Business management

How to shine in the supermarket

Once you’ve secured the much-coveted shelf space at Sainsbury’s or Tesco, how do you make the most of your moment alongside the Kiplings and the Branstons of this world?

“When it’s your first time, you’ve often not thought about any of the infrastructure you need behind the scenes,” she says. “We had a call from Tesco asking us to commit to launching our Free From brand Creative Nature with them within three weeks – around 12 is more common – and I said yes without thinking about how to do it.”

Thus began a frantic few weeks in which Ponan had to educate herself in the finer points of the way supermarkets operate. It’s a very steep learning curve – here are some of the basics:

It can take months to get a ‘yes’

Ponan’s three-week lead time was unusual; Steve Magnall, CEO of St Peter’s Brewery, whose craft beers are stocked in the major supermarkets, says it can easily be a six-month process to get onto a supermarket’s shelves. “Your main contact will be the buyer of whatever section you want to get into,” he says, “and if you’re a small business you might meet them once in a year.” Magnall says he once spoke to a buyer at Aldi who had 2,000 breweries per week contacting him from around the world.

The supermarkets will want a significant margin. Magnall says that around 25% to 30% margin is the norm. He says it’s imperative you only ever agree to sell to your supermarket at a price that works for you. “Do the numbers and know the minimum you’ll go down to,” he says. “If it goes lower, pull out or you may destroy your business.”

Expect a mountain of admin

“You have to set yourself up on all the systems the supermarkets need you to have in place, such as Electronic Data Interchange to send your invoices,” says Ponan, “and you need to make sure payment terms are agreed so you know when you’ll get paid, because cash flow can be a real issue for small businesses.”

Among the multitude of other things you will quickly discover is that supermarkets have different ‘compliance rates’. “You could agree a listing of 100 stores,” says Ponan, “but if your supermarket has a low-compliance rate you’ll probably only be in half of them and will need to employ someone to visit stores to see if you really are being sold there.”

Think about running on-pack promotions for customers, perhaps linking up with other brands that have a strong presence in the store

Caroline Morris
Head of sales, Bar-Be-Quick

Ponan admits this all sounds mildly terrifying, but she also agrees that a supermarket listing can propel a brand to stratospheric levels. While her initial experience with Tesco was a “nightmare” and ultimately didn’t work out, she has since gone on to see her products stocked at Ocado, Asda, Sainsbury’s and The Co-Operative. “I think you need to ask yourself how you see your brand growing in the supermarket,” she says. “Don’t go in without knowing the trends in your market and having some kind of brand strategy.”

Tastings, promotions and more

On the proactive side, there are a multitude of things you can do to make the most of your big moment. “Depending on the supermarket,” says Magnall, “you can do tastings in stores, you can agree some upfront promotions, like introductory offers, and discuss ways to stand out on the shelves; plus you can do things like have 50p off the next purchase on the till receipt.” You have to pay for these, however. “It’s all pay to play,” he says. “None of it is free.”

Caroline Morris, head of sales at barbecue brand Bar-Be-Quick, says: “Think about running on-pack promotions for customers, perhaps linking up with other brands that have a strong presence in the store.” It demonstrates your commitment to providing the best experience for your supermarket’s shoppers, she says, and it also encourages higher basket spends and aligns your brand with household names.

Ultimately, you will usually have six months for your product to prove itself. “Supermarkets tend to have a one in, one out policy over that time period,” says Magnall. “They’ll have a rate of sale that you need to get through, and if you’re achieving that you should be fine. If you massively smash it, they’ll likely give you more distribution into more stores.”

And if you don’t? Just do what Ponan did: lick your wounds, see what went wrong and come back with a better plan next time.

Five top tips for supermarket first-timers

Theadora Alexander, co-founder and CEO of Young Foodies, an independent champion body that helps SMEs in the grocery industry, shares her thoughts:

1. Be on top of ‘go live’: “Go live can often come with mishaps, like deliveries not arriving in store on time, stock being left in the storeroom and products not being displayed in the correct place – don’t worry, everything is fixable. Your job is to micromanage this process.”

2. Prioritise your supply chain: “Your operations team is critically important in your business and your in-house or third-party logistics partner is the guardian of that reputation.”

3. Check your data weekly: “Supermarkets should provide you with online sales portals – visit these regularly. Check your sales by week and, if possible, by store. You need to know that the Tesco Express in Dean Street has run out of stock because no one else is going to notice it.”

4. Go into stores regularly: “It’s easy to forget that your product is on a supermarket shelf somewhere and whatever is happening on that shelf is the difference between success and failure for you. So go into stores and check that your product is where it should be and optimised, and see what other products are displayed near yours and what’s on promotion. Try and build relationships with the store workers.”

5. Give your buyer confidence: “Never underestimate how busy your buyer is. Be a great supplier and keep your buyer up to date with how everything is going – periodic check-ins to reassure them that sales are progressing, that you’ve received positive reviews, and that they needn’t worry about your products because you’re doing a great job of managing your brand.”

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