Every healthy CPG brand’s dream is to get into retail, but how do you get started?
By Victoria Walling
There’s nothing that speaks more to healthy CPG founders than getting their products ready for retail distribution.
Yes, you’ve already got great products, but are your team and operations set in place for you to scale your distribution and sales activities? That’s a question many founders need to contemplate on.
Getting into retail is not an overnight plan. It takes research, effort, planning, and backing to be able to scale distribution in great lengths. In this article, we will go through several steps to help you get retail ready in the next couple of months.
But before anything else, I want you to go through this list and evaluate if your brand is already ripe for retail distribution:
You’ve got strong sales – If your sales are strong and you are selling most of your products via D2C, then it may be time for you to consider retail to reach more people.
Your product is ready – Your product has been tried and tested, made of the highest quality ingredients, packaged well, and priced competitively.
Your brand recognition is present – Before getting into retail, you need to be able to establish your brand in the market, so you are known and trusted by your target audience.
You’ve got a strong sales and marketing plan – you need to have one set in place for how you will reach your target market even more, generate sales, and create more affinity with your brand.
You’ve got the capacity to scale production – Are you ready to produce double or triple your usual inventory? If you have the capacity to scale production to meet demand, then retail distribution is a great way to help you increase sales even further.
You’ve got an established distribution network – Are you already selling your products on strong channels such as online marketplaces, your website, or specialty stores?
You have the resources to support retail distribution – This is an important factor because it entails having enough inventory, the ability to ship products quickly, and the budget to cover the costs of marketing and distribution in general.
Once you are able to consider all these, you are then ready to make a decision about when it’s time for you and your brand to get into retail. There’s no ready-made, one-size-fits-all answer because it varies on your specific situation.
Now if you say you’re already checking off everything on that prior list, let’s get down to business.
Step 1: Do Your Research
Conducting market research will help you understand the competitive landscape, pricing, and distribution channels you need. Before you even approach potential retail partners, it’s essential to learn about their needs and preference so you are able to customize your pitch to what they are looking for. Do this by visiting their websites, reading trade publications and online forums, or even talking to other healthy CPG founders who are already selling in their stores.
Do your research to identify potential retail partners that align with your brand and target market. Look at important facets like their size, location, customer base, and product mix.
You also need to determine the right retail channels that are the best fit for your products. This may include big-box retailers, online marketplaces, specialty stores, or a mixture of all these.
Tip: Start small. Don’t try to launch in major retailers across the country immediately. You can start with a few key retailers that are a good fit for your product and brand locally before even starting to scale nationwide and internationally. Start slow and keep growing at a steady pace.
Step 2: Secure Financing
Getting your product into retail stores can be costly, so you’ll need to make sure you’re able to secure financing to cover the costs of production, marketing, and distribution. You can consider options to seek investments and funding this by reading my article on 5 Ways to Raise Funds for Your Healthy Food and Beverage Brand.
You must be able to secure the proper funding and put more focus on margins, so you are able to review all cost fronts – goods production, brokerage fees, retail commissions, all while considering inflation and changing times.
Tip: Take time to raise funds. Making sure you know the end-to-end coverage and implications of raising money to shoulder the cost of your expansion to retail is important at the end of the day.
Step 3: Build Good Relationships with Retailers
It’s the game of the trade. Attend industry events, join relevant trade groups and associations, and network with retailers within your industry to build relationships over time. This should not be done when you only decide to go into retail.
All retail buyers are busy people, so it’s your goal to make it convenient for them to do business with you. Make good conversation. Have all your paperwork done and in order, be responsive to their clarifications and requests, and offer them competitive pricing and terms.
There are several types of retailers today – grocery stores, mass merchandisers, drugstores, convenience stores, specialty stores, and online marketplaces. Some retailers that many healthy CPG brands look at are Whole Foods Market, Sprouts Farmers Market, Erewhon Market, Costco, and so many more.
But launching nationally is tricky and oftentimes you end up paying for excessive slotting fees, free fills, high chargebacks, and get pulled out of shelves in six months.
If this is the case, what should you do? Start with independent retailers that focus on regional or local presence to test your sales velocity. Grow from there. Once you are successful in independent retailers, you can work with a broker to pitch to the big retailers.
Remember that no one else will care for your product in the same way you do, so it’s important to work with a retailer that you can trust and who also values your hard work.
Tip: Building relationships is slow burn. Take your time building relationships with retailers as you get ready to expand into retail.
Step 4: Create a Retail Strategy
Once you have tested your product-market fit and know that you have a great product that answers the need of your customer base, then you need to get the word out and start selling more.
This means you must develop a comprehensive and strategic sales and marketing plan that will drive more people to retail stores and try your product. Ideally your retail strategy and sales and marketing plan should focus on products, positioning, packaging, pricing, placement, and promotions.
You should be able to identify the independent and national retailers you want to work with, so you can pitch your products, negotiate terms, and manage inventory.
Tip: Don’t just focus on merchandising and in-store activations. Retail sales and marketing today branch out to email campaigns to customers, support for your retailer on your website, newsletter for your retailers, and the list goes on.
Step 5: Prepare Your Products
It’s one matter to find the right retailer distribution partner, but another thing to ensure that your inventory is ready.
Ensure you establish your fulfillment centers, so your production and distribution capabilities are aligned with the volume demands of going into retail. Your products should meet all the necessary regulatory requirements, feature attractive packaging, and are priced competitively.
Having retail-ready pricing helps you know how much margin you are making after working with a distributor or broker then figure out necessary adjustments to make it work better for you.
Last Tip: Be Prepared for the Unexpected
As entrepreneurs in the healthy CPG industry, you know that no two days are the same and that things don’t always go according to plan. You need to be prepared for the unexpected, making sure you have contingency plans in place in case there are delays in production, any shipping problems, or other unforeseen challenges that may come your way.
Getting your healthy CPG brands into retail stores is a big challenge and undertaking but not impossible as long as you have careful planning and execution.