Consumers do have choices for where to buy food. We know there is consolidation with the large retailers but the specialty stores in the market continue to offer innovation and unique shopping experiences for consumers. They also offer an alternative to the big players for suppliers looking to sell more and perhaps try new initiatives.

 

My definition of specialty stores is broad and is not limited to the higher end operators. They are certainly an important segment however there are specialty stores that resonate with other demographics or segments of the market. My definition of a specialty store is a retailer who chooses to focus on a narrower segment of the market, whether that is through the offering, target market or positioning.

 

Differentiation drives traffic

Specialty stores need to offer something different to succeed. Chances are they have to pay a bit more than the big stores for products and with lower sales, operating costs as a percentage of sales are higher. That all adds up to a higher comparable basket price in most, not all cases. When you are more expensive in the food industry you need to be better or unique, which is where specialty stores thrive. Your job as a supplier is to help them be better or different. Understand how they are competing and support this positioning.

 

We have a number of specialty stores with most being regional. The following chart captures some of the stores but certainly not all.

 

Opportunities

These stores often list unique items or products that might require something different than the large stores can manage. Find products in your mix that do not compete directly with the larger stores unless the specialty store wants it. Obviously they need to have the staples in the categories where they compete, but they might be looking for a slightly different size or package so prices cannot be compared directly with the competition.

 

Specialty stores will have more flexibility so you can change more often or offer unique combinations of products. You can also work together to try different products without the significant investment required with the larger players.

 

Staff in specialty stores are generally more engaged, which presents opportunities. You can interact with them to get them selling and also solicit their feedback. Selling programs like demos are more reasonable in these markets and often they are happy if you do it as opposed to using a demo company.

 

My experience has been the conversations with these stores can be more focused on consumers and selling. They do not have the bureaucracy to satisfy that the big retailers have. If it is a good idea for both partiesm it can generally be implemented.

 

Specialty stores can be good growth opportunities for sales and products. If you can get into the chain when it is relatively small and there is some expansion you will grow with them. Farm Boy in Ontario is one such example which continues to open new stores.

 

Challenges

The biggest challenge is that the volume is usually lower, per store and for the entire chain. That will increase your marketing cost per case but if it is the right relationship and you are happy with the volume it can be even better than thousands of cases where it is not a great fit for your business.

 

Distribution to these stores can be difficult. Some do have their own warehouse and others rely on direct store distribution (DSD). Most do not have the holding power so deliveries might need to be more frequent. Some of these stores are part of the larger retailers. T&T is a division of Loblaw, H.Y. Louie operates Fresh St Market and Urban Fare is part of Overwaitea. They do have established distribution networks to use but other smaller, regional chains can require different solutions than full pallets to a warehouse.

 

More autonomy and no bureaucracy is a win for many but it also means these merchants can change direction quickly and leave some on the outside looking in. Smaller specialty stores are nimble and directions can change. Watch and listen carefully to ensure you are supporting them and delivering what they need.

 

Selling to specialty stores

Consider the position they occupy in the market and challenge yourself to say how do I support this? Find the products and programs that will ensure they can be different. That can be unique offerings if they choose to have a very deep listing base in a narrow group of categories or it could be different sizes in the items that compete with the larger stores.

 

Find options where it is more difficult for consumers to compare prices directly.

 

Talk to staff in stores. You will likely learn more than some of the larger stores.

 

Offer new or innovative products and stay close to results. You will learn consumer reactions that allow you to make required changes before you get too far with huge investments in packaging and other costs.

 

Some of these stores are more likely to try new items if they can do it as a guaranteed sale. Factor this into your costs and take advantage of the test. Once you establish a base you can leverage these results into bigger volume elsewhere.

 

If you have any questions about selling your products in specialty stores please give me a call at (902) 489-2900 or send me an email at peter@skufood.com.   Next month we will explore food in the drug channel.

 

RETAIL NEWS

 

Penguin Pick Up brings Walmart to new trade areas

Recently Walmart and Penguin Pick Up announced that consumers would be able to shop online with Walmart and pick up their order free at Penguin Pick Up locations. This will allow consumers in some densely populated urban markets to now consider Walmart for their food purchases. Availability or prohibitive costs make it difficult for Walmart to open stores in these densely populated areas. Now Walmart doesn’t need the physical store, because consumers can shop on line and pick up their order at Penguin Pick Up.

 

The pace of change is accelerating and retailers are working hard to find the best, most efficient options.