Supermarkets are perhaps the best-recognised type of retailer. They still have the biggest share of retail sales and in Australia two supermarkets, Woolworths and Coles, dominate the market.
In South Australia we also have a strong representation of independent grocers through the Foodland and IGA brands. The main operators are Drakes, Romeo’s Retail Group and The Commercial Retail Group. Supply to these supermarkets can be either through Metcash or directly with the store.
Supermarkets might be the first retail outlet you might think of for your product if you are just getting started, you should think seriously about whether your business is ready to supply supermarkets and chain stores. While significant money can be made from supplying larger retailers, they are particularly aggressive on pricing and trading terms, and producers should expect to be squeezed for price cuts, volume discounts, promotional offers and extended terms of trade.
Larger retailers will generally expect significant contributions toward marketing costs, including in-store displays, demonstrations and tastings and other merchandising support . Food producers who decide supermarkets are important to their distribution strategy should be prepared for the additional costs involved in gearing up for volume production and in marketing products.
If you decide to target supermarkets as your retail customer of choice, you can improve your prospects by ensuring that:
- your products are inherently attractive and appealing
- your products are appropriately packaged, bar coded and priced
- your production systems can assure consistent quality
- you are geared for volume production
- you are priced appropriately relative to substitute products
- your marketing information and business systems project quality and professionalism
- you have references who are willing to support your product and your ability to deliver
Find out who the buyer is, and send them a product sample, with a package of information including details of the full range and future plans, packaging sizes, wholesale prices, and your volume capability. (For more on this, visit Retailers)
Follow up with a phone call. If this leads to a meeting, prepare thoroughly, and expect to make changes to accommodate buyer preferences.