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Retailers balance risk, reward in adding natural products
Supermarkets are highly selective in adding natural and organic products, but they are more likely to embrace items from brands that truly understand their needs. That was the consensus of a panel discussing this topic during the Supermarket News Health and Wellness Summit at Expo West in Anaheim.
David Orgel
March 5, 2015
3 Min Read
Left to right: Scott Silverman, KeHE Distributors; Rhonda Siltman, Coborn's; and Todd MacGrath, Presence Marketing.
Supermarkets are highly selective in adding natural and organic products, but they are more likely to embrace items from brands that truly understand their needs.
That was the consensus of a panel discussing this topic during the Supermarket News Health and Wellness Summit at Expo West in Anaheim, Calif.
For new products, “we need it to be on trend now,” said Rhonda Siltman, category manager, natural and organic, Coborn’s, St. Cloud, Minn. “It needs to be understandable today, with understandable value, since we are a conventional supermarket.”
Despite that caveat, Coborn’s wants to be current in taking on new items at a time when the natural and organic segment is performing very well for the company.
“We like to be first to market,” she said. “I want us to be a destination for this. I’m willing to take a risk if a vendor has done their homework.”
Doing one’s homework often means understanding not only the needs of the supermarket channel, but of specific retailers, panelists said.
“If you’re a brand, you need to understand the strategy of the store banner,” said Scott Silverman, VP, customer insights and growth solutions, KeHE Distributors, Naperville, Ill.
“You also must prove the brand has impact in the category,” he added. “Start locally, because you need proof of concept on what works. You need to tell your brand’s story in-store. Can the brand have impact in the category that’s scalable and makes sense?”
When working with supermarkets, as opposed to other types of retailers, “the cost of entry is greater and the risks are higher,” Silverman said.
Moreover, new items need to find their special niche, and it doesn’t have to be about product innovation alone.
“Let’s say you have a new blue corn chip product that enhances retailer margins,” Silverman said. “Margin enhancement is another way to approach supermarkets.”
He emphasized that the supermarket channel is making good strides with natural and organic and needs to focus more on marketing and communications.
“Supermarkets are doing more than ever in bringing in items and dedicating more space on shelves,” he said. “That’s half the job. The other half I’d like to see involves more integrated marketing campaigns telling communities why these products make a difference.”
This involves staff training and consumer education, he emphasized.
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“It’s telling the stories of the brands. Traditional grocers have big megaphones. They can amplify the message and benefits to help Americans think differently about food and agriculture.”
Todd MacGrath, director of conventional accounts, Presence Marketing, a natural and organic brokerage based in South Barrington, Ill., outlined a number of factors he considers in deciding whether to bring new brands into his company’s portfolio.
“Are brands prepared for the cost of entry and cost of promotion?” he said. “What’s been their success in the natural channel? What can they offer to the supermarket trade?”
He said it’s important “to understand a brand’s scalability, in terms of how much they can take on.”
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