Supermarkets and retailers are clamouring for ways to grow their categories, increase their food fall and reduce the stranglehold of the big brands such as Coca cola and Unilever. And that’s where challenger brands like you come in – providing high quality products that fill a definite niche that maybe the big brands have missed or simply are not a strategic fit.
But why would you want to supply the big supermarkets – why would you want to give between 25 and 70% of your profit to someone else? Well there are a number of reasons that might be relevant to you
- More volume – Tesco has nearly 30% of grocery retail sales which means that if you are NOT in their stores, you are missing out on a big chunk of customer money
- Ease of distribution -some products such as frozen foods are really difficult to distribute direct to consumer and keep to temperature. A listing with Ocado can give you immediate national coverage and they do the deliveries!
- Credibility – a lot of my clients are on an upward trajectory and that needs additional funds and investment to get them to the next level. A listing with a grocery multiple gives that credibility that you are going places and of course about to benefit from substantial distribution
- Better profitability – the paradox of gaining a retailer listing is that despite the margins they need, you may end up more profitable as you simplify your business. No more direct deliveries, better volumes means better buying power for raw materials and packaging and longer production runs means less changeover costs
So, what are the secrets of becoming a supplier for big retailers and supermarkets? How do you get in front of the buyers and make a compelling sales case for them to list you?
1. Decide on who
The first decision you need to make it whom do you want to approach. All supermarkets have a different customer base and not all might fit with your customer avatar and brand values. Also have a look at the market share and who is up and coming – it might surprise you!
2. Are you retailer ready?
There are a number of retailer requirements that you need to meet before you can apply online – for example, you cannot complete your Ocado application without a salsa or BRC accreditation for your production facilities – and it has be grade A/AA for BRC – grade B and below simply won’t do. They also need the right type of product insurance (had issues with Costco on this one)
3. Get the meeting
The hardest part of becoming a supplier for supermarkets is actually getting them to talk to you! There are four ways you can make that initial approach
a. Apply direct online – all the retailers, Tesco, Sainsburys, Morrisons, even Aldi and Lidl, are all keen to find the next big thing and encourage suppliers to get in touch and register on their online platforms. They have a variety of programmes designed to grow challenger brands and are often prepared to look at you on a regional basis or trial like Taste the future with Sainsburys. The easiest approach is to apply online and here’s a list of their supplier websites
b. Pitching events – there are a number of events available where you can compete to get a slot complete – examples include Bread and Jam fest, Enterprise nation food exchange, IFE/Speciality fine foods and other expos and many more. The application is key so that you stand out from the crowd and then you need a simple pitch to pique their interest and invite samples or arrange another meeting – I have written a great mini ebook on how to do the perfect 10 minute pitch which you can download here
c. Write direct to the buyer – if you know who the buyer is for your category then a direct approach is probably the most effective. However you have to remember that the popular ones may get hundreds of emails with new products a month so you have to stand out from the crowd. We always recommend that you warm up your buyer before emailing via Linked in connections or articles, trade pr or using your network to recommend your brand directly. I have written a mini course called the secret sauce of getting a listing which you can access here to help you raise that profile.
d. Use a sales agency or distributor – there are times and buyers who might be more interested in working with you via a distributor. For a long while, Tesco were loath to set up new suppliers and when Zinda foods wanted to introduce their fantastic chilled wrap products onto the sandwich fixture, the easiest route into the store was via a distributor who already had listings and deliveries in place. I also have another client who supplies the major food halls in London and she uses an agent to agree the sale and make deliveries. She is an expert in these stores requirements and has been worth the commission to get the listing. But clearly that is something you need to build into your costs
4. Know you’re why?
Why should the retailer buy your product? Your USP will depend on many different factors.
a. Product attributes –are you first to market with certain attributes and do you fill a gap in their range
b. Marketing tribe –do have a massive list of followers who will bring footfall to your retailer and grow their market share
c. Marketing funds – do you have funds to invest in supporting your listing and enabling the retailer to benefit from selling your product
d. Customer affinity – as mentioned in point 1, you might have the same customer base and so their customers will love your products
5. Build your selling story
I always get my clients to build a sales presentation BEFORE they make the first move to approach the supermarket. This enables them to get clarity on the key selling points of their brand and enable them to distil out the usp. It can also be beneficial to summarise this into a simple one pager that can be sent with any emails or used as basis for pitching applications.
