Getting niche brands on the shelf
Success in the mass market can be an uphill battle for some niche brands as retailers trim selection, bolster private-label offerings and pass on smaller brands they perceive as higher risk. However, retailers also are increasingly looking to distinguish themselves from the competition, whether it is through exclusive offerings, customization or in-store services. This has given rise to the importance of business development organizations, master brokers, regional brokers, and sales and marketing consultants in helping niche brands navigate the path to retail. To gain greater insight, Drug Store News once again hosted a virtual roundtable discussion with some of today's leading players.
DSN: WHAT DO YOU THINK ARE THE GREATEST OBSTACLES FOR A RETAILER THAT WANTS TO MOVE QUICKLY ON NEW PRODUCTS AND BE FIRST TO MARKET? HOW DO YOU NAVIGATE EXISTING ROADBLOCKS TO SPEED THE PROCESS?
ANTHONY RAISSEN, INTERQUANTUM: Chains are tied to planograms and timing restraints, as well as being cautious in introducing new items due to the risk in dollars and the shelf space needed for new item introductions. One suggestion is for chains to allocate a few "slots" in their planograms on a regional basis for testing new items that could be rotated on a quarterly cycle to see if they meet the sales criteria for full distribution.
DAVID BIERNBAUM, DAVID BIERNBAUM & ASSOCIATES: For one, chain drug often is bounded by once-per-year category reviews. The review process is long, and even after that once-per-year category review, it of- often takes several months before the new item actually makes it to the shelves. I consult and advise my branded clients to time their launches for when the majority of retailers are reviewing any given category. There are other factors that cause chain drug retailers to miss out on being first to market with new innovative products. Let's be honest, chain drug is more likely to hurry to add a simple, less innovative OTC/HBC line extension with a huge pharmaceutical company, rather than to add a more innovative newcomer from a smaller lesser-known company. The reasons include perception of risks, money and if we are honest, in some cases, high-level executive politics.
RON OTTO, NATIONAL SALES SOLUTIONS: Some retailers are reluctant to add new items until they are ready to revise their planogram. This usually happens once per year. So they may miss out on being first to market. A cut-in is an option, but this is time consuming and expensive for the retailer. It would help if retailers would publish their planogram review dates on their website so that everyone can see them and plan their national introduction accordingly. In addition, most category managers are stretched thin and simply do not have time to see all the new brands being introduced. They need to rely on the due diligence of good broker operations to screen the brands for the category managers.
DAN MACK, MACK ELEVATION FORUM: Retailers that co-create new items with their manufacturing partners place themselves in the position to maximize new item launches, as well as achieve first-to-market positioning and consumer leadership. Manufacturers are looking for retailers that are truly looking for brand partnerships centered around shared values in the truest sense of the word.
DSN: WHAT IS THE BIGGEST CHALLENGE FOR BRANDS TRYING TO GET ON THE SHELF THESE DAYS? HOW CAN COMPANIES LIKE YOURS HELP?
DEBBY LAMPING, PINNACLE SALES & MERCHANDISING: The biggest challenge of getting products on the shelf is space. Every inch of the retail shelf needs to immediately provide profit to that section. Vendors need to be prepared to offer products packaged that not only appeal to the consumer, but also are mindful of space constraints and sustainability standards. Creating a retail product is just the first step. Vendors need to have the marketing plans and resources available to educate the consumer and guide them to the shelf. An experienced broker knows the account base and can direct vendors early on to plans and programs that will enhance sales, giving the products the best chance for long-term success.
RICH SWANSON, THE SWANSON GROUP: When involving small- to mid-sized suppliers, one really needs to perform proper due diligence to validate that their product or brand meets a consumer need, fills an opportunity gap or white space, provides incrementality to the segment and aligns with the specific retailer's goals. Our clients get the entire [Swanson Group] team of experienced business executives working together as a "thinking tank" to take them deeper in their thinking, ensuring proper alignment with the retailer and bringing forward solutions.
JOHN MALMBORG, KKM: The biggest challenge for brands getting on the shelf is having a product that is innovative and has the capability to grow the total category sales and profit. The last thing a retailer wants on its shelf is a "me too" item with less profitability and no staying power. They do not want items to just source volumes from existing brands on the shelf unless there is a premium that can command a higher ring and profit.
OTTO: Even a small or niche brand needs to have a significant consumer-marketing budget to ensure success during the first six months on the shelf. Retailers have no patience and will discontinue new brands if they are not performing up to their minimum sales expectations within six months. Without a significant consumer-marketing budget and in-store promotional budget, the odds a retailer will take a chance on a brand are slim. This is a challenge for small- to mid-sized companies.
DSN: ONCE A SMALL OR MEDIUM-SIZED BRAND BREAKS THROUGH, HOW DO YOU STAY RELEVANT AND TOP-OF-MIND WITH THE RETAILER, AND MAKE SURE YOU'RE NOT CHURNED OUT IN THE NEXT CATEGORY REVIEW?
