Collaboration and cooperation between natural products brands and retailers are crucial in order for each to stay ahead in an increasingly competitive marketplace.

Daniel Lohman, Organic Industry Strategic Advisor

August 11, 2014

3 Min Read
Achieve brand-retailer symbiosis

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. 

About the Author(s)

Daniel Lohman

Organic Industry Strategic Advisor, CMS4CPG (Category Management Solutions)

Daniel Lohman is an expert in the organic and natural CPG industry. With more than 20 years experience, he is certified at the highest level of category management proficiency: Certified Professional Strategic Advisor.   

Focused on leveling the playing field between natural and conventional CPG manufacturers and retailers, Lohman is passionate about helping them get more out of their available resources. He believes that natural and organic CPG companies deserve to benefit from the same practices and technologies as their conventional counterparts—without sacrificing what makes the natural channel distinctive. Lohman is a trusted and respected member of the natural community, a Natural Products Expo speaker, and a writer for Supermarket NewsNatural Food Merchandiser and newhope360. He is a staunch advocate, passionate about bringing true category management to the organic and natural channel and offers a unique and fresh perspective on the industry. 

Responsible for growing sales and teaching Category Management theory and principals while at Kimberly-Clark, Unilever and SPINS, Daniel has worked with and supported hundreds of natural and conventional manufacturers, retailers and brokers. His extensive knowledge and expertise extends beyond that of a traditional Category Manager and has earned him recognition and a reputation throughout the industry as a thought leader. He has mentored Category Managers, is a trainer, speaker and expert panelist for the Category Management Knowledge Group. 

Lohman is internationally published and the author of Strategic Solutions And Guide To Grow Your Natural Business and the What You Need To Know blog.

Category Management Solutions (CMS4CPG) provides innovative strategic solutions for natural and organic CPG companies interested in gaining a significant competitive advantage. CMS4CPG provides companies with actionable insights to assist them better connect with consumers, helping them "win-at-shelf." 

Follow Lohman on TwitterLinkedIn and Facebook. Lohman lives in Colorado, is a member of Naturally Boulder and can be reached at [email protected] or 303-748-3273. 

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