The Dairy Alliance Retail Training Series
Andy Harvell has been in specialty retail since 1999, working for multiple retailers along with selling and distribution. Having experience in stores, regional buying, national buying, international buying, sales, and distribution, he is uniquely qualified to speak on these topics with expertise on all sides.
Starting Up Selling Retail
Starting Up Retail
Example 1
Facility Inspections
Facility Inspections
Refer to local ordinances on the required facility inspections for both food safety and general safety.
HACCP Planning
HACCP Planning
Hazard Analysis Critical Control Point
All distributors and large retailers will require a detailed flow diagram for products sold. The HACCP program must meet the standards set forth in the Food Safety Modernization Act (FSMA)
Third-Party Certifications
Third-Party Certifications
Demonstrates the commitment to food safety and highlights the extra steps taken to ensure the safest production environment.
Provides assurance to consumers on ingredient statements
Certificate of Insurance
Certificate of Insurance
Standard minimums are minimum amount of two million dollars ($2,000,000) combined single limit for bodily injury and property damage per occurrence; two million dollars ($2,000,000) for products/completed operations aggregate; and two million dollars ($2,000,000) general aggregate.
Recall Process
Recall Process
Recall programs must demonstrate basic measures and list appropriate contact information to ensure full cooperation regarding any potential recalls associated with their facility.
Product Labeling
Product Labeling
Proper Labeling is crucial to product success. Once a customer picks up your product every thing they need to know needs to be present on the packaging.
Every product should list the following; Brand, Product Description, Storage Instructions, Nutrition Facts, Allergen Statement, Ingredients, Lot Number, Distribution/Production Source, and Expiration Date
Nutrition Facts
Nutrition Facts
The best source for Nutrition Fact information is the FDA, you should always reference the FDA for questions
https://www.fda.gov/food/food-labeling-nutrition
All products should be sent off for nutritional analysis to ensure accuracy and compliance
Universal Product Codes (UPC)
UPCs
GS1 is the go-to for your UPC numbers. The first 9 Digits will come from GS1. This leaves 3 digits remaining as your choice. I highly recommend using these open spaces as product identifiers within your organization.
UPCs will open more doors to retailers because this is what allows them to “scan” your product at the register. Most retailers require UPCs for pre-packaged products, however there are exceptions.
https://my.gs1us.org/
Nutrient Claims
Nutrient content claims describe the level of a nutrient in the product, using terms such as free, high, and low, or they compare the level of a nutrient in a food to that of another food, using terms such as more, reduced, and lite.
Product Claims
Health Claims
Function Claims
Structure/function claims may describe the role of a nutrient or dietary ingredient intended to affect the normal structure or function of the human body, for example, "calcium builds strong bones.“
Qualified health claims (QHCs) are supported by scientific evidence, but do not meet the more rigorous “significant scientific agreement” standard required for an authorized health claim. A disclaimer or qualifying language is required.
https://www.fda.gov/food/food-labeling-nutrition/label-claims-food-dietary-supplements
Product Packaging
Packaging
- Packaging is not only the vessel for the consumer but also plays a part in purchasing, shelf space, and product placement.
- When determining the packaging for your product research similar products in stores and what they are using.
- Buyers will decide on not bringing a product in due to the packaging
- Packaging for the dairy industry is fairly standard.
Bulk Consumer
This is packaging meant for customers to buy an entire case
Case Packaging
Wholesale
Display Ready
Basic cardboard packaging with only essential identifiers for retail workers, customers do not typically see this packaging
Packaging for discount stores and club stores where the product can be displayed on the shelf in the shipping case
Regional Chains
Local Stores
Regional Chains have locations scattered across a large geographic area. Regional chains often pull from more than one distribution center.
Local stores are usually small independents that have one to five locations in a single area.
Retailer Types
National Chains
National Chains have locations across the country and pull from multiple distribution centers.
Natural Foods Store
Natural Food Stores have strict ingredient standards and will sell only products that meet those standards. These are often referred to as “clean” products.
