Now, more than ever, brands have to be conscious of how their product is distributed. With the massive amount of orders coming in through various distribution channels, especially in the time of COVID-19, it’s important that supplies are spread out just enough so that they can make full use of the distribution channels at their disposal. Elliot Begoun speaks to Corinne Shindelar, the President Emeritus of INFRA, the Independent Natural Food Retailers Association. Elliot and Corinne discuss why brands should be mindful of their distribution channels, and how they can go about doing so. If you’re running an eCommerce business, this is definitely a conversation you shouldn’t miss.

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Listen to the podcast here

Distribution In The Age Of eCommerce With Corinne Shindelar

I’m excited to have everyone join us. It should be a good conversation. We were chatting about the fact that we like to use these to be actionable casual conversations that you can ask the questions that are top-of-mind and take away something that hopefully you can leverage and use. Keep that in mind as we go forward. We’ll start the conversation off and we’ll chat. We’ll try to get through as many questions as we possibly can. I’m going to have Corinne give a little introduction. I am thrilled to have her. There is more wisdom that is going to come from her and her experience than most of you will have an opportunity to get in your lifetime. She’s been in this business for a long time, since she was about four. I look for this straight unvarnished truth and clear assessment. I’m certain you’ll get the same from her. Corinne, a little bit about your background. Thank you so much for doing this with me.

Elliot, thanks for having me. I’m in beautiful Minneapolis, Minnesota. It’s a great opportunity. I have been in the natural and organic food channel for a wee little bit of time. I spent fifteen years as a general manager of a successful food co-op in Minnesota that is still a successful thriving business. After that, I spent ten years launching and building the Cooperative Grocers Associations both regionally and then built it into the national organization, which is now NCG, National Co-op Grocers Association. I had a great time doing that. I spent years launching and building INFRA, the Independent Natural Food Retailers Association. I would say, yes, I was probably about four years old when I started.

I was thinking about my retail experiences throughout my entire career. I’ve been oriented towards innovation and supporting startups, especially mission-based startups and brands with an eye to fair and equitable food systems. I’ve been involved in starting up a lot in the organic and natural food space. I don’t know if any of you have been joining in the Hirshberg Institute Conversations that Gary has been hosting. I think about all those tales from the trenches and I went, “Those guys were selling to me when they first started out in my store.” At that time, I got the first packaged potato chip in the natural and organic food space on the shelf. I’ve been around for quite some time.

It’s important to realize that even though our situations and our environment is changing, we still face a lot of the same challenges and the same similarities. Hopefully, we can learn from the past and make an even better future. Everyone’s talking about, what’s going to be the new norm? I like to be thinking about it from a perspective of, what’s going to be the new better? We have an opportunity now as we look to shape our future in our food system in a way that is equitable and assessable. “How can we make it better?” This is a good time for all of us who are sitting in this space to be thinking about that.

I was also thinking about when I launched INFRA in 2005 and there were six retail founders and we had $40,000. That was it. $40,000 for two years. It covered my expenses, no salary. I used that money to get around the country and meet with other retailers and spend time at trade shows, believe it or not, in tabletops and negotiating my way through like, “Please give me a free table. If you give me a free table, I’ll give you this if we’re successful.” I spent a lot of time talking to independent retailers and other retailers from behind those tables. I know exactly what it’s like to be on both sides of the aisle when you’re trying to sell into retail space and what that looks like.

It took us from 2006 to 2008 where everybody said, “It can’t be done. Retailers won’t do this,” but I used all of my tenacity and perseverance. Years later, INFRA has 380 doors that it serves. In 2019, I celebrated by rounding out a lucrative $3 billion contract that I negotiated that drove between 200 and 800 basis points out of the cost of goods for our retail members. It can be done. Whatever you’re doing and aspiring to do, it can be done if you have the passion and you believe in it and the tenacity and perseverance. You take the time to think about why you exist and where you’re going to make a difference in the space and why you’re sitting in the food space.

One of the many reasons I wanted to have you on is because you offer such a unique perspective. You’re an entrepreneur and building out INFRA. You have been working and managing boards for a long time is the best way of saying this. You’ve done that through some difficult times. I’m sure you can share some learning and some ways to help these brands navigate how to work with their board and with their advisors. You understand the supply chain side of the business. You have good insight into the distribution and working with a distributor. You have the insight from what it is that retailers are looking for from the brands and what brands should expect out of retailers. I’ll start with a question. We had a bit of a time to chat about this, but we can riff on it a bit. What changes do you see in retail that have maybe come from or have been accelerated by this period, what’s come with COVID?

