Virtual—Small brands need to form relationships with the retailer—that’s the takeaway from “How the Pandemic is Changing Retail & How to Remain Relevant to Shoppers,” the latest podcast from Daniel Lohman, Natural Industry Strategic Advisor at Brand Secrets and Strategies, in which Lohman interviewed Phil Lempert, the Supermarket Guru.
COVID-19 is having some serious effects on the industry, Lempert noted: “We’re seeing people go back to big brands,” he said. “People believe in them, retailers can depend on them. Small brands have really been hurt substantially and need to step up their game—they couldn’t keep up supply the way big companies can. This isn’t food, but we’ve seen people moving away from the natural soaps and laundry detergents and so on and going back to petrochemicals. This is very serious stuff for our industry, and we need to reverse it. Smaller brands need to do a lot more testing and establish their efficacy.” And when it comes to food, he said, people are moving away from natural anyway—“I know people, on a personal level, who haven’t had oreos for decades who are now eating bags of oreos, because they’re on the shelf and people need that comfort food.”
The main point: “This is very serious stuff for our industry, and we need to reverse it,” Lempert said.
And the way to get a brand started, they added, isn’t going to be trade shows in the future. “We’re not going to see 100,000 people at Expo West,” Lempert said. “We’re not going to see a booth next to a booth. The people working the booths aren’t the main people at the brand, the people walking the aisles aren’t the main buyers.” Lohman agreed, noting: “They’re great networking events, and that’s important, but they’re inefficient.”
The solution: Go direct. Lempert used the example of Publix—“What Publix is doing is working with local farmers and local dairies, and Publix is buying that product that would normally be plowed right back into the ground—because there’s no farm workers, and no truckers to deliver it to where it would usually go—and they’re buying it at a fair price and donating it to Feeding America. And one farmer—I believe he was a third or fourth generation farmer on that farm—was almost in tears, because otherwise he’d have had to shut down.” The lesson: Go direct. “Retailers have recognized that if they have a relationship with a farmer or a dairy, they don’t need a distributor, a broker, a middleman—they can go direct. They’re signing contracts where they get the full supply from farmers, from dairies, because they want to be assured that this [shortage] is never going to happen again.”
How this applies to brands: “A lot of brands are saying that they need to get a broker, that a broker will be the magic light, who will get them into every Kroger or whatever—but that’s not necessarily to your benefit, and it’s not necessarily true,” Lempert said. “Brands these darys are not working that hard. That’s my disappointment with them. We have these new brands who think that it’s so easy—they read articles about how easy it is to raise money, like with Beyond Meat, but those are exceptions. There are a lot of failures. This idea that you can have agreat product and someone will write you a check for a couple million—it’s not going to happen. VCs have moved onto healthcare and software. If you want to be successful with a brand, you—not a broker, not a salesperson—have to get out there and make a relationship with the retailer.”
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Of course, that’s not the end of it. Lempert continues: “You need a great product, of course. But you also have to have the consumer insights, you have to help merchandise the product, you have to bring something to the table.”
Lohman agreed wholeheartedly, noting that there’s a “stupid simple” rule that people still forget: “Nothing’s going to happen until someone buys your product. If customers can’t find it, they can’t buy it.” He agreed, too, that brokers aren’t always the way to go—“To be efficient, brokers need to use cookie-cutter strategies that don’t differentiate your product. You’ve gotta keep your hand firmly on the rudder of your ship. I hear stories about a lot of brands that can’t get the money now—venture capital isn’t as easy to get. Now’s the opportunity for brands to lean in, to use creative strategies.”
Those creative strategies should all boil down to making it easy for the retailer to say yes to a product, Lempert and Lohman agree. “Retailers are focused on one thing and one thing only,” Lempert explains, “and that’s operational. How they’re going to cover the costs of all the sanitizing, the antimicrobial belts, the plexiglass. What you’ve gotta do as a brand is really help them, not try to disrupt them, not tell them to do something different.” And when it comes to the product itself, it should be on-trend—and right now, that trend is immunity. “Consumers are understanding that one of the best ways to fight—whether it be COVID-19 or another virus or illness—is to have a good immune system, to eat right. All this information is coming out about vitamin D, vitamin C, about immune health. You as a brand should be reading it, should be understanding it. If you need to reformulate your product a little bit, do it.”
Lohman’s advice to brands: Ask yourself some questions. “What are you doing to grow your brand? What are you doing to support the retailer?”
Lempert’s final takeaway: “A brand should be on top of what the trends are, and should make sure your company values and product values align with the customer values and retailer values, and really be a true partner with the retailer, because if you’re not, the retailer will not put you on the shelf.”
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