There’s no denying that more and more consumers are having products shipped to their homes. Yet the need for brick-and-mortar stores remains strong. And that makes it imperative for consumer packaged goods (CPG) brands to prioritize building and maintaining retail partnerships.
Just how important is physical shopping? A March 2022 PowerReviews survey showed that 95 percent of consumers had bought CPG products or grocery staples in a store within the previous three-month period. In other words, consumers are dividing their time between having items delivered and picking them out by hand.
This doesn’t mean CPG companies shouldn’t incorporate strategies to make it easier for consumers to order their products online. But once again, the best way to do this is with robust, trusting, long-term relationships with enterprise retailers rather than via direct-to-consumer (DTC) routes.
What’s wrong with the DTC model? To be sure, the technique works well with very specific product portfolios. The challenge is that it’s not currently easy for many product types. DTC puts the onus on the manufacturer to figure out how to fulfill orders efficiently and cheaply.
Take household cleaners, for instance. The average consumer only wants to buy one or two bottles. Shipping those bottles cost effectively and safely is challenging from both a monetary and an environmental standpoint. Therefore, DTC is currently a difficult growth avenue in the North American market. Instead, getting a CPG item to be a large retailer’s online pickup and delivery SKU is a smart move.
With online pickup and delivery, everyone wins. The CPG manufacturer can push products, the retailer can satisfy shoppers, and shoppers can get precisely what they need and want without substitutions. But the products need to be on shelves for this to happen. Kroger’s “click and collect” isn’t going to advertise SKUs the grocery giant doesn’t carry. If a CPG brand’s item isn’t in distribution at the store, it’s not providing value to anyone — especially the manufacturer.
Roadblocks to Managing Retail Relationships
The obvious way to make it easy for consumers to find a specific product is for CPG brands to foster great partnerships. Unfortunately, this has become more difficult in the post-pandemic setting. Today, retailers are facing increased challenges, including labor shortages and supply chain hiccups. They’re now servicing multiple product delivery models from the same brick-and-mortar store, which puts increased stress on store operations and the head office. CPG companies must be ready to overcome three roadblocks on the way to making connections with retailers.
The first obstacle is the massive time crunch in-house retail buyers are facing. Just a decade ago, a retailer typically had one buyer responsible for products being sold in-store and another buyer in charge of e-commerce sales. Now, those roles have merged into one. The individual who used to be only responsible for moving brick-and-mortar products must now manage everything. With only so much bandwidth during the day, it’s tough for CPG brands to get appointments with buyers.
Another stumbling block is that many retailers with well-advertised buy online, pick up in-store (BOPIS) policies are aiming to carry fewer SKUs. From the retailer perspective, it’s a logical maneuver. Consolidating SKUs streamlines the virtual ordering process. Regrettably, it also means there are fewer niche “impulse buy” SKUs. For CPG brands that aren’t household names, getting a tertiary SKU for an innovative (but unknown) product in retail aisles can be tough.
The third sticking point to building a relationship with retailers is the worldwide move toward Zoom, Microsoft Teams, and other online videoconferencing platforms. It’s harder to establish rapport online, but many retailers primarily want to meet over video. This continues to evolve, and each retailer differs in how it approaches vendor engagements. Navigating this varied landscape is time consuming and presents challenges in building those deep relationships that can lead to sustained growth for the retailer, the brand, and the manufacturer.
Snagging Retailer Attention in a Noisy and Busy Ecosystem
Though it might seem like all the aforementioned challenges are nearly insurmountable, plenty of CPG brands are making advances. They’re building the foundations with retailers necessary for survival in the modern online-offline shopping ecosystem. Many are adopting new strategies to get and stay front and center in retailers’ minds.
Because our company has weathered a lot of changes in the retail industry over the past half-century, we’re able to provide some insider secrets to help other CPG brands succeed with their retail partnerships. Below are some of the top methods for manufacturers to consider:
1. Consider working through a broker.
Previously, I worked for a very large CPG company where about 95 percent of all the sales were managed internally. At my current company, we have a small sales team, so we rely on numerous broker partners. Both systems can work. Nevertheless, using brokers can be pragmatic and practical for organizations with smaller workforces.
Though it can sometimes be difficult to find the right broker who understands the retailer (and whom the retailer prefers) and is eager to learn about the unique aspects of our product, we’ve been able to make it happen. The trick is to stay in tight communication with the broker so we always know what’s occurring on the retailer merchant level. (“She’s having a baby this spring? Let’s send a card!”)
2. Expect to play a long game.
It’s not possible to just sprint into having a tight relationship with a retailer. There’s too much competition in the field, and it can arise at any time. In the household cleaning industry alone, the competition has become fierce and even a little unpredictable.
Fifteen years ago, most consumers saw four or five common brands on the shelves. Thanks to viral social media marketing, a competitor could come out of nowhere and capitalize on a huge amount of buzz. Consequently, CPG companies must keep a “long-game” mentality that’s focused but agile enough to shift when necessary.
3. Tailor your CPG product narrative.
CPG brands can’t just have one sales presentation. With so many other manufacturers competing for shrinking URL and shelf space, salespeople must tailor their pitches to fit each retailer’s narrative.
That means more than just changing the logo in the top right-hand corner of a PPT deck. It requires the CPG brand to dig into the data and customize everything from product offerings and packaging to price points. The data is out there; wise CPG brand sales teams will know how to use it consistently and appropriately.
4. Provide thought leadership and insights.
A CPG manufacturing partner that brings a retail merchant exclusive insights, category or segment consumer information, and other proprietary research will stand out as a thought leader. Segmentation studies are particularly needed and helpful to manage the significant changes in consumer and shopper behavior since the pandemic.
For instance, a CPG brand could conduct a study of 1,000 customers. Chances are strong that a couple hundred of them shop at Walmart, Albertsons, Kroger, etc. Being able to slice the data and offer specific, statistically significant insights to a retailer keeps the retailer interested — and it keeps the CPG brand relevant. Confidently saying, “We conducted a segmentation study and talked to your shoppers. This is what they said and why we think this is a white space of opportunity” can get a product the figurative thumbs up.
5. Seek to find each retailer’s preferred communication cadence.
Many buyers and merchants deal with 60-plus different vendors at any given time. If all of those vendors emailed every day, they would be overwhelmed just by sheer communication. CPG companies must keep this in mind. As eager as a salesperson wants to be to stay in touch, the salesperson has to figure out how not to overwhelm the retail merchant’s inbox.
Discovering the right balance can be tricky. Again, this is where having a broker is helpful. A broker usually represents several companies to a retailer. As a result, the broker can send out one message and cover more ground without causing annoyance or friction.
6. Keep up with your retailer relationships.
Certainly, it’s unwise to bombard retailers. There are other ways to stay in the spotlight without being a pest, though. An example would be to consider what’s important to the retailer. Is there a foundation project it’s pursuing? What’s it doing in the DEI space that your organization is uniquely suited to participate in? How can you stand out by matching the authentic drivers of your organization to the retailer’s objectives?
Every retailer is different. Understanding them all and then aligning yourself with what matters can deepen personal and professional connections. At a time when inflation is high and the average American’s pocketbook is stretched, stewarding relationships with retailers is the right thing to do. CPG manufacturer leaders who think beyond their brands to acknowledge what’s relevant for retail partners will position themselves and their products well.
Consumers might be buying more items online so they can have them brought right to their doorsteps. Still, they’re not forgoing the more conventional in-person shopping experience. Therefore, make the most of these evolving buying trends by establishing and maintaining tight connections with retailers.
Sarah Chadwick is the chief sales officer at Jelmar, a respected leader in the household cleaning products industry.
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