Today we interview Rudy Mirran to find out step by step, exactly how he goes about getting his product into grocery stores and retailers. Rudy has a great deal of experience with selling wholesale products to grocery stores, retailers, and everything in between. We ask about product differentiation, product packaging, buyer relationships, pricing strategy, and more.
Step By Step Instructions For Selling Your Product Into Grocery Stores
- Understand The Retail Landscape In Your City, County, State And Region In Order To Determine Your Product Fit.
- Create A Target List – Map out Who Your Consumers Are and Where They Shop.
- Research Where Your Product Fits Within Retail Stores’ Category Mix – Ensure that you account for the retailer’s quality standards requirements and guidelines on ingredients and packaging.
- Begin Networking Including Attending CPG Events To Gather Intelligence On The Targeted Customer List.
- Visit The Individual Grocery Stores / Retailers To Gain Knowledge From Everyone You Can – Stockers, cashiers, other employees on their breaks – ask who makes buying decisions.
- Be Prepared To Ask, “What Does It Take To Do Business With This Store?”
- Offer Samples To The Decision Maker And His/her team – Once they sample your product, and if it is truly differentiated, they will become your champions inside the organization.
- Follow Up And Determine Next Step In The Process – “What Do We Do Next To Work Together?”
Interview:
Chris: Can you tell us about your background?
Rudy: Well, I’ve been in corporate America for 30+ years working on five continents and 11 countries. I worked primarily with Fortune 500 companies including PepsiCo, Kimberly Clark, Maytag and Compass Group PLC. My experience included spending a good deal of time in the international arena where you have to learn the intricacies of doing business within each various cultures. My career included running existing businesses, establishing and building new markets, developing new channels, launching new brands and consolidating acquired brands.
After graduating from UT Austin’s business school, I attended Thunderbird in Arizona and completed my MBA in international Marketing and Management. It was the place to go if you wanted to focus on international business. In fact, to graduate, you had to be fluent in a second language. I also met my wife Amy while working on our MBAs. The international aspect of the program focuses on the major differences in how business is conducted across the globe. Understanding the cultural differences including how you treat people, how you negotiate, how financing works, and being fully familiar with local labor and compliance laws were very critical to achieve success. Networking was also a very critical aspect of doing business overseas. Like-minded people (other American expats, Graduate School Alums, Industry Associates, etc.) were very willing to assist. Looking back on it now, every success I achieved across the globe had some element of my networks’ contribution.
A great value that multinationals like PepsiCo & Compass Group PLC offer their employees is training & professional development programs. They invest heavily in developing the next generation of business leaders. I owe a great deal of my professional & personal growth and success to these programs which I attended in multiple countries. I was fortunate enough to gain expertise in Management, Operations, Sales & Marketing and Financial Management.
Chris: A lot of CPG brands aspire to get to the $10-25M revenue mark. So let’s talk about that. What should CPG brand owners be thinking about to prepare for that sort of opportunity?
Rudy: First, they need to understand the mechanics and life-cycle of a brand. A lot of brands in this revenue range have a great product, a high quality brand, but they are usually missing either a great distribution network, or lack the access to capital necessary to go to new markets. Or, their product catalog isn’t big enough to get to the next level of revenue. Usually, at this point they need a platform that has the reach for distribution, customer service, access to capital, relationships – all the basic business infrastructure to take the brand to the next level.
Chris: There are a ton of great brands in the U.S and in Texas that are currently in the following situation: They are in a few grocery stores, they have a wholesale operation. They have some product market fit. They want to go to the next level. What does commercializing a business look like? How do we go national?
Rudy: I’ll start with the mindset stuff. You have to be driven, focused and fully committed to doing whatever it takes to persevere and be successful. You have to have a vision and unwavering attitude about your brand and products and be the best at what you do. Maybe you’re in Whole Foods, but you are currently just in Central Texas, or just in Texas. That’s a great start, but if you aspire to grow beyond that, you need to be proactive in your relationship with the retailer and pursue a more aggressive growth plan that takes you into a regional position and then perhaps a national one. That may require more investment in building production capacity, new product development and logistics.
