Say you’ve created a new probiotic beverage that’s generating buzz among customers. It’s stocked on the shelves of boutiques, organic food grocery stores, and independent Mom & Pop shops across the region. With so many success stories, you decide to create new accounts with conventional retailers like Safeway and Kroger — and immediately run into a brick wall.
After a few months, it’s clear that conventional customers aren’t buying your beverage at the volumes you expected. What’s more, your costs have increased exponentially and you’re expecting product declines any week now. Why is conventional retail such a struggle compared to natural food stores?
The first thing to remember is that natural food shoppers differ from conventional market shoppers in many ways. Customers visiting a Sprouts or Whole Foods are seeking a premium experience — either in terms of the storefront or the product. They often buy fewer items than conventional shoppers, but are willing to spend significantly more, especially for niche items. Natural foods customers also tend to be health conscious and consider ingredients more frequently in their purchasing decisions.
Right from the start, vendors need to adjust strategies if they want to attract mainstream shoppers. Conventional customers purchase a higher volume of goods during each trip, so they don’t generally risk high prices to try out new items. More importantly, conventional messaging needs to be far more widespread because most conventional shoppers won’t seek out niche products the way natural shoppers do. Taking additional steps to make your product more appealing to these markets goes a long way towards increasing conventional sales velocity.
If you thought conventional shoppers were picky about natural products, that’s nothing compared to conventional retailers. Major chains are purely interested in moving units, not taking chances on experimental products. When retailers do accept a more niche item, they want to know it will stand out on store shelves. That means retailers like Kroger, Safeway, and Walmart focus on natural products that are low risk — and are more likely to discontinue them when sales movement doesn’t materialize.
On the whole, a natural account success story only sells a fraction of what conventional retailers would consider successful. But that’s not a bad thing, and some natural CPG manufacturers even take that into account for their early stage growth strategies. It’s easy for a CPG startup to flood natural channels with a product, creating a unique sales story that can be pitched to conventional retail once they’re ready to make that jump. Once a natural product is the top-selling item in a particular category or multiple regions at natural retail, the product may be ready to present that story to a major chain.
While getting onto the shelf of a large conventional retailer is a major accomplishment, it’s also where the real work begins. Vendors need to start pushing themselves even harder to assign new prices and promotions, monitor the competition, and prove to retailers that their partnership is valuable. Failing to do so can lead to product declines that can be hard to bounce back from.
The most visible indicator of this change are costs, which increase exponentially during the transition from natural to conventional retail. Slotting fees alone are a major expense for emerging brands, requiring thousands of dollars before a product officially ships. Procurement costs also increase exponentially — if you have products with 10 natural food store locations, and suddenly Kroger wants you in 70% of its locations, can you fulfill that order? Can you continue to fulfill it consistently for months?
What’s more, conventional retailers often expect vendors to manage their own promotions, coupons, and other discounts. Not every new business knows how to accomplish this at first. Combined, these factors mean that, even with strong sales, your bottom line could be harmed within nine months. And the odds are high that a retailer would rather discontinue your brand than help you find your footing.
For many vendors, that’s a good reason to avoid pitching to conventional retailers until you have a high degree of consumer visibility. You only get one shot to succeed with a Kroger or Walmart — it’s better to have a strong sales story, and enough of a reach to ensure customers know who you are. When a natural product has become a top-seller in a particular category, it’s in a far better position to succeed conventionally.
Making the transition from natural to conventional retail channels is possible, but it won’t be an instant process. Success requires continual account maintenance and a level of CPG data awareness that reflects the conventional scale. In other words, you should be analyzing syndicated data sources every week, which is a challenge for manufacturers lacking the resources of larger companies.
This is where tools like Bedrock Analytics can help. Our visualization tool lets you generate custom charts and tables that are both informative and presentation-ready. You can quickly and easily determine optimal price points, benchmark key competitors, and measure promotional effectiveness. If your natural product is struggling in a traditional retail chain, these steps can help you find the best paths towards increasing product visibility and maximizing sales velocity before your brand is harmed.