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16 Essential Tips for Scaling Your Business into Brick & Mortar Chain Stores As you embark on the journey of scaling your business into brick & mortar chain stores, we've gathered 16 pieces of advice from successful CEOs and Founders who've done just that.
From understanding your product and focusing on local launches to learning from mistakes, these industry leaders share their invaluable insights. Dive into their wisdom to navigate your path to success.
Manage Margins and Understand Retailer Costs
It's important to do your due diligence on managing your margins and profitability with every SKU you plan to present to retailers or distributors. Make sure your margins are healthy enough to give the retailer their expected markup, which can be as high as 40%. If you have an item that has high COGS, it may be difficult to remain profitable and/or have the additional funds to market and promote the item at retail so you can ensure that the item is successful enough to remain on the shelf.
In addition, most entrepreneurs I have mentored aren't aware of the costs associated with launching at a retailer. For instance, often, there are slotting fees associated with launching a product that can be as high as $250,000 in addition to the cash outlay with the initial stocking orders. Sometimes these fees are negotiable, sometimes they are not. Having a certified minority-owned status (woman-owned, veteran-owned, black-owned, LGBTQ-owned) can sometimes help you get a reduction in these fees.
Deeannah Seymour, CEO and Co-Founder, pH-D® Feminine Health
Check Supply Chain Resiliency
Check the resiliency of your supply chain! As you begin to scale, it's important to have multiple suppliers for your ingredients and to identify long lead times, especially for those ingredients coming from abroad. This might seem unnecessary when you're starting out, but it's important to plan for success and build those supplier relationships now. Remember, no product equals no sales.
Lauren Chew, Founder and CEO, Love + Chew Brands
Maintain Presence and Manage Costs
The problem is not so much getting into the brick-and-mortar stores as it is staying there. Choose a partner to work with and show them some love. Promos, discounts, digital advertising support, etc. The other stores will follow. Side advice: watch your margins. Whatever you think this will cost, double it.
Tim Hill, CEO and Co-Founder, iLOLA
Establish Wholesale Relationships and Adjust Production
We started our DTC brand with swim as our hero product, and our strength in this category proved to be a good entry point for wholesale. As we set our sights on further expansion and growth for Fair Harbor, including an assortment for 365 days of the year, our established relationships with wholesale partners have proven invaluable to this strategy. One consideration we've had to address is realigning our production calendar for wholesale, but thanks to our agile team, we solved the issue, and it's been well worth the effort.
Jake Danehy, CEO and Co-Founder, Fair Harbor
Use Data and Insights to Persuade Retailers
It sounds simple but I think the best advice is to use data and insights to tell a compelling story to whichever retailer you are looking to sell your product to. At Target, we used data and insights to clearly show an unmet need in the Toddler Snacks category- better-for-you treats- and showed how our product, Brownies with Hidden Veggies, addressed that need. Target has been a long-time supporter of the idea of a brownie in the Baby and Toddler aisle so their partnership throughout the development of the item was also crucial. They were particularly excited that this product is one of a kind (the first Brownie in the Baby and Toddler space) but still delivers ingredients like fruits & veggies. It's a win-win for Beech-Nut and Target.
Lauren Evans, Brand Manager, Beech-Nut Nutrition Company
Focus on Execution and Retailer Requirements
As Skinny Mixes has expanded into Target and Walmart, the one piece of advice that I would give is to not underestimate the importance of focusing on execution. It is critical not only to have strong pull-through sales and marketing plans, but also to have all the new item setup, logistics, and fulfillment double-checked to ensure you are meeting all of the retailer's requirements. Many overlook the attention to execution to ensure it is a success from the retailer's scorecard.
Dana Paris, Chief Marketing Officer, Jordan's Skinny Mixes
Use Sampling Tactics for Customer Attention
The best way to grab customer attention is through sampling tactics. This not only gives the customer the opportunity to try your product, but also provides your brand with invaluable real-time feedback from your target customer.
You can measure immediate lift with sales the day of a sampling event and, if the retailer provides store-level reporting, you can measure average daily sales for the weeks after the demo compared with the weeks prior. Starting with a smaller cluster of stores to measure performance before over-investing is recommended. If the ROI from your initial test is strong, you could ramp up from there.
Lauren Picasso, CEO, Cure Hydration
Understand Buyer's Mindset and Offer Unique Value
You must understand the buyer's mindset and look at shelf space like real estate. You want the shelf space, but other bidders are vying for it as well. Ask yourself, "What are you offering the retailer that they can't get elsewhere? Why should they choose you?" You need to lay this out very clearly for the buyer.
Think beyond the benefits of your product, which is what got you the meeting. The design, how it will appear on the shelf, your marketing plan—all of these factors will contribute to getting you into the store and helping you scale. Buyers are under significant pressure to bring in products that will sell, so it's essential to think holistically.
Richard Laver, Founder and CEO, LUCKY F*CK Energy Drink
Start Small and Use Performance Data
Our advice would be to start with a limited footprint and work to get great velocity results. Focus on the best chain account for your product. For Gimme, this was Whole Foods, and/or limit the geographic area. By focusing on steady distribution, you're ensuring your brand can supply enough product for the big chain stores.