Chris: As small business consultants in Austin, TX, we are lucky to have a lot of very experienced folks who have done well in wholesale. Let’s hear the step by step on how you expand your wholesale footprint?
Rudy:
1)The first step is coming up with your target list. Usually, smaller brands start at the more local level with grocers like Wheatsville, Fresh Plus, Thom’s Market, Sprouts, even Whole Foods, Central Markets and targeted HEB locations. But make sure that the demographics line up with your target customer and their target consumers. And within each chain of grocers, location matters. The HEB in Westlake is different than the HEB on South Congress. Essentially, you are mapping out consumer demographics and where they shop.
2) The second step is to figure out where your brand fits. There are different limitations with different wholesalers. For example, there are some acceptable and unacceptable ingredients , and quality standards as well as other important guidelines. Each store is different, so you need to do your research. After you gather all the data and understood retailers’ requirements, it’s time to start talking to people.
3) The third step is to take the research you’ve done on target demographics and where your brand fits and reach out to your network. There are also a number of professional meetups and networks for CPG brand owners to attend where they can get intro’s. I personally like to go to each one of the stores I’ve decided to target locally and talk to a bunch of the people working the shelves.
If you’re a small company, then you are going to have to do all this stuff yourself. I would walk into the HEB’s and I’d stand in the category section where we wanted our product and just watch people’s behavior. They usually did one of two things: either they knew exactly what they wanted and they would grab it and go, or, they would stand there and stare for a while.
If they are standing there, that means there is an opportunity for a new brand to win the purchase.
So if they were standing there, I’d walk up to them and ask if I could ask them a quick question. I would point out a certain brand that I knew would be a potential competitor and ask, “Do you know anything about this brand?”
Chris: What else do you learn from doing this guerrilla style market research?
Rudy: I learned that if you are going for a premium price point, you probably have to win them before they get to the store. They aren’t going to see that higher price, and try to justify why it’s so more expensive than competitors’ brands. If there is a similar product selling for less, you probably aren’t going to win unless you’ve built brand equity beforehand. Ultimately, you can do all this stuff but you also need to be building relationships at the store level.
Chris: Tell me what kind of relationships you need to be targeting to get into grocery stores?
Rudy: Obviously, the first thing to do is mine your network for relationships within the targeted retailer. Ideally, you start with a meeting with the Head of Supply Chain or Head of Procurement, which would ultimately lead to discussions with the Category Head and other key players depending on the structure of that organization.
While seeking audience and beginning discussions with the leadership of Supply Chain/Procurement/Category management teams is essential, it is also important to ensure that you build relationships across the organization including the local management of the retailer stores. I think you have to be creative. It takes a lot of research and talking to people.
For example, I wanted to get our product into a major retailer. I would approach local retailer employees and learn from them about the key decisions makers at that store. In some cases, it’s the GM or the department/category head of that store. In others, perhaps it’s the team at HQ. Often, it’s the local team who are responsible for selecting new products/categories for their stores. This would normally allow one to get in front of a very important decision makers for the store. These tactics are all old school and that’s why they work. They are unique and uncrowded.
Chris: When you find this person, what does pitching them look like? What does that initial conversation look like?
Rudy: You confidentially present yourself (as the Founder, CEO, Head of Sales, etc.,) and the brand you represent, “I know you guys promote Texas based companies. I’d love to understand or maybe get your guidance in terms of understanding how we can potentially do business at your store?”
They will probably ask about our product, specifically, “What do you sell and why is it different?”
I then give a quick overview of our company, the bases on which it was founded, our Unique Selling Propositions and our involvement with the local community. I would share the key differentiators of our product including our locally supported supply chain system.
I would return in a few days and ask how they and their team liked our products. If they love it, I ask, “What do you recommend our next step should include in order to get on the shelf?” In many cases, if you build rapport with the local store team, they will be willing to either offer you the opportunity to place your product in their store or introduce to their company’s category management team to go through their new supplier approval process. If you don’t proactively move the process along and develop an action plan, you won’t get very far in getting the order!
