the right sales agent (broker), or you can sell direct. Depending on which way you choose, there are things to consider.
Let’s start with your brand story. The brand story needs to address the consumer needs, category opportunities, and how your brand meets the need and the opportunities to drive incremental category growth.
When emailing the buyer directly, keep your email clear, concise and compelling. Consider areas such as a descriptive subject line and even including a video in your email to gain the attention of buyers.
If you are bringing or sending samples, make sure you stand out. The sample box should be branded, and small things matter, such as including a handwritten note. Also, be sure to leverage your network — you never know who knows who. And, if at first you don’t succeed, try, try and try again. Getting that first meeting can be a journey.
Once you got on the shelves, what are some ways you can raise your chances of staying on the shelves?
Mr. Siegel: Now you’ve had the meeting with the buyer, and they’ve authorized your brand for distribution. Next is the most important part — velocity (UPSPW — units per store per week) and ensuring that you stay on the shelf. This is the brand’s job and not the retailer’s.
So, what can you do to make sure you stay on the shelf? Depending on the retailer, many have specific programs you can participate in to let the consumers know who you are, where to find you, and the price. Launch a social media campaign to reach your core consumers, and let them know where they can find you. If you can get consumers’ emails all the better. Now you can communicate with them directly.
Conduct store audits, and talk to consumers and store employees to gather their feedback and adjust as necessary. Build the right promotional plan for your product that includes understanding key seasonal holidays.
Determine how you are going to have multiple points of distribution in the store from shippers to PDQs. Stay in touch with the buyer at least once a quarter to keep them updated on the investments you are making in the brand and their consumer, and don’t forget to share the results. The last part is to have a sound supply chain. The last thing you want is to be out of stock on the shelf.Again, there are several things to consider when building a channel strategy. Taking the time to do the work and research up front will pay dividends. Finally, remember that feedback is a gift. Take your story on the road, listen to the feedback and adjust.