Power Pivoting in Consumer Products

The way we shop for food changed over the past eighteen months - along with most every other facet of our world. COVID, forced the world to think and act differently about a great many things. The food retail channel of distribution and the consumer products manufacturers who sell to food retailers were challenged to develop methods to meet consumers new needs and to adjust, and adapt as rules for safety changed - sometimes daily. As with other industries, there were heroic successes and epic failures as companies on all sides of food retail tried to find a course through uncharted waters. Many companies made choices about whether and HOW to play offense or defense. Some held their ground and considered it a victory while others experienced accelerated growth as they considered options, assessed risk, and made decisions for action in a time of unprecedented change.

For FOOD RETAILERS, the list of power pivots included on-line ordering, curbside pick-up, direct to door delivery, contactless payment, and third-party partnerships which helped their customers obtain the food they needed without ever stepping foot into a brick and mortar store. As in-store foot traffic dropped by double digits for most food retailers, the surge in e-commerce food purchases tripled overnight. Incisiv’s graph on sales projections shows digital sales in the food channel will reach 20.5% by 2026.

Most major food retailers focused on upgrading their digital platforms as it became apparent that remote shopping for food was a legitimate shopping shift that was much more than just a temporary solution to COVID.

This shift in food buying behavior in a channel of distribution that has historically been slow to change, represents a tremendous opportunity for retailers and suppliers that are able to recognize opportunity and make adjustments to seize the moment. As the digital business for food continues to grow, retailers will be making even more strategic and intentional “pivots” like aggressively upgrading technology, shifting operational priorities, reallocating resources, adjusting profitability models, and trying to retain customer loyalty with outstanding customer service.

For CONSUMER PRODUCTS COMPANIES, this shift in retail buying behavior has provided many “power pivot opportunities” as they adjusted to the quickly changing world of food buying in the era of COVID. Here are a few great examples of consumer products companies that shifted on the fly to leverage the opportunities caused by the Covid crisis.  

Card Isle is a print-on-demand greeting card company that found a niche with Florists who wanted to offer greeting cards as an upsell to their floral arrangements. They launched their solution over 6 years ago and have been refining and perfecting the business model in that single channel of distribution. As the “Pandemic shopping shift” to digital became a way of life for food retailers, it was clear that not EVERY product in the traditional store was suited for the digital shopping experience. Greeting Cards were showing up as a casualty - along with impulse items at the check stand and new products hoping to gain “trial” through in-store shopping. Food retailers realized there was an opportunity to improve the profitability of their digital market baskets if they could find a way to get consumers to add greeting cards back into their baskets. What was needed was a digital card department for the online shopping experience of their consumers. Card Isle had the solution ready to go having perfected the seamless integration of a digital greeting card department directly onto the e-commerce platform for over 400 Florists and many pure play e-commerce retailers around the country. Their “virtual” card department with over 25,000 creative cards is organized in the same way a greeting card department is laid out in traditional retail stores which makes it very intuitive and easy to shop for consumers. 

Once a consumer makes a selection, and personalizes it if they wish, the cards are printed on site in-store making it easy for a store clerk or “picker” to add the card to the market basket.

 Card Isle, recognized the opportunity, made the decision to pivot from a single channel of distribution and began introducing this digital card department to food retailers in mid 2021. They formally introduced their concept at the National Grocers Association trade show in Las Vegas and quickly turned heads. Food retailers, wanting to reclaim one of the most profitable categories in their store saw this as a perfect pivot. Within four months of the NGA introduction, they have commitments from four traditional food retailers which plan on offering Card Isle on their websites in time for Valentines Day 2022. Besides the incremental profit, one of the most common comments heard from retailers is the Return on Space from this solution (which only requires counter space for a small printer) vs a traditional card department which typically takes up 100 linear feet or more of selling space in the store.

At a time when many consumer products companies were pulling back, cutting resources, and focusing on survival - Card Isle spotted an opportunity to expand their distribution and diversify their retail base… and took action.

Pivot: Recognizing an opportunity to diversify channels of distribution, they allocated resources and pursued a new initiative to expand their distribution in a time of retail uncertainty. When most companies were playing “defense”, Card Isle played “offense”.  

Result: The return on investment for introducing a digital option for greeting cards to the food channel of distribution has been excellent. Within 4 months of implementing the food strategy, 4 food retailers have come on board and several more are in the pipeline for early 2022 implementation.

 HyaGlo by Cogent has great products for skin care based on a concentrated hyaluronic acid formula which helps restore and rejuvenate skin by adding moisture to dry, over-washed, over-worked hands. With most of their distribution concentrated in the specialty channels of vitamin stores and health food outlets, they relied on a broker network of independent sales reps for the majority of their “brick and mortar” sales. When the pandemic hit, their "pivot" was threefold: 

1) They completely switched their sales model from a broker network with independent sales reps (who, as a result of COVID, were no longer traveling to stores to make sales calls and were working their territory via phone and email) - to a direct sales force with a beefed up call center and a direct connection with retailers via phone and email.

