Food brands can find success without the top 4 grocers. Here’s how…

Food brands can find success without the top 4 grocers. Here’s how...

Getting a listing with a major supermarket may seem like a clear recipe for success. But for many food brands, building success away from the big grocers now makes better business sense.

In times gone by, the pinnacle of many food suppliers’ ambitions would have been to get a listing in Tesco, Sainsbury’s, ASDA or Morrison’s. And it’s not hard to understand why.

Get your feet under the table with a national and your sales figures could soar, your food brands become a household name and your efficiency savings go through the roof as production volume increases.

Yet for every example of a business achieving success in this way there are dozens that have fallen by the wayside. With hindsight, many of these food brands admit that their “get a listing at all costs” approach actually proved to be a high-risk strategy and took their attention away from lucrative and sustainable sales channels.

At RedWigWam we work with businesses to look beyond the biggest names in the industry and set their sights instead at the significant market share now held by independent grocers, farm shops, delis, cafes and food service companies.

Once upon a time, avoiding the “Big 4” was a sign of a lack of ambition; today there are both strategic and financial benefits to working with independents and alternative sales channels. After all, growing a brand by landing many smaller fish offers greater assurances than trying to land that one big fish at all costs.

Let’s take a closer look.

A shift in consumer habits and a new respect for localism

British consumers are shopping cheaper, buying little and often, going healthy and eating out more. How do we make sense of that!

It’s impossible to have missed the stark change in consumer habits over the last decade. Instead of the traditional weekly shop at the giant out-of-town supermarket, millions of us now choose to shop little and often from smaller, more convenient grocery shops. While the big UK grocers have accommodated this through small metropolitan stores, the change has given greater opportunity to independents and alternative outlets.

According to research by Mintel in 2016, 45% of Brits now regularly visit convenience stores for a “top-up” shop each week. Over a quarter of people in the UK visit convenience stores twice or more a week. Perhaps most surprising is that 7% of us now visit convenience stores for our main weekly or monthly shop.

Time-poor consumers are looking to cut down on time spent grocery shopping and gain greater flexibility, with less time (and inclination) to perform a large weekly shop. Indeed, Mintel’s research showed that the convenience sector had grown by 1.8% in 2015 to £38.7bn and is estimated to reach £43.8bn by 2020.

This not inconsiderable slice of the UK’s retail pie makes for interesting reading, notably because it has seen independents and smaller chains grow their market share – stores which represent a very real opportunity for new or emerging food brands.

The “little and often” trend has also been accompanied by a number of other changes to consumer behaviour in recent years, which should not be overlooked by FMCG suppliers. The healthy eating trend, explosion in café culture and growing influence of the food service sector in supporting brand establishment should all be of great interest.

High street cafés and coffee shops alone have seen 28% growth in the last 5 years, selling not just hot drinks but an array of snacks, refreshments and meals. This trend has also enabled farm shops and delis to build on “sit-in” trade and expose customers to the kind of locally sourced, artisan or health conscious produce that they won’t find in their local ASDA or Tesco. Service stations, too, have worked hard in this space, as they try to compensate for falling revenues attributable to the drop in tobacco and fuel sales.

Why go independent?

Going independent can help to avoid growing too big too quickly. Although fast growth can seem like a business’s dream scenario, it can all too often occur without the infrastructure in place that’s needed to gain repeat business. An unproven product may gain a listing, but it can just as quickly find itself dropped. If a business has made major investments to fulfil an order, suddenly losing a foothold in a major grocer can leave a brand dangerously overextended.

Conversely, developing relationships with a network of smaller independents can pave the way for sustainable, long-term growth. In the first instance, price establishment is much more straightforward – especially for brands attempting to carve out a niche as a premium product. Cafes, farm shops and smaller retailers don’t typically drive deep discounts in the same way as the largest supermarket chains, enabling suppliers to grow operations on healthier margins.

Developing a clear brand story and cultivating brand advocates within stores and outlets is also more likely in smaller, independent shops. By working closely with influential shop managers and floor staff it is possible to develop a greater influence over customer purchasing decisions in these stores.

The challenge

Of course, there is one big problem with opting for the convenience, café and independents market as opposed to the national grocers: one point of contact can become thousands.

Rather than working directly with a single buyer or cohesive buying team to get a listing in shops nationwide, a huge number of relationships now have to be established and managed. While getting lots of little fish to take a nibble of your product offering is often significantly easier than getting the big fish to take a bite, instilling organisation and bringing all of these strands to heel can be difficult.

For all the benefits of working with smaller stores, monitoring success, checking on implementation and marketing effectively to customers can be a very real challenge for suppliers.

Resource your brand with RedWigWam

Building a relationship with a large number of small outlets around the country can very quickly drain the resources of even the most ambitious brand. At RedWigWam we not only bring decades of experience in the FMCG sector to the table, thanks to our sister company, The Mothership Group, we can also give suppliers access to a network of 52,000 pairs of eyes and ears nationwide.

Above all, brands need to be responsive in the 21st century. And RedWigWam’s crowdsourcing service is perfect for food brands that need to get bodies into store fast (often within a matter of hours). Whether it’s monitoring placements, experiential activities or engaging in field marketing, we can help.

For brands looking to raise awareness in-store, we can supply the resources to carry out brand ambassador roles, perform tasting sessions or speak directly to managers. We can also supply reliable, fully-briefed mystery shoppers or marketers into everything from a city centre café to a remote service station farm shop.

Not only will you gain someone who is well placed geographically, but also someone with the knowledge and skills to bring real passion and commitment to any given role.

Occupying a better negotiating position

Targeting independents, convenience stores and alternative outlets during the early days can help an FMCG brand to build a successful and profitable business. Of course, this doesn’t mean that these companies should never supply the likes of Sainsbury’s.

In fact, there are many examples of suppliers who have used a proven track record through alternative sales channels to leverage a better negotiating position when the big supermarket chains finally come calling. And importantly, if the deal isn’t right; a business can always decline.

Want to have eyes and ears in any outlet in a matter of hours? Find out how we can help by visiting today.

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