MACK: The best smaller brands create a trusting bond between their consumers and their retail partners. They stay relevant with their retail partners by sharing special knowledge, passion and hidden insights that others don't offer. They also are more agile than their larger competitors, creating custom solutions for each retailer — addressing their unique shopper needs. They go deeper, are more specialized and are more flexible than their competitors.
CURT BEHRENS, P2B: Sales success at retail is the only way to stay relevant and on the shelf. When your product is accepted for placement at any retailer, the onus is on the manufacturer to create demand and drive consumption at retail. By whatever means necessary — co-op programs, local and national promotions, TV, radio, print or digital, PR, mommy bloggers, or word-of-mouth — it doesn't matter which tactics you choose, as long as you pick the ones that cause consumers to purchase your product at retail.
SWANSON: One must stay relevant with the consumer first and understand their satisfaction level of the current value proposition, evaluate data and make the necessary changes to the consumer's continuously moving needs. As for the retailer, understanding their consumer and designing brand and promotional support offerings that create an improved consumer experience, provide incrementality to the segment and support loyalty [is important]. The [Swanson Group] team works with our clients to ensure there is a strong, well-thought-out annual business plan, and then monitors quarterly to ensure objectives and deliverables are being achieved, and if necessary, then makes adjustments.
BIERNBAUM: Actually, for some products, getting on the shelves might be the "easy" part. The real challenge is doing all the right things there-after to stay on the shelves and fight off all the other wannabe competitors, direct and non-direct. I am completely buoyant about sitting down with the retailer to be sure that all plans, expectations and execution are laid out together with the retailer, and then to follow the plan and stay in front with excellent written, verbal and face-to-face communications all year long. In addition, it's important that we stay ahead of the curve all year long, constantly staying informed about other new launches, as well as what might be driving the retailer generally and specifically day-to-day, week-to-week. … I have found that too many small- or medium-sized suppliers become too complacent once the product hits the shelves.
DSN: WHAT DO YOU THINK HAS BEEN THE BEST NEW NICHE PRODUCT TO EMERGE IN THE LAST YEAR OR TWO, AND WHY? WHY DO YOU THINK IT WAS ABLE TO BREAK THROUGH, AND WHAT CAN OTHER CPG COMPANIES TAKE AWAY FROM THAT?
BEHRENS: Alkalol is a 117-year-old start-up brand in continuous distribution since 1894, which in the last two years has gained distribution in more 30,000 retail doors. Previously available only behind the counter or by special order through a pharmacy, Alkalol committed to becoming a traditional OTC sinus wash brand three years ago. They developed a retail-friendly package, leveraged their existing loyal and very passionate consumer through Facebook and Twitter, engaged an effective public relations campaign and invested in "live read" radio promotions in top markets. Today Alkalol is bringing incremental profits and consumers to retail and is the fastest-growing SKU in the emerging nasal wash category.
MALMBORG: One of the top niche brands is Organix shampoo and conditioners. They were able to break through because they had a great package, great formulas and they gave the shoppers a reason to try the products with their "try me free offer." They also continually renovate the brand with new formulas that are on-trend with consumers.
MACK: It is hard to ignore the brand success and growth of Chobani yogurt, Ricola's Dual Action Drops, Think Thin protein bars, Sundial Brand's SheaMoisture products and Purell Advanced Formula. Each of these brands have truly connected with their core consumer, and are excellent examples that dark-horse brands sneak up on competitors because they have a clear brand identity, listen intently to their customers, allow their fans to bring forward their message, and use speed and agility to their advantage while aligning with the larger societal trends. They are run by leaders who believe their products serve a larger purpose.
DSN: WHAT ADVICE DO YOU HAVE FOR RETAILERS TO BRING MORE EXCITEMENT TO THE SHOPPING EXPERIENCE? HOW DO YOU THINK SUPPLIERS CAN HELP?
BRUCE FUNK, ELIAS SHAKER & CO.: I think retailers need to keep giving their consumers a good selection of items within a category, as well as right-priced, right-promoted strategies to move product off the shelf. Suppliers need to help support those programs, as well as offer new ideas that will create win-win-win situations.
LAMPING: Use of attractive store displays in well-merchandised, immaculate stores enhances the shopping experience. Suppliers can make sure their displays are appropriately sized and durable with eye-catching graphics.
MALMBORG: Innovative merchandising solutions that can be scaled and interactive with consumers, and capitalizing on social media — Facebook, Twitter and mobile apps. Suppliers should continue to develop opportunities based on current trends and bring forward to the retailer. The world is changing every day, and suppliers need to understand just because it was "no" last year, that doesn't mean "no" this year. Do not filter for the retailer — bring all options forward.