I also like to do a great deal of research before I make these approaches. I want to know exactly where I want my product to be in their store. Do I want to be on specialty shelves, next to certain brands or in a totally new category? Do I want my pricing to be X or Y. That way the first conversation has more meat to it and can move the conversation further towards the goal as quickly as possible. I know I want to be eye level, but where in the store?
Another thing I’d like to say on this topic is that you have to go for it. Cold calling the general manager of a national chain and asking for a meeting can be challenging. You must be very creative in your approach to reach key decision makers.
If you are the Founder or CEO of a local brand and you wanted to meet with them, explain that you wish to align with their strategy of promoting locally-produced products.
“At all times, be ready to explain your product and why it’s different. Be ready to ask what you need to do to get a sample in their hands, no matter what.”
Chris: Doesn’t it cost money to have your product at eye level in a grocery store?
Rudy: Basically, a lot of grocery stores look at their shelf space as real estate. It is literal shelf-space square footage that the majority of retailers utilize to generate revenue. Slotting Fees are charged by most national retailers in order to allow for a new product to have shelf space. These fees have become very common and institutionalized across the US. If you want enough space with eye-level strategic placement, you may end up paying heavy fees. Since not all retailers require these fees, you must do your homework when you plan your growth strategy.
Chris: What data are you tracking to see how you are performing at the stores?
Rudy: A lot of grocers consider that information to be proprietary and will be willing to share on as-needed basis only. Where the data gets murky is when you move from delivering the product to the stores yourself (DSD) to the retailer’s distribution centers. At that point, you don’t know the sell through based on your invoices anymore. You can get an estimate, but not super accurate sell through rates.
To get as close to your store performance as possible, it once again comes back to relationships. You need to meet the stockers, the buyers, the procurement team – all the people with whom you build relationships to stay top of mind. You have to show up to the store regularly and be in front of them, asking questions. This will also help you with requesting ways to build your brand equity with shoppers. The better you know the store employees, the more likely you will be able to offer sampling in order to stand out, build brand equity and drive sales.
Chris: What would you encourage other business owners to do as best practices when targeting stores they want to sell into?
Rudy: Build relationships. A big weakness in this business is not having relationships at different various levels of the retailer’s organization. If you only have one relationship at a junior level of the organization, you may face challenges in making key decisions and drive a more aggressive strategy with your brand. You need to develop relationships with more key people at various levels of the organization. Most CPG founders get comfortable once they get on the shelf. That’s not how you win long term. You must remain vigilant in your approach to the retailer and continue to grow the relationship.
Chris: What are some of the ways you can create a differentiated product?
Rudy: What you put in your product is critical. The stronger your supply chain and the more you offer fresh, wholesome, healthy, Sustainable and local Ingredients, the better you are differentiated. In addition, you must be in tuned with current trends and what drives consumer behavior and produce products to fill those needs. Having the right packaging that is attractive and coveys the essence of the brand and is as Eco-friendly as possible will certainly differentiate your product. And finally, you can enter competitions because this becomes great third party endorsement of your product.
“Entering and winning competitions is a quick way to get recognition that you can take to the stores.”
Chris: How important is packaging for selling at a grocery store?
Rudy: Packaging is very critical to the success of the brand. When you walk into a store and you look at the shelf, attractive and high quality packaging is what catches your eye. Packaging is also very important to the integrity and quality of the product inside. When packaging is attractive, it elevates the experience and the taste in your mind. It just makes you think it’s better. At the end, we eat with our eyes!
Chris: Small business consulting in Austin is particularly fun when you get into pricing strategy. How does competition affect your packaging and pricing?
Rudy: It’s a very important driver of your overall strategy because you have to look at your target consumers, and think about what it would take for them to choose your product over others. Then you have to look at all the options that are out there for them, and ask how we differ from our competitors? And if there are really similar competitors, how do I build and justify my pricing? Does my packaging represent the essence of my product and my price point? If you can’t differentiate from your competitors, then you have to reconsider how you go to market in order not to get into a price war.
You also have to consider your competitors brand equity, market presence and history. If you are going head to head with them, then you have to be really different and unique to justify your pricing and packaging plays an important role in conveying that message.
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