Specialty Foods Store
Store Types
Specialty stores have a selection of conventional products but they also highlight unique and story driven items. They will also be more likely to carry more expensive products.
Conventional Store
Conventional stores typically do not have restrictions on ingredients and they focus on carrying everyday, low cost products.
Direct Store Delivery
Direct Store Delivery (DSD) is when the producer delivers directly to stores. This is the most common form of distribution when starting a small brand.
Distributors
Distributor
Signing on with a distributor makes distribution easier but increases costs.
Category Review
Typically reviews only happen once per year and are 3 months out. Large retailers operate with a calendar, smaller retailers review product as needed.
Category Reviews
Properly Identifying the type of store where your product fits is paramount in your success.
Targeting the wrong customer can be costly and lead to disappointment
Types of Retailers
- E-Commerce
- Conveinence Stores
- Conventional Stores
- Natural Stores
- Specialty Stores
- Club Stores
- Food Service
Types of Stores
Brokers are a resource to get placement and understand the market.
Going through a broker is the easiest route to land presentations, they have the connections.
Brokers
When interviewing brokers be detailed in explaining your goals. Understand their territory and the other brands they represent. Large brokerage firms will have competing lines. Smaller brokers typically do not.
Large companies can be very strict about the schedule. If you miss your window you could have to wait up to a year to present again.
Larger companies operate on review schedules due to the number of brands and items they sell.
Brokers are very much aware of the schedules and can help you submit in a timely manner. Some brokers have standing meetings for every category review
Review Schedules
Net-Net Pricing
Some retailers ask for "Net-Net" pricing. This is where the cost has everything stripped out and is the lowest price you can sell a product at.
Promotion Frequency
It is common to offer promotions four time per year. Promotions can be a percentage off or dollar amount.
Promotions
Demo Support
Typically request is number of stores and frequency. Cost will always include product but if a service is hired this will increase the cost.
There is are good buyers and bad buyer!
Do your research!
Good Buyers are responsive and will work with younger brands to ensure success for both parties.
Buyers
Depending on the size of the retailer a buyer can be responsible for multiple categories or just one.
Bad buyers are unresponsive and will make decisions that can harm your brand.
Be aware of the quantities being purchased, you know your product and you know how it sells.
Buyers have favorites. There is nothing wrong with this but it is important to know because if you are going after a brand that is a favorite, you have an uphill battle.
Distributors
Distribution is what this all possible. There are multiple options from Direct Store Delivery (DSD), internal distribution, or regional/national distributors.
Understanding the cost of doing business is critical in budgeting. Almost all retail outlets you sell to will require some sort of investment. This could be promotions, free-fill, slotting fees, and guaranteed sales. Some placement decisions will be determined by the start up costs.
Cost of Doing Business
Working with Distributors
Food Service
a,
Types of Distributors
All distributors have specialties and service specific customers.
Catalogs are primarily dictated by their customers.
Grocery
b,
Specialty
c,
Full Store
d,
Insurance
a,
Vendor Requirements
Tax Documents
Vendors are required to follow specific guidelines laid out by each distributor. Each distributor has different requirements but there is a core list for every one.
b,
Certifications
c,
Payment Information
d,
Standard Labeling
a,
Item Requirements
Fee's
There are a number of requirements of all items that a distributor sells, however this can vary by product type. There are core requirements that you should expect with any distributor.
b,
Allowances
c,
Product Guarantee
d,
HAACP
a,
Food Safety
Food Safety cannot be stressed enough!! Unless you can provide all the necessary documents showing your food safety plan no distributor or retailer will bring your product in.
Recall Plan
b,
Supply Chain Transparency
c,
Retailer Requirements
d,
FOB vs. Delivered
a,
Pricing & Payments
Pricing is paramount to your financial success with any distributor. Understanding how to properly price your product will help you get to be profitable sooner than later.
Slotting
b,
Introductory Allowances
c,
Misc. Fee's
d,
Item Number
a,
Purchase Orders
All orders are place through a purchase order. There are different ways to submit but the information is always the same. PO's are placed via email, fax, or Electronically.
