Turning down a major retailer might seem like a missed opportunity, but for many Consumer Packaged Goods (CPG) founders, it’s a strategic decision that can save a business. Here’s why saying “not yet” to national retail expansion might be the best choice for your brand.
The Allure of National Retail Expansion
Every founder dreams of their product on the shelves of big retailers like Costco. When I was offered this chance for my beverage brand, O2 Hydration, I faced a critical decision. Here’s why I said no and why other CPG founders might need to consider the same.
- The Temptation: Getting your product into a major retailer can feel like hitting the jackpot.
- The Reality Check: Without being fully prepared, this move can jeopardize your brand’s survival.
1. Understand Your Market and Prove Demand
Before scaling, you need a clear understanding of your market and solid proof of demand. Here’s what that entails:
- Start Small, Scale Gradually: For O2 Hydration, we began our retail journey with Whole Foods in one region. This allowed us to test and refine our approach.
- Gather Insights: We learned that product sampling and storytelling were crucial for customer engagement. This insight guided our growth strategy.
Key Takeaway: Start with a smaller retailer or regional focus to gather data and build a loyal customer base. Expand only when you have a proven track record and the insights needed to support larger-scale operations.
2. Secure the Necessary Resources to Replicate
When expanding nationally, you must have the resources to support this growth. Here’s what went wrong for us:
- Initial Success: Our product did well in the Midwest with Whole Foods. This success led us to believe we were ready for national expansion.
- National Challenges: The lack of a concentrated focus diluted our efforts. We couldn’t scale our support and logistics quickly enough, resulting in our product being discontinued.
Pro Tip: Concentrate your efforts in specific regions before going national. This allows you to manage and support your retail partners effectively, build brand recognition, and avoid common pitfalls of rapid expansion.
3. Have the Conviction to Say “Not Yet”
Saying “not yet” can be daunting, but it’s crucial for long-term success:
- Avoiding Premature Expansion: Retailers may push for quick placement, but if you’re not ready, it can lead to failures.
- Preparing for Success: Ensure you have the necessary tools, resources, and strategies before agreeing to national retail expansion.
Retailer Perspective: Retailers expect brands to be prepared for success. They’ll offer attractive deals to entice you, but you need to be certain you can deliver. If not, saying “not yet” can save you from potential setbacks.
Strategic Planning for Retail Success
Retail expansion requires meticulous planning and execution. Here’s how to prepare:
- Market Research: Continuously analyse market trends and consumer preferences.
- Resource Allocation: Invest in infrastructure, personnel, and logistics to support growth.
- Sales and Marketing Strategy: Develop a robust plan to promote your product effectively.
Success in Retail: By building a strong foundation and understanding your market, you’ll be better positioned for successful retail expansion when the time is right.
The Path Forward
Understanding when to expand and when to hold back is crucial for CPG founders. Here’s a summary of the key steps to take:
- Build a Loyal Customer Base: Start with manageable regions and refine your approach.
- Secure Necessary Resources: Ensure you have the capability to support larger-scale operations.
- Be Prepared to Say “Not Yet”: Only agree to national retail expansion when you’re fully ready.
By following these guidelines, you can set your brand up for sustainable success and avoid the pitfalls of premature expansion. The decision to turn down a major retailer, like Costco, can be a strategic move that positions your brand for even greater future success.