What I think is amazing about it, if you step back and set the stage in your head around the fact that we have seen a seismic shift where we’ve spent the last 50 years transitioning the food dollar of 50% of that going into food service. All of that foodservice dollar has had to shift over into grocery buying. That’s $700 billion and that’s 50%. That’s huge if you start looking at the numbers. What I find fascinating about how this has impacted everybody, regardless of where you sit in the supply chain, is all those things that you envisioned that needed to happen or all those things that you were working on for future opportunities, they’re here. The retailers can’t sit and talk about omnichannel. “Should I do it? Shouldn’t I do it? What does that look like? What does click and collect look like? How can I do that?” It was thrown in their face. They had to deal with it. They had to make something happen. That’s a big piece of that.

Looking at one of the things we talked a lot about over the past years at INFRA was access to products. How are the food and the supply chain going to keep up with the demand? As that demand shifts and changes, how is the supply chain going to determine how to allocate products into either retail or online? We’re seeing a lot of that. We’re seeing shortages all over the place. It becomes this thing where we talk about, “Get smart retailers. Do your SKU rationalization.” All of a sudden, you can’t just get smart. You have to do it. You don’t have a choice. You’re forced into these things that you thought were futuristic possibilities that become realities. There’s a lot of that taking place.

One of the things you mentioned, and this is a conversation I’ve been having with a lot of folks, is SKU rationalization. Those of us that have been in the industry for a long time have wondered when this was going to reach its tipping point because it was unsustainable, the amount of the SKU proliferation. That is being exposed dramatically as brands that are deemed not essential are finding themselves pushed off trucks and not being delivered. What do you think is going to happen in terms of overall SKU count? Do you think that people will go back to the same continuation of proliferation, both the brands themselves and the retailers as well? Do you think that now is the time where there’s going to be more curation and more focused on the best performing SKUs in the store?

It’s going to be the latter. The reason why is I’m also thinking about the next generation of shoppers. We can’t think about shopping or purchases or our customers in the way that we think about what we ourselves do or what we ourselves are looking for. The Millennials and the next generation are interested in quality versus quantity. They want good experiences, but they’re not necessarily looking for variety. They’re not looking for ten different kinds of corn chips. They want a good quality corn chip. That’s an example. There is going to be a long-term SKU rationalization impact. I can’t tell you who it is, but I had a conversation with a good friend of mine who’s a CEO of a large CPG company. One of their brands has a hundred different SKUs. They’re cutting back to their four top sellers. That’s it. They don’t know whether or not they’re going to be bringing the rest back online. If you think about it, ratios don’t go away. Twenty percent of the sales make up 80% of the dollars.

Pareto’s Law exists for a reason and that’s always been it. Consumers want choice. Consumers want variety. There’s a benefit from the excitement and treasure. Disagree with me if you’d like, but one of the things that are going to change is that core SKUs will continue to grow and do well in retail. That’s where the marriage between eCommerce and retail work well. You’ll see the ancillary, the second level SKUs being available online first. If they prove that traction, then those will eventually or potentially float or retail. You won’t see a continued proliferation of SKU. Many brands have tried to grow their revenue by proliferating SKU with the cannibalistic balance trying to grow the top line. The stores, the infrastructure, the distributors, they can’t support that.

It’s going to vary depending on the brand and the product. There is going to be some that are what I would say showcased in brick and mortar and some that are going to be replenishment in brick and mortar. If I was launching a brand or thinking about a new product, concept and idea, I’d be looking hard at, why do I exist? Where am I going to fit on the shelf? What gap am I filling? Am I thinking about the category I sit in in the right way? Fifty percent of that food dollar is going to shift back to foodservice. People are going to find satisfaction and a safety net in preparing and patching their own food a little bit more than they were leading into this. That’s going to impact how you market your product.

I’ll be thinking about it from a lifestyle factor. You might think that you’re a beverage but in reality, you’re maybe a wellness product instead of a beverage. How are you coming to the market? If that’s the case, do you have a better opportunity of being able to tell your story online first or brick and mortar first? Your strategy has to be based on what your story is. The other thing I would recommend is getting comfortable with full transparency. If you want to be on a brick and mortar shelf, walk into that space with your story fully transparent of, “This is where I’m at. I launched online. This is how it will support customers coming into your door or vice versa.” You’ve got to help put that SKU on the shelf.