RAISSEN: It would be great to see retailers carve out a section of the store for innovative products, even if it were to be done on a regional basis. I know this seems simple, but with the shelf space at a premium, it always comes down to return on investment. Not just the ROI on shelf space, but the costs associated with inventory and logistics as well. Some progress has definitely been made in this area with "As Seen on TV" sections in some stores, but this is limited. Suppliers would need to limit the downside for retailers by promoting their products to the retailers' customers, as well as by providing for an easy way for retailers to handle returns.
DSN: WHERE DO YOU THINK NICHE BRANDS ARE GETTING THE MOST ROI FROM THEIR MARKETING SPEND THESE DAYS?
FUNK: Conventional marketing and consumer advertising — print, radio and TV — always will have its place and can be extremely effective. But in terms of reaching the consumer, that may not always be an option for the smaller niche vendor. I think there needs to be an increased effort put on social media marketing, which if done correctly, can be quite effective. Marketing as well to the professional trade — if applicable to the product — while sometimes taking more time, also can be effective. Trade shows, such as ECRM, I think also are an effective use of marketing dollars. Lastly, it is important to participate in the retailers' programs, as they can help build the brand from within.
RAISSEN: We have been very successful using a direct response approach to create awareness and drive trial. The model works well because it provides for affordable advertising that generates some immediate sales and helps companies with their cash-flow requirements. Most products do not make money in direct response these days; however, a solid campaign can create large-scale awareness that, in turn, drives consumers to look for the product. With most direct response campaigns, even with the proliferation of Internet shopping, only about 8% to 12% of the sales come directly to the company and the remaining 90% is done at retail. Provided a company can sustain the investment spending in the beginning of a campaign, once they get to retail they will be able to capitalize on the 90% of consumers who are retail shoppers.
SWANSON: Most companies only look within their own toolbox and don't provide a full consumer solution on their own. Our team highly recommends companies look outside to find companies that have complementary products that could provide a bigger consumer solution when combined [and] more grassroots initiatives where you could share costs, improve frequency in touching the consumer, as well as potentially making contact with known users of your product. Combine advertising events, cross coupon [and] joint in-store marketing — [in other words,] co-create an improved experience for the consumer and retailer.
Airborne last year line-extended its immune-support health formulas with an energy formulation — Airborne Plus Energy — that is formulated with B vitamins in place of caffeine for prevention-minded consumers who are looking for a little boost of energy over cough-cold season.
It was a half-court shot heard around the world. Earlier this year, a Miami Heat fan sank a half-court shot in the Carmex Half-Court Hero contest, netting $75,000 and placing Carmex on the ESPN circuit. Long a successful niche player, Carma Labs has a strong pedigree of getting its Carmex brand noticed through nontraditional forums.
As many as 84% of American women surveyed understand what ovulation is, but more than a third of those women are not confident that they know exactly when they ovulate. Identifying the niche need, Clearblue recently came out with an ovulation test kit that can identify a woman's four best days to get pregnant, two more days than any other test on the market.
Niche marketer Ermis Labs is making a splash with its CoralActives retinol exfoliating cleanser and CoralActives penetrating acne serum. According to the manufacturer, sea whip coral, a soft coral found in the Caribbean, provides a natural anti-inflammatory extract and sets the products apart.
According to a Dannon Co. survey, as many as 68% of consumers identify probiotics as a key go-to product in regulating digestive health. The latest Culturelle product to come out of i-Health — an adult-strength chewable version — targets a key demographic within the probiotic segment. According to the American Medical Association, 40% of Americans have difficulty swallowing pills.
Medline recently announced a unique distinction around a new product in its niche first aid portfolio. Curad's BioMask is the only Food and Drug Administration-cleared antiviral medical face mask that has been found to inactivate flu viruses.
Looking to raise awareness, Merz recently created merchandising opportunities with a package redesign to help drive sales of Mederma Stretch Marks Therapy. "The redesign not only gave Mederma Stretch Marks Therapy a much more premium look, it also works better functionally for the consumer," noted Jessica Wright, associate director of OTC marketing for Merz. When opened, the front flap reveals the tube inside and highlights before/after photography, as well as clinical trial results.
Longtime niche marketer Majestic Drug recently added a sleep-friendly solution for relieving tooth sensitivity. Called Senzzzzz Away, the product is clinically proven to eliminate tooth sensitivity from cold, sweets or heat. And it's a niche product friendly to the wallet — one treatment is good for six months.
Tom's of Maine is a strong participant in the natural oral care niche. Most recently the company launched its Naturally Clean tootbrush. Made from a plant-based handle instead of petroleum, the Naturally Clean toothbrush also is dye-free and has multi-height bristles to clean between teeth and along the gum line. To celebrate the launch, Tom's of Maine is inviting consumers to tweet their pledge to make a switch to @TomsofMaine using the hashtag #naturallyclean.
Beauty brand Wet 'n Wild took 2012 by storm by signing international pop culture icon Fergie as its first global beauty ambassador and has now announced the launch of the first line from the collaboration. Enter Fergie by Wet 'n Wild nail color collection, which features 24 shades developed in partnership with the superstar.