This can include:
- Brand mission and values
- Product description and brand usps
- Evidence of rates of sales from other customers, wholesalers
- Testimonials and customer reviews
- Contact details (so important and often forgotten)
- Social media and website
6. Follow up
Once you have got in touch with a buyer, you may hear nothing! Perseverance is critical as you might just be contacting them at the wrong time. So keep following up with new information, awards won and other great news that keeps reinforcing how well your brand is doing and how they really need to list you – pronto!
7. The meeting
a. Finally, after all that hard work – you have the meeting – the opportunity to sell to the retailer and maybe finally become a supplier for that supermarket you have always dreamed of. Key things to remember are
b. Be prepared to negotiate – They will always ask for more than they want so don’t be surprised by some financially scary requests – it is possible and ok to say no! Work out your profitability and don’t forget to build in promotional activity, distribution costs and settlement terms – all have an impact on your finances
c. Ask questions – no one can know everything about every retailer so don’t be afraid to ask questions about distribution, marketing, margins and anything else you need to know to help you to build the best commercial deal for your business
d. Don’t over commit – work out the financial implications of every bit of cash they are asking you to invest – how many products will you need to sell to generate the profit to fund that £500 investment in product review?
d. Understand the distribution deal – do you need to deliver to one depot of all of them? Can you deliver in a small van or do you need a trunker – we struck a deal with Booker to supply Budgens and Londis and then hit the snag that we had to deliver in a trunker so needed someone to consolidate the load which lost us a day of our already short notice and added cost
e. Exclusivity – Sainsburys taste the future team are looking for a year’s exclusivity from other multiples and discounters. Selfridges would like to be “first to market”. A lot of the retailers are interested in exclusivity and always say yes initially as there are many ways to offer it – one exclusive SKU, a 3 month exclusivity (because you might not get another listing until after that so costs you nothing!)
f. Forecasts of volume – it is critical to know what the forecast is for volumes although be aware it is unlikely they will give you an accurate number. It will depend on number of stores, rates of sales of other products, time of year, promotional activity, other launches and a whole load of other info. However you need a reference point so that you can plan it into your production, buy the right amount of raw materials and packaging etc etc. Some retailers might be prepared to underwrite packaging to help you – Costco did for example with a client of mine when they wanted a specific type of display tray
8. How to deal with no
Listen to the feedback and work out how to get better – eg change the packaging, build the marketing, get more funding, sell more elsewhere. Always have a plan B with a view to other retailers, export or Amazon. No might mean yes for the future and it often can take two or three years to finally get that dream listing in a supermarket
9. How to deal with yes
OMG we got the listing! We are going to become a supplier for supermarkets. Our products will be on the shelves.
Now the real work begins to get set up as a supplier.
a. Make sure you sort out the administration and paperwork to get that listing in place so that it launches smoothly
b. launch in the strongest way possible – the first two weeks are critical for the system to reorder your products so make sure you have good supply set up, a great marketing launch plan in place and a merchandising team out in stores making sure that it is all in place to hit the ground running and impress the buyer!
c. And to keep the listing – once we have calmed down a bit about the listing of brand, we often move onto the next opportunity sometimes neglect our older listings. That can be problematic as brand neglect means that the buyer might not be thinking of you at their next range change. Other challenger brands will come along to challenge for your space just like you did….and might have a USP that doesn’t feature in your product range. So keep your eye on the ball, think about brand refresh, new line launches and dynamic marketing to keep your brand listed and growing
10. How to say no and walk away!
And finally, you might not become a supplier because you simply have to say NO! You may get the meeting, do everything right and then the buyer asks you for a cost price that is your cost!! Or a bigger better retailer offers you an exclusive deal that it too good to turn down. Never be afraid to walk away IF it is not profitable or not congruent with your brand values. You might be too expensive maybe due to low volumes, poor purchasing power etc but they may also be negotiating hard and by walking away you will determine if they are really interested. There is no point being a busy fool just to say you are in Tesco (other supermarkets are available!).
But if you are inspired to go and become a supplier for a supermarket or retail chain, then you might want to check out my course – Pitch perfect! That will enable you to get started on the journey and provide help every step of the way