I was at that fancy food show years ago and I was looking at all the new products and their new product showcase. I was fascinated because I work in the natural and organic channel. I was surprised to see some products that are like, “Why aren’t these in our stores?” I went and I sought out those brands and those tables. I asked them, “Where are you launching your product? Where is it sitting?” They said, “Conventional grocery.” I looked at them and I said, “Why is that? These are perfect products for our organic and natural stores.” They said, “There’s less competition at the shelf.” They’re not already saturated with GMO products. They’re not already saturated with these products where the natural and organic channel is. Along with figuring out your category, we’re also going to be having to refigure out what’s the channel.

Part of it too is taking an omnichannel view. I call it concentric circles. The brands are going to be capital efficient. Capital efficient is the new velocity and I’ve been saying that a lot. I also think that you can’t look at each of your channel strategies as separate. They’re interrelated. If you have an eCom strategy to start, fine. That may be the best place to start for an early brand, depending on your product. To your point, you want to be looking for a curated list of retailers that have your consumer at the point of need where you can be discovered and be on the shelf. That could be a good place to be in retail.

At the same time, there’s an opportunity in corporate campuses, colleges, universities, travel and all of the other places out there. It isn’t necessarily the channel strategy. It’s more the consumer strategy. How do you get to where your consumers are where the problem you’re solving is most pronounced? Where the need that you’re feeling is most acute? How do you get there in a capital-efficient way? How do you surround them to drive discovery and interaction? That’s the mindset I’m encouraging people to take. It’s a jigsaw puzzle. Every brand and every product has its own puzzle. It needs to put the pieces together based on their consumer and their product.

That raises another thing that is important to note. Omnichannel definitely is here to stay. Every retailer is going to have to come up with some solution that’s workable, that is click and collect and/or an online delivery presence. Frankly, none of them are working well. They’re not cost-efficient. They’re not capital efficient at all. Where does that margin come from? How does that dollar stretch across all of those different channels, if you will, in ways to reach the customer? The other thing too is that brands need to be thinking, those that are on the shelf, “How are you making it easier for the customer too?” Re-shift your trade span instead of discounting and doing OIs, MCBs and things of that nature.

Put your dollars into marketing your message. Make sure your message is strong about why you did this and the value that you bring. Also, put it in a way that’s consumer-friendly. I was having this fantasy when I was talking to my grandchildren. I wish that I could not only click and collect but that I could go and I could click on a menu that would put all the groceries together for me and what I needed. The meal planning thing is all done. More brands that can insert themselves or collaborate with their frenemy in putting those together, that’s where I think it’s at.

Solutions are going to be important for a busy lifestyle. A couple of questions came in. Given the SKU rationalization mentality, how do you think that everyone’s going to approach innovation? Does that slow innovation? Does it impact innovation?

It’s going to mean that innovation is going to be lively as soon as things open up again because people are going to be exhausted. They’re going to have some exhaustion from the same old, same old. They’re going to be excited about it. Things are going to come and go much faster. You’re going to live and die on the vine much quicker. Either you’re going to be long-term or not.

There’s this concept of disposable brands. The nimble companies that can innovate quickly and get something in the market to ride a trend or to seize an opening, but know that it may not be something that they can foster or maintain for a long time because they will have a season that’ll come and go. There’s a lot of talk about that. That’s expensive unless you’re able to do a lot of that yourself. The other thing that is going to happen with innovation is it’s going to be less about SKU and less about product and more about the way you get to the consumer and the way you connect with the consumer. There also is going to be more customization that’s done online, at point of purchase.

Your term of capital-efficient is going to require brands to be thinking about their scope of launch. At this point in time, I would be looking at regional efficiencies versus trying to do national launching. I would be looking at and let that be more of, I would say, organic growth across the country. If you’re looking to launch it in the near future, I would be seriously monitoring what I’m referring to as state waves. What is happening with state waves? When are states opening up? When are they backing off? When are they going to maybe open up and it’s not going to work? They have to close down again. There’s going to be this other big surge. The reality of it is the food system is strained. It’s stretched. Everybody is busy. They don’t have the bandwidth. They have a mental overload.

