The Supply Side: Retail Experts, Suppliers Discuss Shelf Success

Selling to Wal-Mart and other big box retailers can be a path to business success. But if you ask to play with the big box folks, you better be ready to deliver.

Burt Hanna, founder of Fayetteville-based Hanna’s Candles, said selling to Wal-Mart before you are ready can be a fatal mistake. He said staying nimble and ahead of, or on trend with, consumer whims is also critical.

“I built up sales with about 5,000 other small retail outlets before I got my first order from Wal-Mart. We managed to fill Wal-Mart’s order for 345,000 bags of popouri in 1989 in just 45 days time, but it took everything we had to pull it off,” Hanna shared at the Selling to the Masses CPG (consumer packaged goods) School held in Bentonville on Thursday (Oct. 21).

Hanna said he was afraid of Wal-Mart in the early years of his business because he knew that he could not fund, nor keep up with demand without losing his other business.

It would be 10 years before Hanna got another order with Wal-Mart and that was because the retailer called him. Hanna now supplies the MainStay private label candles and wax melts to Wal-Mart. He said being willing to change with the times and revamp the business to suit the latest trends has helped him stay on the shelf at Wal-Mart.

“I didn’t know anything about making candles, but I learned. I went to Germany to seek out the machinery needed and ended up building my own candle press just to fill Wal-Mart’s first candle order,” he said.

‘FAIL FAST’ AND GET BACK UP
Victoria Lynden, founder of Austin-based Kohana Coffee, is a supplier to Whole Foods and Central Market, but her best selling item is a product she created out of necessity. Lynden said eight years ago when she began selling slow roasted coffee beans to Whole Foods in Austin she wanted to demonstrate the product to consumers.

“It was at least 110 degrees in Austin, Texas, in mid-July and there we were in the parking lot trying to get consumers to taste our hot coffee. Nobody wants to drink hot coffee when it’s that hot outside,” Lynden said at the CPG School event.

In a bit of desperation, Lynden said she went home and figured out a way to serve chilled coffee that had been slow roasted and returned to the parking lot to test the product.

“People loved it. They began going into Whole Foods and asking for the chilled coffee, which Whole Foods did not sell at the time. They didn’t like me demonstrating product that they did not have available, so I had to figure out a way to make a shelf stable cold brew coffee product,” Lynden said.

She traveled to California to meet with a farmer who had developed a water filtration process for conservation purposes. Together they developed a patented filtration process to make shelf-stable cold brew coffee, somewhat ahead of its time.

“We started with 200 cases sold in Whole Foods (in) Austin and that quickly spread through Whole Foods and the west coast. Today the company is valued at over $100 million,” Lynden said.

She said starting small with one store and getting close to the consumers in that area was key to helping her see what was in demand and to look for opportunities not being fulfilled.

“I started out as a roaster, it was a hobby for me. But when we saw the chance to fill an untapped demand we stepped up to the challenge,” Lynden said. “Failures happen, but make sure you fail fast, pivot and get back up.”

She also urges suppliers to set up where the people are, whether a parking lot, kiosk or some other stand and have consumers test and review the product. She said personal marketing is not expensive and can be crucial to help fine-tune or tweak the product in an earlier stage of development.

NIMBLE CAN BE BETTER THAN BIG
Ross Cully, of supplier consultancy Harvest Group, said suppliers who make themselves vulnerable to critics who help tweak products for the better is a good way to ensure the product stays relevant. He said if a product doesn’t sell off the retailer shelf there is a big chance the retailer will come back to the supplier and ask them to fund a rollback or some other price promotion to move the product.

“When problems arise with slow sales, it’s imperative that the suppliers be on top of it. Go in and fix it. Make sure the product is actually in-stock, make sure the sales forecasting is tweaked if necessary, and then share this plan of action with the buyer,” Cully said during a panel discussion at the recent CPG School event.

He said smaller suppliers might have an advantage over large CPG companies in being more nimble and quicker to adjust to changing trends, and being ready when Wal-Mart needs something.

“It can take a longer time for some CPG companies to make a change given the multiple layers of management and their fixed manufacturing processes. This is an opportunity for smaller to mid-size suppliers to answer that call,” Cully said.