Whether you’re an experienced supplier trying to keep pace with changes in the retail grocery industry, or you’re just now trying to get your food products in the stores, understanding the ways to navigate the various distribution channels is a challenge.
Today, I want to talk about finding the magic mix in channel distribution, but first, let me provide some definitions of words I will use throughout this blog to make sure we are all on the same page.
- Supplier-the brand or company that has a product(s) to sell
- Customer-the person or company the supplier is selling to. In today’s blog, the customer is the retailers to which the supplier wants to sell their products.
- Consumer-the people purchasing the products in the stores.
- Distribution Channel-the manner in which the retailer gets the product to the consumer. This can include standard register purchases, in-store pickup for items sold online, and curbside pickup.
No magic bullet
I am here to tell you there is no magic bullet to channel distribution. The magic is now, and continues to be, in the mix. As we look ahead to the future of grocery retail, retailers are focusing on the omnichannel approach and suppliers should focus on the consumer’s awareness and interest in the products.
It is important for the supplier to build a relationship with the consumer even though the supplier’s direct customer is the retailer.
The grocery industry giants, Walmart, Sam’s Club, and Kroger, as well as smaller grocery chains, are trying to figure out the perfect distribution channel. Walmart and Sam’s Club combined hold 21 percent of the retail grocery industry while Kroger holds about 10 percent. The rest is fragmented among many other grocers, including Amazon.
As you research distribution channels, you will find there is a certain amount of success in each channel, but each channel has its unique problems. My advice to grocery suppliers is to diversify distribution channels and not put all their eggs in one basket.
Focus on the consumer
Here’s the thing. As a supplier, you need to focus on the retailer’s consumer who, especially in the retail grocery sector, is focused on convenience.
The successful supplier in 2018 must be open to constant change. As the industry evolves, the distribution channels will change too.
Consumers are changing as their needs for convenience change. It wasn’t too long ago that we had people who not only bagged groceries but carried them to the consumer’s car without being asked. Now, we have a system that is moving more towards consumers scanning and bagging their own groceries. Don’t forget the e-commerce giant, Amazon, is trying to figure out how to sell grocery products with the acquisition of Whole Foods last year.
In closing, I would like to urge all suppliers to ensure they keep an open mix of distribution channels and product access. Suppliers should also always maintain a relationship with the consumers. This is how they can thrive through the changes in the retail grocery distribution.