I have a great example of that. I received this email from one of my members because I was asking them about how their click and collect solution was going. They said it was horrible and they had to switch. They’re trying to switch mid-stream. They said, “We have customers filling out online forms that we print off and a cashier does the shopping. I’ve had a couple of employees drop out because of anxiety and so we had to cut hours. I can’t wrap my head around hiring and training in all of this as well. It’s a continual firestorm. Our sales are still up despite the hours being cut and it feels like we’re all working 80 hours. Even though on average, everyone’s down to about 25 or 30.” There’s so much emotional strain on everybody as well.

One of the things that is going to be a continued challenge is, to your point, there’s going to be state waves. There are going to be waves. One of the things that I would encourage brands, and I’d like to get your thoughts, is to make sure they think of it much in the same way they would if they were investing in the stock portfolio. They need diversification in their channel strategy so that when a wave comes, they have the ability to withstand it better. You’re seeing any company, any brand that was food service-centric is getting crushed. A brand that was wellness online is having its day. For whatever reason, it doesn’t have to be the next pandemic. It could be any other change of foot in our global interconnected society that interrupts the way business is being transacted. Having a diverse approach to the way you reach your consumer is going to be important, in my opinion. I want to get your thoughts on that too.

You won’t get any disagreement here. I’d also be mindful of not having that old time saying, “Have all your eggs in one basket.” When it comes to who you’re courting as a customer to make sure that your customer courting is widespread, make sure that you’re not getting clauses and contracts that don’t make it possible for you to sell into whatever streams or distribution that you wish to do. Those are out there. I’ve seen them. Don’t do exclusivities by any means. I was in Germany and there are still companies that were writing exclusives with Whole Foods. That’s crazy, anything like that. The whole world has shifted in that way. What you have to do is to maintain control. You maintain control by ensuring that you’re not dependent. You’re interdependent with those that you’re serving and what you’re delivering.

One of the things you said before was about regional. As an industry, we glorify the national launch. We somewhat diminish those brands that could be building good regional businesses. With this change, a good regional business is good business. Brands should start by being a good regional business first. You and I both worked with brands in other countries and in New Zealand. I think about that all the time. California is almost ten times the size of the entire country in New Zealand. Most people looking outside in would kill to do well in California. Most brands that start here may launch or be in California and soon as they open their first DC, they’re looking into the next market and going national and want to be Whole Foods global or something along those lines. What’s your take on building a strong regional business?

You have a better chance of being successful because along the way, you’ll also be able to answer some questions for yourself which is, how big do you want to get? What is a sustainable lifestyle for you, the entrepreneur? What’s important to you? What do you value? We have these visions of growth and what they mean. What we’re seeing with this whole pandemic and this global crisis is how much we’ve become a global economy. As much as certain bodies of government don’t want to acknowledge, it’s incredibly true that we have a system that is not sustainable in the long haul. Launching regional gives you a chance to look at who you are, what you’re doing, where you want to go and how successful you can be before you’ve stretched yourself so thin. Think about it from a perspective of, do I want to have one kid or four kids? Some of us landed with four, like me. It gives you an opportunity. What sells in California might not sell in Minnesota.

Trying to make something sell across countries is more difficult. The reality is that I hear a lot of people say, “I want to build a business to exit.” Building a business that’s fast-growing, the hockey stick that everyone who is of that mindset chase is wonderful, but not if you are doing it in lieu of having good fundamentals, like strong unit economics, channel economics, connections. Eventually, it’s going to catch up to you. It’s like building a house of cards. If there isn’t that strategic acquisition or something meaningful that happens, at some point that house of cards is going to collapse.

I wrote in my article, not that I was trying to be a downer, I believe in the valley of death. The space between when a brand is able to raise Angel and C round money to the time a brand is able to raise A round or higher money, that valley has gotten deeper and wider. Sadly, there are quite a few of the brands in the marketplace that are caught in that valley and don’t have enough provisions to get to the other side. I’m encouraging those that are not quite halfway to think smaller, to think about, “What if I turn around? Can I turn around and make it back and retrench and think differently about my business?”

I wanted to get back to something you said and it relates to another question that came up. You talked about the stress, the angst and the emotional toll that this is playing. One of the questions I’m getting often is, “How do I reach out to my buyer? How do I keep top-of-mind awareness without seeming opportunistic or tone-deaf?” From your perspective, thinking through maybe the lens of your members, what would they want from their brands? If they’re not essential, it’s a transactional thing. It’s more checking in, that type of thing.

