Retail grocery is not always the best place for an early-stage CPG product. In fact, it very well could be the worst. Most stores have over 35,000 SKUs. As a new brand, you have to find your way onto the shelf, somehow interrupt consumers’ habitual shopping behaviors and hopefully find your way into their shopping carts. That is not easy. There is a massive brand graveyard out there littered with those that have come before, tried and failed.
How do you determine if retail grocery is the right channel strategy? There is no simple answer, but there are a few variables to examine. The first is the need-state. If you want consumers to discover your brand, doesn’t it make sense to be available where and when the need is most acute? A second consideration is the ability to drive trial. A third is the cost of driving that trial.
Let me illustrate. Better Breakfast (fictitious), a brand aimed at capitalizing on the snackification of the American diet, is introducing a line of nutrient-dense breakfast bites. But, where do they launch? If they go into retail, they likely will find themselves either in the breakfast aisle positioned by the low-cost breakfast bars or in the very crowded nutritional bar set. Neither is an ideal place for discovery and most people aren’t shopping the breakfast aisle with the intent of eating breakfast right then and there. Simply stated, the need is not acute.
In either of those sets, the competition is fierce, and the shelves crowded. For a multi-serve breakfast bite, how do you drive trial? Demos are an option but are both expensive and difficult to scale. Promotions work but are again very expensive, and you run the risk of training your consumers into a lower price point. That said, doing both still won’t guarantee success.
Retail grocery does not allow for much storytelling. Brands, for the most part, are relegated to what they can communicate on the package. Most augment by leveraging social media. However, social media and purchase behavior at retail are difficult to link or quantify.
All of this means that Better Breakfast is likely going to have to make significant investments in promotions, demos and social media to drive discovery and trial. This is coupled with the investment made to get on the shelf in the form of slotting fees or free-fills. It is an expensive high-risk strategy.
Now, let’s say Better Breakfast rethinks its launch strategy. Instead of retail, they focus on grab-n-go locations such as regional coffee chains, corporate campuses, micro-markets, airport concessionaires. In each of these, the need-state is likely to be acute. People are arriving hungry and looking for a breakfast solution. The competitive-set won’t be as crowded, and because of that the chances of discovery and trial are much greater. The trial can be driven without the cost of demos or promos.
This is a gross simplification of the process. I offer it merely as an illustrative example of the questions that should be considered before you launch. There are some other obvious things that need to be considered such as market access, cost-to-serve, distribution, and more. But the message I want to convey is that retail grocery is not the only effective route-to-market and the alternative is not just e-commerce.
You must be a bit of a detective, find where the need is most acute and then figure out how best to get your products in front of consumers at that exact moment. It’s not easy, but do it well and it is a game-changer.