Factors to consider in listing as a foreign supermarket supplier
New opportunity for African suppliers
Real disposable income in many Western nations is dropping – this means that consumers are aiming to reduce their day-to-day spending. Some budget conscious consumers are switching from established or ‘high-end’ supermarkets to lower priced entrant grocery stores. For example, in the UK, German Discounter market insurgents like Aldi, Lidl and The Co-Op are rising in market share – significantly. This switch of consumers to discount grocery stores provides an opportunity for foreign suppliers, as discount stores are known to be more experimental with alternative and lesser known suppliers, products, and places of origin.
Currency differences also bring about factors which allow for this increased demand for foreign suppliers:
- As inflation is hitting developed nations, supermarkets are under pressure to provide better priced alternatives.
- UK currency’s depreciation compared to Dollars and Euros is causing UK Buyers to preferentially source from locations outside of Europe in other currencies, like Rands;
- Many foreign consumers have a high acceptability of emerging markets products and specifically the quality associated with South African products.
However, listing as a retailer in international supermarkets is not easy. Here are some tips for your best chance of success.
Product entry & listing in foreign supermarkets supermarkets
What additional challenges do suppliers need to consider when selling to foreign markets?
The following differentiators are typically where local suppliers are stronger, and needs to be addressed if wanting to make a success in a foreign market:
- The level of off-shelf support gained
- Promotional support
- Distribution & logistics
Large/medium size companies more often than not succeed in entering foreign markets, but two thirds of small companies’ new brands fail. Not being able to overcome the factors listed above is one of the main reasons why small companies fail.
What do international retailers expect from suppliers?
From retail buyer feedback, these were the top 3 golden rules for suppliers:
- Market knowledge – know the market: the supermarket’s competitors and your competitors.
- Product knowledge – know your product’s competitors and where yours stands out.
- Product evidence – compelling evidence that there’s a need for your product in the market.
They expect you, as the potential supplier, to know your product, to know your competitors, to know the market, to know the supermarkets, and above all, to have a concrete business plan and a product evidence based offer to them.
The key to having all of these in order is to see things from the buyer’s perspective. The buyer needs a good reason to buy your product.
- Can you provide the buyer with real evidence to pack up your Value Proposition?
- Will it drive more volume than other brands?
- Will it drive more margin for the buyer?
- Is there a clear consumer demand for your brand?
Becoming a listed supplier in foreign supermarkets is a great way to grow your business’s reach. To become a listed supplier, you must first understand how to approach buyers and know the kind of things they look out for. If not prepared in the above manner, it will be a challenge to get good results from a meeting with a retail buyer. Once your products reach the retailer’s standard, and you’re clear on your business plan and product evidence, you should apply to become a listed supplier.