Thinking ‘Small’ on a Big-Time Challenge

It’s a problem as old as the food industry itself.

Big retail chains get lots of attention and resources from suppliers, while smaller, independent retailers are often left behind without access to innovative programs and timely access to new products. This challenge has grown in recent years as big chains and large suppliers launch into collaborative partnerships.

Here’s why this is a concern. Big innovations often start at smaller, independent retailers. These companies have an outsized impact. They are very good partners for testing new products and are deeply embedded in their communities.

Now there are new reasons for suppliers to revisit their relationships with smaller retailers. First, we can finally measure the true size of the independent retail sector, and it’s significant when taken collectively. A first-time study unveiled by National Grocers Association earlier this year found this segment is responsible for about $130 billion in annual sales, and accounts for close to 1% of the U.S. economy from a GDP perspective. That was probably a surprise to many observers, noted Peter Larkin, president and CEO of NGA.

Second, independents are increasingly in a position to be at the center of shifting demographic trends. For example, many locales are being transformed by surges in ethnic populations. Independents are nicely positioned to react quickly with their hyper-local store formats and merchandising strategies.

Read more: Independents Post Sales, Profit Gains

Here’s one model for how suppliers can work with smaller retailers. This week SN saluted Kraft Foods for its support for small chains and independent retailers. The award was part of SN’s annual Supplier Leadership Awards program, which is intended to spotlight manufacturers that are on the leading edge of partnering with retailers.

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Here how Kraft is doing a very good job working with independents:

• Designing programs tailored to the needs of specific stores and neighborhoods.

• Providing resources for exclusive promotions and events at smaller retailers.

• Urging other suppliers to collaborate more with independents by sharing data and information about categories and trends. 

Suppliers should take note and commit to deeper partnerships along these lines. This isn’t a charity effort for small retailers. It’s good for suppliers, and it will further energize an innovative segment of the industry.