By Andy Harvell, Owner of Harvell Vendor Services
Finding the right U.S. retailers for your food-based products is critical to ensure the products you have worked so hard to develop, perfect, and package are accessible and marketed effectively to your intended customers. But first you must understand the levels and types of retailers, as well as the pros and cons of working with each one, so you can find the best fit for your products. I’ve learned this through working in the specialty and natural foods channels for over 20 years, where I have held positions at large U.S. retailers as a buyer, worked as an importer of specialty food products, and as a sales representative with a national brokerage firm.
Retailers in the United States can range from small stores in a single town, to national retailers with 1,000+ locations. The main types of retailers include e-commerce, ethnic stores, discount stores, convenience stores, conventional grocery stores, natural product stores, specialty stores, club stores, and foodservices. Read below for info on the types of retailers that you could partner with, as well as sales channels to consider.
Types of Retailers and Sales Channels
E-Commerce continues to grow and is a great way to test the waters in the U.S. market. Many companies specialize in e-commerce fulfillment and will store, sell, and ship products on your behalf. Many distributors and retailers are developing e-commerce sites to expand their product selection and reach. Additionally, other e-commerce sites will sell your product on your behalf, but you will be required to ship the items yourself. This latter segment of e-commerce can be complicated and may not be a viable option when shipping from another country; you may need to have your product already stocked in the United States.
Ethnic stores cater to the specific country or region they are representing. Product labeling will be U.S. compliant, but still in the traditional style of the origin region. For example, in the United States, aubergines are commonly referred to, and typically only known, as eggplant. Most Americans can easily identify an eggplant based on its purplish color and large shape. However, few Americans have ever seen or tasted yellow eggplant, known as “garden eggs” in Ghana, and widely used in West African recipes.
This could pose a problem for West Africa-based companies marketing eggplant, be they yellow or purple. For example, on GhanaFresh’s label (see photo), it should be noted that the company’s packaging covers all required U.S. information and layout guidelines. However, the product is yellow and the description says both “Garden Eggs and Aubergines,” which would confuse many Americans. Because of this, this type of labeling is acceptable in an ethnic store, especially those frequented by West Africans, but will likely face challenges with a more traditional U.S. retailer.
Discount stores often buy products at a discounted rate, which may be due to minor imperfections in the product or labeling. These types of stores often carry low price and/or unique items to complement their selections. Discount store product selection is very broad and contains everything from food and clothing to home goods.
Convenience stores, commonly referred to as “C-Stores,” focus on small portions and snack segments for the consumer market. This retail segment will focus on the convenience of products and packaging and is likely to purchase highly marketed brands. Products that fit well in C-Stores are common and well-known items that a customer typically does not have to think about. They want to grab something and go, be it for a road trip or office snack. For example, in Ghana, you can easily find brand name plantain chips snacks in C-Stores, while in the United States, customers can choose from a wide range of potato chip.
Conventional stores, or traditional American grocery stores, simply sell products their regional and local customers will purchase. When getting a placement with a conventional store, you will often face high placement fees. These include free fill, slotting fees, and deep discounts at launch. “Free Fill” is when the customer (the grocery store) asks for free cases of your product for the launch. This is commonly one case per store. “Slotting Fee” is an expense to secure a spot in a distribution center.
These distribution centers focus on customers that want to stock their pantries and get everything, from food, paper goods, cleaning products, beauty products, and health items. For young brands, a conventional store may seem exciting but the cost of doing business with them is higher.
Using another aubergine/eggplant example, agribusinesses should know that it’s uncommon to find simple, canned eggplants in conventional stores. You will find eggplant combinations utilizing other ingredients. Notice how on the label for the eggplant product made by Cento, there is a clear picture of a purple eggplant combined with tomatoes. This label is designed with the American consumer in mind.
Natural product stores have strict ingredient standards, with an emphasis on the quality of ingredients. Historically, natural product stores have emphasized local and regional brands, allowing smaller companies to receive store placement and establish a customer base. As conventional stores have shifted to offering more natural products on their shelves, natural product stores will continue to face more competition from conventional stores. As with the conventional stores, you must account for expenses for placement.
Specialty stores can be a solution for the placement of imported items. These stores curate unique products, with an emphasis on taste and the product history and story. They typically have higher internal profit margin requirements, so product pricing is usually higher. Specialty stores differentiate from conventional stores as their client base is shopping for specific ingredients or special occasion items.
When targeting specialty stores, you must understand their customer and what they are looking for when shopping. The emphasis with these stores is ingredients and quality. Items also tend to be packaged differently. For example, an alternative to a canned eggplant product is one in a clear, glass jar. With this type of packaging, you can keep it simple. As shown in the product example by Castellno, the labeling clearly shows eggplants, but really is supplementary to the actual eggplants the potential buyer can easily see in the jar. This style isn’t for every product, however, because not all products will display well in a jar.
Club stores feature larger product sizes with specific packaging requirements. These stores require high-volume products and typically focus on high-marketed items. Volume with club stores is very high and should not be an initial target for young companies.
Food service is also a great entry point for selling common ingredients, including to manufacturers, restaurants, and hotels. These segments require bulk packaging at a lower cost.
Exporting to the United States can be a rewarding and exciting experience. Having a clear strategy on where your product will see the most success is important and will require an investment of your time and energy. Patience is also key: preparing a new item for the U.S. market can take up to a year or more if you are truly desiring to get everything right. Fortunately, there are companies that specifically work with foreign suppliers to get your company and product ready for export. They will guide you through everything you need to know and help you make the best decisions for the growth of your business. Take your time doing the research and finding the right partners so that your investment can see the greatest return.
Harvell Trading & Vendors Services can offer additional support and consultation for any questions about exporting your product into the United States. We specialize in food and beverage, but are able to help guide you in the right direction for importing other products. Please visit our website and review our consultation opportunities today. We have multiple partners with different expertise, so that we are able to help grow your business. For more info, visit www.harvellvendorservices.com