That’s a tough one because you’re going to get a different response everywhere. You’ve got to be prepared for that. Don’t give up. Have tenacity and perseverance but do it with humanity and humility. The reach out initially is, “I want you to know I’m here. I’ve been thinking about you. I know it’s tough on the frontlines. Is there anything we can do for you? When you’re ready to have a conversation about what we’re seeing and what’s new up and coming, let me know.” It’s the real ease in. I’d be looking closely for information as people get into this new normal, which isn’t a new normal at all. Getting your hands on who’s doing category reviews and when, because that’s shifting and changing and it will start popping back up. Right now, there’s been a hiatus on it. Buyers aren’t seeing brands often or having conversations. That will start changing. You’ll start to see some of that happening.

I’ll use an example. I had a brand that reached out to me because I want this brand to be successful and I’m excited about it. They sent me a sell sheet and some samples that I was going to distribute to my friends here in the Twin Cities because I can’t find it in any of my grocery stores here and I wanted it. I didn’t want to buy it online because I had to buy too much and all that whole scenario. They sent me the sell sheet that was long and words. I wrote them back and I said, “You’ve got to cut it. Give me the elevator speech. I need five words on why they should go on the shelf because nobody has time to listen to it.” Short, succinct, clear, but also making sure that they’re reaching out on the relationship side first and foremost.

That’s an important point, a simple takeaway. Everyone is inundated with emails, texts, this amount of stuff online. Crazy webinars like this one. We all have so much information coming. It’s time for brevity. If you want your message seen, if you want action to come out of your ask, make it simple and make it quick so people can digest it. It’s another form of empathy. Think about it. I know that I’m guilty of this. When I look at an email that is more than 50 words, I begin to shake. When it’s more than 250 words, I archive it.

I want to go back to something that you were saying and that’s when you’re talking about the regional versus national launching, finding your niche and your space but also finding your stride. I think of it as finding your stride. When we think about global economies and we think about the customer shift and change, and note how I keep saying customers instead of consumers because that’s going to be a new trend as well. Keep in mind that we’re talking about foodways and consumption and all of that. Those are all topics that are hot on everybody’s mind. Our language makes a big difference.

In full disclosure, to the audience, I have been the board chair of the Non-GMO Project. When Elliot and I were in New Zealand together, we had the opportunity to meet and speak with the Minister of Agriculture. They’re discussing whether or not they will allow GMOs to be produced in the country to meet the demand for plant-based foods. My question to the minister was, “Tell me why I would want to buy plant-based foods that were growing in a petri dish or a GMO in New Zealand? In the US, all I have to do is go to my backyard and grow it myself.” As a brand, you need to be thinking about, is your proposition unique enough that it will hold the legs nationally or globally? Think about, “Why do I want to buy you? Why do I want to eat, drink or wear you?”

“What’s my reason for being? Why am I here? What am I doing?”

If it’s just to make money, that’s great and good luck.

Especially in these times. I know you talk to a lot of brands. Founders dealing with their boards who are stressed, who are pushing them or asking them tough questions, what advice are you giving founders as to how to manage that?

My advice is that you need to be calm and comfortable. You also have to look at your board as your partner. They’re your oversight. They’re your bosses. They’re also your partners. What information did they need from you in order to ensure that they’re providing you with good guidance and providing you with insight that you need as well? It’s a give and take. Too often I see situations where boards are not being used at the level that they can be used for the expertise and the reason that they are serving on the board. Also, strategically, it’s important to have your board get more comfortable with having budgets and projections that are changing rapidly and frequently and not getting tied to five-year plans anymore. If it’s all about five-year plans, then you need to be rethinking. You might want to have five-year pillars or strategic initiatives, but you definitely have to stay nimble. If you get too stuck on where you think you’re going versus where you’re going to end up going and not taking your board along with you, you’re going to have a rocky road.

Also, it’s important as a founder or CEO to ask your board for help if you need it. Be specific. That is a big role of what they’re there to do and are capable of giving you some great guidance or making some things that happen for you.

I want to emphasize the fact that if for some reason you don’t trust the people that are on your board, then you need to be working with your board chair and rethinking whether or not you have the right group. Is it that you don’t trust them or you don’t trust yourself?