Quantity
b,
Cost
c,
Pick-up/Delivery Date
d,
Fee's
a,
Shipping & Receiving
The method chosen for shipping will impact your costs and understanding the costs associated will help you make the best decision for your company.
Fill Rate
b,
Overages
c,
Inspections
d,
O/I, MCB, Customer Specific
a,
Marketing & Promotions
Samples
Every distributor will require promotions for all customers and you will also do customer specific promotions. Marketing expenses can add up so making sure your dollars go to the best programs for your business is critical.
b,
Item Placement
c,
Advertising
d,
Spoilage
a,
Customer Expenses
Resets
Distributors will often pass on expenses related to your products that are charged to them by the retailer. This is covered in most contracts/agreements and if misunderstood can be costly.
b,
Discontinued
c,
Promotions
d,
The Different Types of Retailers
Different Types of Retailers
E-Commerce
Amazon is an easy way to market but comes with costs
E-Commerce
Meal Kit companies are great for volume but require special packaging
Not ideal for highly perishable products
Conventional Markets
High store count but does allocate space to local producers
Conventional Markets
Costs are low so margins are thin
Multiple brands of the same product
High demand promotional program
Specialty Market
Specialty markets are blending in more with conventional and natural
Specialty Markets
Prior to pandemic multiple specialty stores collapsed
Higher retails allow for higher cost items
Larger assortment of local items
Natural Stores
Strict ingredient standards
Natural Stores
Wants low cost/high quality to compete with conventional stores
Heavy emphasis on local items
Club Stores
High volume, high production!!
Club Stores
Special packaging and pricing
Minimum requirements on company sales
Discount Stores
Good entry point for lower cost product
Discount Stores
Packaging and pricing requirements
No promotions!
Food Service
Local restaurants can buy direct or a distributor
Food Service
Restaurants can help build brand identity
Food service distributors build business on low volume high account number
What is a Food Show?
Its an event for producers to display and show their product to potential buyers and industry professionals
What is a "Food Show"
What a Food Show is not..
Participating in a food show is an investment and you should not always expect to walk away with a stack of orders
What is the cost?
What is a Customer Show?
Customer Show
Cost varies by retailer so it's important to take your volume along with you projected volume.
Customer Shows are held specifically for and attended by staff of the customer. You will typically already have product in-store.
What Regional Table Top Show Cost?
What is a Regional Table Top Show?
Regional Table Top Show
Since these show are generally hosted by distributors the cost will vary. You should have customers already if you are participating.
These shows are usually hosted by regional distributors and national distributors with regional branches
Holiday Shows
What is a Distributor Show?
Typically held in the summer showcasing holiday products and promotions
Distributor shows feature products carried by the distributor focusing on seasonal items with promotions
Distributor Show
Summer Shows
What does a Distributor Show Cost?
On top of show costs expect to have promotions ready of at least 15% to 25% off products
Typically held in the winter (after holidays) showcasing summer products and promotions
American Cheese Society
If you are producing cheese this is a great conference to attend for education and product competition
Industry Conference
IDFA Conferences
Multiple conferences throughout the year with each conference focused on different dairy categories
What is Buyer Event?
Advantages
A buyer event is where an organization gathers suppliers and buyers to match them up and facilitate sales.
Buyer Events
These events are a great opportunity to get in front of buyers and get contacts but the interactions can be brief
IDDBA Show
What is a National Show?
IDDBA is specifically focused on Dairy, Deli, and Bakery products. This show is one time a year and attracts buyers from across the country
National shows are large events attended by thousands of buyers. These shows are great for buyers to find products.
National Shows
Investment
Fancy Food Show
These shows require significant investment in time, product, and travel. Young brands can do well due to the amount of buyers but you need to be ready for large distribution.
Fancy Food has a Summer (NYC) and Winter (SF/Vegas) show. These shows are great for specialty products because the buyers come from companies interested in higher end product