Retailers’ Cuts Hurt Independent Marketers

by lisa ~ June 29, 2009

June 29, 2009 - Retailers nationwide are cutting back on the number of products they carry, according to an article in today’s Wall Street Journal. This is great news for the shareholders of the country’s biggest consumer product makers such as Procter & Gamble Co. and Campbell Soup Co. but disastrous for small manufacturers.

Companies ranging from Wal-Mart to Kroger Co. to Walgreen Co. are trying to cut inventory costs and increase the profitability of their house brands. So instead of offering a dozen types of glue or soy milk or hairspray, they are offering far fewer. Instead, they are promoting the top three or four brands as well as their own private label products, which offer higher profit margins.

This means that regional or artisanal food purveyors will have to work even harder to market their wares. Independent marketers’ efforts have long been stymied by retailers’ notorious “slotting fees” - payments they demand in order to provide shelf space in their stores. Now paying those fees may not even be an option if stores are only willing to stock the top-selling brands.

So what’s an aspiring consumer marketer to do? Product sampling at local events such as craft fairs and green markets is obvious. Build a following and ask patrons to join your mailing list. Collect names, addresses, and emails.

Then take your brand online. Social networking is a natural outlet. Owners of small brands have one distinct advantage over the CEOs of Procter & Gamble and Revlon Inc.: They can develop one-on-one relationships with their customers.

To really take advantage of this opportunity, tell your customers how the product is made. Are its ingredients locally sourced? Is it organic? Additive-free?  These too are selling points that smaller consumer products marketers can capitalize on. Not all marketing has to be expensive.

To read the Wall Street Journal article “Retailers Cut Back on Variety, Once the Spice of Marketing,” click here: http://online.wsj.com/article/SB124597382334357329.html?mod=googlenews_wsj

Lisa Tibbitts is a corporate communications professional with an MBA in marketing. Follow her on Twitter: http://twitter.com/FinancialPR.

###