It’s often a little bit of both. I want to put on our Swami crystal ball, fortune teller hat. One of the things that I’m curious about is, what will happen to B2B direct sales to some degree? The UNFIs or KeHEs of the world recognized the burden that SKU proliferation has placed on them, but retailers still want to be able, on specialty and lower velocity items, to meet the needs and wants of their consumers. Do you think more and more will wind up accepting or working on a direct basis?

Yeah. Technology is going to provide us the ability to go back to doing more direct. Keep in mind, the size of these retailers range as small as $1 million in sales up to $110 million to $120 million in annual sales and everything in between. We’re not talking about the Krogers or the Targets of the world. That’s true too in their case. Direct is going to be extremely important and technology is going to allow that to happen. I also think that technology needs to be able to allow for what I would call more system fluidity so that you can redirect your stock or your inventory into other channels quickly and rapidly. We need to make technology do that. The B2B relationship, if I’m a brand, I would highly suggest that if you aren’t already, you are well versed in your technology that allows a customer to see where they can find you. Don’t forget to budget for having store locator opportunities.

I want to find Organic Valley milk. I want to go to an Organic Valley and say, “Where can I find Organic Valley milk?” It pops up and tells me where to buy it. Too often, that’s not the case. We’re waiting for somebody else to do that. I would also say that while we think we’re doing well overall in general, when it comes to technology, we’re not. It doesn’t matter if you’re conventional. It doesn’t matter if you’re natural or organic. It doesn’t matter if you’re the distributor. I’ve spent the past years bumping my head against the wall with the spins of the world, the different POS systems of the world, all of these different gazillion providers. Imagine being a retailer right now. I have to have fifteen different technology platforms to deliver a product to a customer. That’s awful. It doesn’t work. We’ve got so much work to do in that space and it’s evident at this time. We’re not fluid. We can’t switch easily.

Let me go back specifically to the direct. What technology have you seen that shows promise, anything in particular or broadly?

When it comes to omnichannel, I have to say, I haven’t seen anything that I could stand up here and say, “Yeah, that’s golden.” They’re wrought with challenges and issues and they are not capital efficient. If I’m a retailer and I’m launching omnichannel and I have to give up 8% of my ticket to Instacart or 9% to Mercado and I’ve got to do both of them, I have to stay competitive in my pricing and I’ve got to operate on a margin that’s X, how are we going to do that?

Economic models need to work for everybody. We’ve seen what happens when certain elements of the value chain, find their economy is out of whack because it’s been squeezed on one end or the other, it’s not a good outcome. It impacts everybody.

We’re going to save money elsewhere. Other things are going to happen. I would guess that we’re going to have a lot more virtual trade shows versus trade shows that we’re traveling to. We’re going to have more virtual buys. That’s going to shift. This buying direct is going to shift because now I do not have to pay the broker, the distributor, and this and that before I get it on my shelf. Those models are going to shift.

B2B direct is going to be something interesting. It’s not for the high velocity, fast turning items. Those will likely always be better suited going either warehouse to warehouse or through a distributor because of the tonnage. It will be interesting to see what happens over time with refrigerated and frozen. The costs have dropped so much because their network design where brands are dropping in 3PLs in 2, 3, or 4 locations and are within two days’ ground of the vast majority of the population. That’s interesting. There are items that consumers and retailers want, but that doesn’t make sense for big distributors to give about phase and it’s about spots. It’s going to be interesting. Here’s a question from Michael Bell, “From what you’re seeing, how are brands best supporting retail partners during these challenging times?”

I hate to say it, but supply. It’s a shit show out there. Everything that I plan to promote still has to be on promotion because it was implied. It was published, in my flyer, in my store. I can only get two cases. Also, if there’s any way you can allocate so your product isn’t all landing in one channel or the other. It’s not all landing at the conventional market versus the independent versus the co-op versus the online. If there’s anything you can influence there, it’s important.

Let’s nuance that question a little bit and go down to those that are smaller brands, maybe had been starting and launching with retailers coming into this. What do they do?

I don’t know how to answer that without more specifics.