2) They changed the look and feel of their skin products with new bottles, updated packaging and marketing messages targeted at customers who need their products to help protect and heal their skin which dries out quickly with increased hand washing due to COVID precautions.

3) They consolidated their ecommerce business, cleaned up their network of sites offering products on Amazon, and enforced policies and price points to leverage the benefits of promotions and marketing initiatives on Amazon.

Those marketing initiatives have positioned Cogent to expand their channels of distribution in the very near future.

Pivot: Bold action in a time of uncertainty to reorganize the sales strategy, rebrand and repackage their premier products, and consolidate Amazon e-commerce business.  

Result: Sales to brick and mortar took a slight dip of 5% in the year of COVID but profitability on those sales increased by over 10% by eliminating sales commission to their third-party independent sales force. In addition, relationships with retailers increased by shifting to a direct sales model allowing for clearer communication, more successful promotional opportunities, and better feedback. Rebranding and repackaging their products with a more upscale look, positions HyaGlo as a more upscale brand at a moderate retail price in a crowded category dominated by large brands with inferior products. Consolidating over 50 online customers selling HyaGlo products on Amazon to a single customer resulted in a 5% increase in sales with better control over marketing, promotions, and pricing. 

EverlyWell is a home diagnostics company founded by Julia Cheek who’s had great success offering consumers reliable home tests for a variety of health and wellness issues. Most popular tests include Food Sensitivity, Metabolism, and Women’s Health. Within the past few years, several major brick and mortar retailers have recognized the trend for home diagnostics and have added whole sections of shelf space for a variety of health care kits. Test kits are purchased at retail, samples are self collected at home, and the results from accredited labs come with recommendations for better health management. During COVID, with foot traffic down in most brick and mortar stores, many consumer products companies put new product development and launches on hold….. not EverlyWell. Recognizing the need for an easily accessible reliable, and FDA approved COVID Test, EverlyWell developed one of the first home test kits for COVID. 

 At first, the test was only available on their web site - direct to consumer. That has recently expanded to a number of retailers who were willing to offer the test to consumers as a public service - no one in the supply chain receives any profit from the test. It has been a huge success and a great marketing tool for brand awareness and validating home medical testing as a viable movement.

Pivot: When most consumer products companies put a hold on new product development, EverlyWell went the other direction and created a home test kit for COVID as a line extension to add to their growing portfolio of health and wellness test kits.

Result: Responding to a health need in a time of worldwide medical distress helped further brand credibility for EverlyWell and continued to establish it as a responsible and ethical health and wellness testing option. 

 Unearthed is a Food Group from Europe specializing in fresh olives, cheeses, charcuterie, and other specialty foods. They introduced their products to many retailers and distributors at the Expo West trade show several months before the COVID outbreak. They were looking for retail introductions and a path to get their products into the U.S. market. Their signature product was fresh olives from Spain that were packaged in small plastic tubs with very little brine. The packaging and overall approach to Olives and Cheese resulted in an authentic and flavorful experience.

They were just starting to turn heads with retailers like Kroger and Albertsons when COVID hit and international business travel restrictions changed launch plans. Two years after that round of introductions, those same U.S. retailers remembered their tasty products and clever packaging and are looking for solutions to traditional U.S. olive bars which, for the most part offer salty, soggy, expired Olives in a serve yourself, unsanitary, bucket of brine. Most food retailers have taken out olive bars altogether and are looking for an alternative way to deliver a better product to their consumers in a more sanitary and safer package. Unearthed demonstrated patience and perseverance during the peak of the pandemic and are reviving their push to the U.S. Market and finding a receptive audience and interested retailers.

Pivot: Unearthed created a superior package to deliver a superior product to U.S. consumers and had the patience to wait for better timing. Their commitment to authentic product and clever packaging is beginning to pay off in a very big way for this European company.

Result: After a “COVID break”, they are reviving their plans for entering the U.S. market and many of the retailers that were introduced to their products pre-pandemic are seeking them out. Watch for them in a food store near you soon.

Conclusion - All of us in consumer products were dealt the same COVID hand. For some, it has meant new opportunities and growth. For others, it became an obstacle too big to overcome. Keeping a cool head and a steady hand along with an open mind and the ability to think outside the “Pandemic Box”, paid off with some amazing solutions and responses. New ideas in a time of crisis puts a premium on risk assessment as part of a rigorous vetting process. Even with thoroughly thought-out options, nerve and leadership are required to move forward in new directions in uncertain times. It’s a great reminder to keep a clear head and an open mind as we start a new year. 

Greg Hatten is an international consumer products consultant and an expert in launching new products with retailers throughout the United States. Greg’s experience in getting products “retail ready” comes from a long career as V.P. of Sales at Hallmark Cards and Chief Merchandising Officer at BiMart out in the Pacific Northwest. Known for creative thinking outside the box, he has a reputation for problem solving and adding value as a trend watcher, a thought leader and an influencer.