Natural brands are the lifeblood of the natural retailer. Natural brands owe their existence to the retailers that sell their products. They are equally important to each other and they are critical to each other’s survival and growth.
Competition continues to heat up in natural, especially for natural products retailers. Mainstream retailers pose a huge threat. For this reason, now more than ever, brands need to work closely with their retail counterparts.
Mainstream retailers continue to cherry-pick top-selling natural products to bring new shoppers into their stores/sites. In some cases they include top trending natural products as part of their marketing strategy to gain loyal shoppers—like Target’s recently announced Made to Matter program. Shopper convenience is these stores’ primary selling point. Shoppers can now buy their favorite natural products at the same time they shop for back-to-school specials. Some retailers will even do the shopping for you and then bring your groceries to your car in their parking lot or to your home.
The greatest strength that a natural retailer has is its ability to provide personal customer service. It's that special relationship with their shoppers that differentiates them from other competitors and keeps loyal shoppers coming back. The trust that exists between those shoppers and the retailer are the greatest selling vehicle for natural products. A product recommendation from a respected and trusted retail sales person can go a long way to helping launch a new product—the product that might otherwise be overlooked in a traditional retail store.
The biggest challenge with any new product or new product concept is getting consumers to try it for the first time. Some brands resort to sampling programs which are extremely effective on a small scale. However, it’s not practical or cost effective to sample products throughout an entire chain on a regular basis. In-store promotions, coupons and incremental merchandising (displays) can also prove to be very successful. Combined with slotting, retailer programs, distributor programs and costs, broker's fees, etc., launching a new brand can be extremely expensive. These barriers to entry make it difficult for smaller brands to compete with existing larger brands.
Retailers should work closely with new brands to help develop innovative strategies to drive consumers into the store and to increase product trials. They need to develop a strategy that benefits each other without bankrupting the new brand.
Consider this, some retailers have “loss leaders”—products that they make little or no margin on. These products are designed to bring customers into the store where they will spend more money on incremental purchases. For example, the nation’s largest retailer uses diapers as a “loss leader” because they realize that the diaper shopper will also purchase wipes, baby clothes, formula, furniture, and toys at a much higher margin—more than enough to make up for the “loss leader”.
Natural retailers should apply a similar strategy when working closely with new and innovative products that have the capability of building this excitement in their stores. Retailers need to stop looking at new brands as ATM’s. New brands set trends, drive sales, increase excitement and breathe new life into tired categories.