The pandemic has hit manufacturers and exporters hard, and the signs of supply chain stress are everywhere. Argyle’s Agribusiness and International Trade team recently received a call from a U.S. company that couldn’t find anyone to bring 50 loads of product across the border. Another company told us that higher freight costs led to a 20 percent jump in their retail prices.
We don’t just see this as consultants; we see this as consumers. In the last two years, I’ve often found myself in panic-buying mode, reacting to the empty shelves, and low product availability at the grocery store. The weekly household grocery bill for our family of three has ballooned to $250 – twice what we spent just two years ago. As prices and interest rates rise, we are becoming more price-sensitive, yet we remain value-driven in uncertain times.
If you are a small or mid-sized food manufacturer – without the volume or distribution network to compete on price – how can you succeed in this environment? Now is a good time to take a step back to assess your primary stakeholders and evaluate the quality of your relationships.
It all starts with your customers, your most important stakeholder, and the reason your product exists. You can’t be everything to everyone, so your customers shouldn’t be every single grocery shopper. Ask yourself (and really analyze) some fundamental business questions: Who is purchasing your products – or who should be? What are the needs of these customers, and do your products address them? Don’t be driven by what everyone else is doing. For example, Gen Z is an important customer base and presents a significant opportunity for many brands, but it doesn’t mean this generation should be your target audience.
Once you’ve identified your primary customers, make them your true partner. Convincing them to purchase your product for the first time is difficult; keeping them loyal to your product is even more challenging. What is it that will entice their repeat purchase or encourage their word-of-mouth endorsement among their friends and family? It boils down to the product itself, the experience associated with it, and the underlying brand – and whether it all resonates with the customer. Listen to your customers and their needs and be prepared to make changes to your marketing strategy.
In Argyle’s work with U.S. suppliers, we often meet companies that only want to work directly with retailers. However, if you are a small supplier without a skilled sales and marketing team that understands the target market, you won’t be able to do everything alone. Know your strengths, and find the right partners – food broker, importer, distributor, marketing agency or all – whose capabilities complement yours. Do your research, and ask for references; ensure your partners align with your vision, whom you want to reach and where you want to be. They should have the networks or resources you need to succeed.
Once you have chosen your partners, outline clear expectations and terms. Treat them as an extension of your team and genuine partners with a stake in your business. Make your success their success.
Not every retailer will be the right fit for you. If you’re selling a $20 bottle of hot sauce, it’s likely this product might not be suitable for most major grocery chains. However, the unique ingredients and cachet might make it ideal for the local gift or specialty store. Being pragmatic is the name of the game. There are thousands of products available in a highly competitive market with limited shelf space, and retailers will be extremely selective about their suppliers.
Whether it’s one store or a national chain with hundreds of locations, the retailers’ interests are the same as yours – to sell through as fast as possible. Their customers are your customers. Think about creative ways to work together with the retailer to meet the needs and interests of these customers and capture their attention when they interact with your brand or product.
Government and industry organizations
Government organizations and industry associations are often strong voices and partners to an industry or region. Many of them have free or low-cost programs, including education and training sessions, networking events and financial resources to assist exporting businesses. Review what options are out there, what programs are offered and take advantage of the resources available to you.
It’s been a challenging couple of years – especially for exporting businesses. But you’re not alone. It’s also been difficult for customers and all stakeholders that touch your products before they reach the hands of customers. Take some time to assess your stakeholders and consider what it means to establish a true partnership with these entities. You may be pleasantly reminded that the supply chain comes full circle: you are just as important a stakeholder to them as they are to you.
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