How to get your products into the UK’s top grocery stores

Supermarkets have been all over the news in recent weeks. Tesco’s lover’s tiff with Heinz resulted in them pulling several items off their shelves due to product price increases – including a British favourite – the baked bean.

Sainsbury’s CEO Simon Roberts also recently admitted that pressure on households will “only intensify” as inflation is predicted to increase to 11% by October.

It’s a difficult time for everyone. Not only for consumers – who according to Asda’s income tracker, were spending on average £41 less a week on their shopping in May – but for the supermarkets themselves.

They are bearing the burden of product line increases by investing money into keeping prices low for customers. This includes Sainsbury’s which recently announced an investment of £500m to keep costs down for its shoppers.

However, this also raises concerns for the UK’s small retail business owners, particularly as recent ONS statistics confirmed that 44% of adults said they were buying less food – up from 18% at the start of the year. A stark reality of the squeeze that is being felt as the cost of living crisis deepens.

As the downward sales volume trend increases across retail, dropping by 1.3% in the three months leading to May according to the most recent ONS stats, it’s vital that small businesses in the retail sector prepare for what is a testing time ahead.

One such way is to be one step ahead of your competitors in attracting category buyers from the UK’s top supermarkets.

Now more than ever your brand will need equity, your product must be unique, and you must provide clear evidence that you can meet high volume demand for your product.

We’ve asked some of the UK’s most successful retail startups, as well as former supermarket buyers, to offer their insight and guidance into what you need to do to get your brand shoulder to shoulder with the likes of Heinz, Cadbury, and Grenade.

This article will cover:

The steps you must take to land on supermarket shelves
But why supply to supermarkets? The advantages and disadvantages
Next steps: preparing your brand for the supermarkets

The steps you must take to land on supermarket shelves

Ensure you have the cashflow

It’s a brilliant feeling once you secure that contract with a large retailer to supply your products to them. However it does come with its complications, one of which is cash flow.

According to Michael Buckworth, managing partner at UK law firm Buckworths, cash flow is one of the main problems cited by startups when working alongside large supermarket chains.

“Rarely do supermarkets pay up-front or assist startups with cashflow. This often means that founders will need to source funding to manufacture and deliver the goods required to meet their obligations in the contract with the supermarket.”

Without cashflow you could find yourself struggling to make ends meet in order to expand your business.

Buckworth suggests a number of ways startups can deal with cashflow pressures, including:

Factoring invoices – get payments upfront for invoices that may not normally be paid for 30 to 60 days. This may solve some cashflow issues, but will result in your business having to accept a discount on the face value of the invoice
Raising investment – crowdfunding campaigns, angel investors and even VC funding can help you manage the jump in overheads – the downside is that you may have to part ways with shares as a result
Using traditional forms of finance – taking out business loans and overdrafts is a sure-fire way to secure cash flow – chances of receiving loans will also increase if you have evidence of large contracts with the big retailers

Get your supply chain and operations functions in order

Even with the cash flow to cater to the huge volumes of supermarket orders, you will fall at the first hurdle if you don’t have your operations nailed down.

Ben Vear, General Manager of oat milk brand Minor Figures, believes that although it’s tempting for brands to rush into working with major grocery retailers, it’s critical to get your house in order.

“Supermarkets won’t take kindly to your products being unavailable or out of stock, and getting supply right from the off is what can often make or break a brand when working in such a competitive environment.

“If you aren’t ready then consider starting smaller and working with your local independent retailers, direct to consumers through e-commerce and with health food stores where you can build your brand and a base of loyal consumers.”

Consider starting smaller and working with your local independent retailers, direct to consumers through e-commerce and with health food stores where you can build your brand and a base of loyal consumers.

Outreach to buyers

For Harry Turpin, founder of snack brand The Savourists, the key to getting your product onto shelves is persistence when dealing with category buyers.

“Don’t stop reaching out until you get a reply. Once you’ve found the right buyer for your category; call, email, message, repeat. This stage is laborious and time consuming, but persistence is key. Once you get a response, pitch, pitch, pitch.

“And be aware that product market fit is crucial – demonstrate how your product is the solution to their problems. Show them their current fixture and emphasise to them what they are missing – which is your product!”

Noel Eves, a former category buyer at Tesco and founder of protein cereal brand Superzeros, states that buyers often make decisions based on the classic playbook of finding a well-researched gap in the market.

“Buyers will invest heavily in developing a new product that better serves a niche, providing evidence that it has cut through and a well-funded plan, before showcasing how the product will be supported with marketing in a store environment when it is listed.

“So ideally you want your product to stand out, serve a niche, and be able to provide evidence of a solid, well funded plan.”