I’ll tell you what I’m seeing and hearing is there are a lot of brands that were fairly early in their lifecycle. They may have launched Q1 or Q4. They were going to be using expo as further exposure and get some wind behind them and then they were going to be running their PR or their in-store support and all of that. Much of that has vanished on them and they’re sitting on shelves as a new entrant wondering, “Will I survive the next round? All of my tools, all the arrows in my quiver were pulled away from me. Am I going to be judged? How do I survive?” I have not, quite honestly, been able to give them an answer. It’s hard to tell. I’m curious if you have any insight or thoughts around that too.

If you’re already on the shelf, then provide the retailer with any material to make it easier for them to sell to the customer or get it introduced to the customer. Throw them out of BOGO right away even if that wasn’t it. I know I said don’t promote. Throw a BOGO, Buy One and Get One free at this time because it’s better for your health for you to take two home or whatever the case may be. Those are the only things off the top of my head that I can think of that you can do if you’re launching right now. I would also say claw back a little bit and try to focus on some key places. If you want, go into the community that you live in and go into those retailers and be on the frontline with them and say, “Is there something I can do to help out in the store? I know that you’re taking risks. I’m willing to take them with you.” Those are some of the personal touches that are going to make the biggest difference.

Another thing is to talk with your buyers when you can or email them with empathy and let them know. You want to support your brand. You want to support your products. You’re willing to do that but in this particular moment in time, you’re not sure if it makes sense for you, for them and for the end-user. Get their feedback. Get their advice and get on the radar that you want to support and hope that is enough to carry you through the next review period. There will be a lot of forgiving.

I also think everybody needs to be aware because this SKU rationalization is happening. Even if your product is doing okay or above what was the threshold-pre does not mean that you’re safe. Not being the downer, I would encourage everyone to be stress-testing their models and have a plan B. When you come out from the other side of this unrelated to your efforts, unrelated even to your performance as a brand, you may find yourself in a different position than you hoped you were going to be. Being prepared for that potential and having a plan around that potential is important.

There are a couple of things that I thought of what you were talking about. You guys all might think I’m crazy, but that’s not a first. Those human touches are important. A handwritten note to your buyers sent in the mail versus an email, it’s going to stick in their head. You’re going to be the first person they think of as a go-to because you took the time to get out of the noise and send them something that they don’t normally get anymore. That’s huge. The personableness part of it is key. The other opportunity inside of that is do postcard mailing in the ZIP Code that you’re on the shelf. Do advertising directly to the customers and say, “You can find us on the shelf at this store.”

That’s going old school, the old direct mail. I love that idea.

People are hungry for old school. Think about it as comfort food. Everybody is like, “I remember how to make the biscuits my grandmother made.”

One of the things that we read, we were talking about that on a call we had was that one of the categories that’s grown the most and they’re predicting is going to stay up is home baking because people are realizing the enjoyment that can be had around that. The other thing that I’m suggesting is that reach out to your buyer. They’re sheltered at home for the most part too. If you’ve got a product that they or their family might enjoy, offer to send them a care package home. Say, “I would love to send some product to your house so that you and your family can enjoy it.”

You’ve got to be mindful and this is hard. I ran into this a couple of times. There are some companies that have a policy that does not allow the buyer to get them.

The worst they can say is, “No, I can’t accept it.” The gesture has done most of the heavy lifting for you anyways.

This is old school too, send a bunch of coupons for free products in the future that the buyer can handout to their friends.

That’s one that we talked to a couple of our brands about, encouraging them to send VIP coupons to their stores to give to their employees, to give out as a, “Thank you for being on the frontlines. Help yourself to one of our products,” take it home type of thing if it can be or even a discount to employees if it can’t be full gratuity.

They’re going to be your best salespeople.

That’s a miss, in my opinion. Often in-store activation or marketing is that most stores have, depending on the size of the store, 50, 100, 150 people in the store every day that worked there five days or more a week. Getting them to be aware of your product not only makes them ambassadors for you in the stores but that’s 100 to 150 shoppers that are in the store every day and are likely to buy your product and people under market to the stores themselves. That’s a good opportunity. It builds good wealth. Corinne, one of the other questions I have for you is specifically around distributor-retailer relationships. What are you hearing? What’s going on? How are they jointly weathering the storm together? Are they working well? Is there pushback? What’s your sense?

