Working with Retailers
The so-called farm to retail spread is often a sore point for producers. Their belief is that the retailer is taking too big a cut for his action. In today’s market place the consumer is king, and the final interface with that consumer is the retailer for at least half the meat consumed in this country.
It is important to note several often forgotten points about the retail market.
To break into the retail market, a slotting fee is paid in order to gain access to shelf space. Then there are requirements for dollar volume that goes through that space in a certain time. These fees are charged because the retailer is trying to realize a specific percent margin on the gross dollar throughput.
To successfully enter this market, you will deal first with top management. If it is a chain operation, you may deal at a regional level and then also with specific stores. Ultimately, you will make the sale at several points because you will need full buy-in at the store level as well as within the appropriate division management of the store.
One of the key considerations for doing business with a retailer is meeting his/her gross margin goals. This can be a problem when you are supplying a value added product such as pre-cooked or case-ready meat items. You may find your product over-priced if the retailer applies his 25 percent markup to already value added product.