Know exactly what standards grocers have set

Ann Perkins, the co-founder of snack brand Perkier, has summarised what she believes supermarkets are looking for in a startups product based on her own experiences pitching to large retailers. At a minimum you must provide:

Evidence of consumer demand for your products
Differentiation vs the competitive set which is relevant and motivating to their customer base
A responsive and professional sales team who are analytical and know the market
Products manufactured to a high standard
Competitive prices and promotional plans
98% supply levels minimum

Understand and promote your USP

This one has come up time and time again when talking to business owners, but the significance of a standout USP cannot be underestimated.

The market is incredibly competitive. Even more so right now at a time when supermarkets are tightening budgets as they take the hit of rising food and supply chain costs.

Your product needs to fit a niche and be ultra desirable to consumers. This is reinforced by Danny Lowe, founder of the UK’s leading functional confectionery brand BLOCKHEAD, who sells its products in Sainsbury’s, WHSmith, and Boots to name a few retailers.

“From my experience, it has been vital to have a USP. At BLOCKHEAD we are lucky (by design) as our range of products adds a unique functional dimension to chewing gums and sweets and we have been one of the first movers in the industry.

“However, the proposition and USP need to not only be for the customer but also have a USP for the overall category. You need to show why it makes sense for the buyer to add the product to the shelf.”

Consider the shelf life of your product

Many factories have minimum order quantities (MOQ) to fulfil and this could result in them needing to produce large amounts of your product at one time – in some cases even a whole year’s supply.

Consider the shelf life of your products in case this occurs, as all large supermarket retailers have strict guidelines on the remaining shelf life of products they purchase.

Jerome Jacob, Founder of natural energy drink Mango Go!, believes this is often a concept that stings startups once they take on big contracts.

“Shelf life is a key challenge when working with large retailers. You may need to produce a year’s worth of stock to meet a factory MOQ yet need to sell it within 3 months of manufacture or the supermarket will reject it, as they require 75% remaining shelf life on what you ship them.

“Startups can be stung because of this early doors and it can prove costly. Do your research and ensure you are working with the right manufacturer, and that your product has a long, health shelf life to limit the risks.”

But why supply to supermarkets? The advantages and disadvantages

Statistic: Market share of grocery stores in Great Britain from January 2017 to June 2022 | Statista

Advantages:

Having access to a large customer base can increase sales - the big four supermarkets alone equate to a market share of nearly 65%
Because of the huge popularity and use of our supermarkets, your brand awareness will go through the roof and this can also increase sales and chances of investment
It is easier to communicate with one large customer, rather than with several smaller customers - each with specific demands
Experience - supermarkets are experienced in selling different products and can offer advice in regards to product design and packaging - as well as suggesting manufacturing and supply chain partners
Online food shopping (on sites like Amazon) is growing at a snail's pace - only 6.6% of the UK’s consumers are continuing to shop online as a result of the pandemic

Disadvantages:

Supply and demand will be greatly increased - you need to be able to keep up with quantities required by the big chains
Volatility - the market can be volatile, particularly in times of inflation and reduction in consumer spending (like now) - this could result in a drop in demand and your profit margins decreasing as suppliers offer less for your product (look at Heinz and Tesco)
Your product will be on trial - if it doesn’t sell well - you aren’t remaining on the shelves
Selling via supermarkets means your profit margins decrease compared to selling directly to customers via your own website - but the scale and reach the larger retailers provide can level this out
Could be tied into a contract of exclusivity - so you can only sell your product with that chain and nowhere else

Next steps: preparing your brand for the supermarkets

To recap, these are the steps you need to take before pitching your product:

Ensure you have the cashflow
Get your supply chain and operations functions in order
Outreach to buyers
Know exactly what standards grocers have set
Understand and promote your USP
Consider the shelf life of your product

There are many other things your business can do to help get onto those all important supermarket shelves.

Effective marketing is essential. Even though it can be costly, getting it right can raise your profile, increasing your brand equity and making you more attractive to supermarket category buyers.

Find out all about the latest digital marketing trends and the top digital marketing agencies in the UK to get your marketing strategy off to a flying start.

You should also consider putting a project plan in place so you and your team can be as organised and efficient as possible. The key to attracting supermarket buyers is to demonstrate you have all your ducks in a row.

Check out our ultimate guide to the best free project plan templates to ensure you are fully prepared.

But ultimately, as Remedy Drinks UK general manager Anna Dominey states, consider first whether the larger grocery retailers are the best channel to start in.

Or does it make more sense to start building in independent retail first, to test the appeal of your product and get your supply chain in order?

Remedy did just that before gaining its first UK supermarket listing, growing rapidly as a result.

The drinks brand has driven 67% of all kombucha category growth over the past six months. Anna puts it down to “the robust processes in place to manage our forecasting, production planning, and inventory management as we grow.”