All of the above. Even before going into this, I have spent a lot of time in the whole supply chain from producer to customer, which is exciting to me. Before COVID-19 took off, I was saying, “The last place I wanted to be in this whole system is distribution.” I can’t imagine how challenging our world has gotten for distribution and the difficulties of being able to hire. We’re already having many difficulties prior to this. What I’m seeing is a lot of desire to be more partners and understanding each other’s business, which is a good thing because too often we don’t understand enough about the business of those that we’re interdependent on to get our product to the customer. We don’t understand the distribution business well enough if we’re a retailer. We don’t understand retail if we’re a distributor, a brand. The more you can understand everybody’s accountabilities inside of how the supply chain works, the better served you’re going to be.

What’s happening with distribution and retail is that everything’s up in the air. There are contracts that are out there. Some retailers are trying to enforce their distributor contracts about fill rates and service levels, which is ridiculous in a way. We’re seeing some distributors are working hard to do constraints, which means they’re only allocating so much into each of their retail channels. Whether it’s online eCommerce or brick and mortar, which is the most equitable thing to do. We’re seeing a lot of questions about how they are going to be able to manage the overloads. On the same hand, it’s exciting to see distributors working with their frenemies and working with distributors that were their competitors because they have to. Can I take these foodservice distributors and can I use their forklifts, trucks, drivers and their people? Can we re-shift that? We’re seeing a lot of that, which is great.

You wanted to talk a lot about this whole concept of supply chain and systems fluidity and so forth. What do you see is the approach to the future there?

I see that someone can make a lot of money figuring it out. I have no idea. We have to get better at it. This isn’t the only time we’re going to see this seismic shift. What we’re seeing is probably our new world order, if you will. I happen to be a big picture thinker, which can get me in trouble and it gets me excited about things. We’re being shown exactly where our system doesn’t work in all walks of our life.

We’re also being shown that thinking myopically or thinking only in your silo is a massive flaw and a missed opportunity. There’s so much opportunity to move things around. At the end of the day, what we’re learning is that even in times like this, consumption doesn’t drop. People still eat the same. Some of us eat more than we should but for the most part, we eat the same. There is always that potential that the point of consumption shifts based on external forces. Being able to be predictive of that but also to have a tow in each of those boxes makes a lot of sense from a strategy standpoint.

I’ve been fortunate because I’ve been successful at every business that I’ve started and launched and boulders that I’ve pushed up the hill. They’ve all been extremely profitable when I moved on with lots of cash in the bank. Cash is important. We all know that. I often wonder why. Some of it because my driving factor has been more around my values. That’s what’s always driven me and also being about partnerships. Working with the whole supply chain and understanding where the stressors are and knowing whether I’m being a barrier or I’m being a solution. All of us need to be thinking about that, both from the food supply chain as well as the way our economy is structured and how your budgets are structured and how your cashflow is structured. I was supposed to meet somebody on NPR. I can’t remember who. They were talking about how our economy is all dependent on employment and there’s no safety net. What does that look like for a food system? How does that apply to our food system?

Jenny asked a question. Her question was, “With SKU rationalization, are there any thoughts as to getting additional SKUs brought back in?” I’ll answer it and say, “Yes, but why?” Make sure there’s a real reason why you should have those back-ends. To our discussion around Pareto’s Law, there’s a lot of capital efficiency. For you as a brand to keep your SKU count low, if you focus on the 20% of your SKUs that generate 80% of your revenue, then you are therefore building less inventory and having a lot of other things that aren’t working against you. Think that through. If you’ve got items that are all good sellers, then yes. Any last advice? How do people reach you? What’s next for you? Anything you want to share with the group, the folks that will read this?

People can reach me at my email address, which is simple. It’s [email protected]. I’m connected to Elliot on LinkedIn. If you’re connected to Elliot, you can find me there as one of his friends. We’re good traveling companions as well. I am available to support conceptual thinking and visioning on where to go next in what you’re doing. I’m more than happy to have conversations and coaching with the challenges that you’re facing.

I say this and I mean this not to embarrass Corinne, which is the fun part. She’s one of the best minds in this business. If anyone has the opportunity to have fifteen minutes of her time, one-on-one, it will be fifteen minutes of the best time you can get for your business. She’s being generous. I hope she doesn’t get a crazy amount of emails. Take mercy on her. Thank you, everybody, for joining. Corinne, thank you so much for doing this with me.

We’ll probably do it again. Thanks, everyone.

Important Links

• Corinne Shindelar

• NCG

• INFRA

• Hirshberg Institute Conversations

• Non-GMO Project

• [email protected]

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