The Value of Placement in a Growth Retailer as a Young Brand
Many have forgotten how Walmart, specifically, their Supercenter format provided mainstream CPG a single retail account that generated double-digit revenue growth for years in the 1990s and 2000s. It was a bargain with the Devil, though, because it compressed net margins for those brands by shifting a lot of volume downmarket. There was incremental growth, but overall, Walmart hurt long-term profits for many public companies. They had to make it up with M&A for the most part.
Premium CPG brands, however, have something much, much better than this. They have emerging urban retail chains like Foxtrot and Amazon Fresh. Both add stores annually (albeit much less quickly than Walmart did in the 1990s and 2000s). And annual store growth can bring significant volume growth for a Phase 1 or 2 brand. More importantly, they serve as self-funding marketing directly into high-value geos (or zip codes) full of post-grad educated HHs that tend to buy half or more of their groceries in premium form.
Although getting into Amazon Fresh’s system is not straightforward, and brands already selling in Whole Foods will have an advantage, it’s worth pursuing the marketing benefit I just mentioned.