Since you only get one shot, and it's challenging and expensive to get your foot in the door, be the leader in your category in that chain account. This will initiate the data needed to show the next chain stores that your brand deserves shelf space given the performance.
Steve Broad, CEO and Co-Founder, Gimme Seaweed
Create Demand and Adopt Test-and-Learn Approach
Following the 2008 recession, we diversified our sister brand, He-Shi, and sold it into pharmacies and retail. We had to move to where our consumers were shopping.
We used to think that winning over a buyer and getting our products on the shelf was enough, but it's not.
You must support and create demand for the product; otherwise, no one will buy it.
We built our business from the ground up by getting onto the street, in the stores, talking to people, demoing products, and more. That doesn't happen when you land a large retailer, and we don't realize how much you need to spend to make it work.
It's difficult for smaller, owner-led brands to be creative and stand out from others with huge budgets. However, for me, that's what makes it exciting; we can make decisions quickly and have a great rapport with our customers.
Make sure your budget and resources are assigned for new opportunities or projects before you jump headfirst into them. Have a test-and-learn approach - fail fast, fail cheap.
Shelley Martin, Co-Founder and CEO, Skinician
Adapt E-commerce Strategy for Physical Retail
The principle, "What got you here won't get you there," is crucial when transitioning from e-commerce to brick-and-mortar. In e-commerce, you're focused on keywords and full-funnel conversions. However, physical retail is a different beast; it's about branding, awareness, and creating demand at a macro level.
When we took our Mt. Angel Vitamins line into large chain stores, and we realized that online tactics wouldn't cut it. We invested in in-store branding, including shelf-talkers and endcap displays, to capture customer attention. Unlike online shoppers who explore, brick-and-mortar customers stick to what they know. You have to make them want to know you. So, as you scale into physical retail, remember that your e-commerce playbook needs to be adapted. Focus on creating awareness and demand to make your product the go-to choice among myriad options.
Keith Gregory, Chief Revenue and Financial Officer, Highland Laboratories Inc.
Understand Retailer Prerequisites and Maintain Cash Flow
Chiwis is a women-led, all-natural, upcycled fruit chip company. We have been in business for less than three years, having launched during the challenging times of the COVID-19 pandemic. In that short time, we have secured top-tier placements with brick-and-mortar chains, such as Costco and Whole Foods, by being scrappy and having a deep understanding of the retailers' prerequisites.
Costco, for instance, requires a substantial 20% price reduction per gram and mandatory SQF certification for food safety. Additionally, brands need to ensure they have a robust cash flow to meet the specified sales targets per store per week and stay afloat. Brands should also capture buyer interest through distinctive product offerings and compelling branding.
Never go in blind to meetings with retailers because first impressions can make or break your chances at securing key partnerships as a startup brand that is making a name for itself.
Sarah Goodman, CEO and Founder, Chiwis
Learn from One Location Before Expanding
Within one year of launching Indy Sunglasses online, I was picked up by TopShop, which was the largest brick-and-mortar chain store at the time in my industry. I quickly launched in eight of their stores across the U.S. with no knowledge at the time of how the experience would be.
My advice would be not to rush into every location as this means large outgoings and stress for your business, especially if you are just starting up. Focus on perfecting your brand in one of their locations, learning how their customers are, what your top sellers are with their clientele, then use that knowledge to slowly start expanding into more of their locations so you can really hit targets going forward and know their store well.
Think carefully about your display; you want something to stand out amongst your competition. We made our displays out of wood, painted white, which was admired by many. Make sure your logo is also visible for extra exposure, and you're stocked up on best sellers for holidays, etc.
Indie Mcfarlane, Founder, Indy Sunglasses
Understand Product and Focus on Local Launches
Understanding your product thoroughly, prioritizing the customer, and focusing on launching locally before going broader are key. Observing your product in local stores can provide valuable insights, help resolve any issues, and build a strategy for larger-scale launches.
Caleb Wang, CEO and Co-Founder, MìLà
Maximize Productivity Rather Than Shelf Space
To grow sales, don't focus on maximizing shelf space – instead focus on maximizing productivity. If you have high productivity, retailers will naturally expand your space and provide better placement because your products are doing so well. Conversely, if you have low productivity, you may need to start exiting some products off the shelf, which can be expensive. Taking an inch-wide-mile-deep approach is more efficient, impactful and sustainable over time.
Alicia Yoon, CEO and Founder, Peach & Lily
Persist, Learn from Mistakes, and Stand Out
The success I have now is the byproduct of a 17-year journey that came with its own setbacks and challenges. This is my 16th restaurant; I still have eight open today, and now BCH Grocer, our brand of dumplings, is on shelves in over 1,000 Walmarts across the country in partnership with Patti LaBelle.
I learned from my mistakes and was able to grow continuously. No matter how hard it gets or how many losses, it is important never to give up.
Do your research on the location and demographic, and look into what is driving the success of other brick-and-mortar chain stores in the surrounding area and how your brand can stand out amongst the rest.