Why a Dual Physical Channel and DTC Strategy Leads to Success

“Retail is not dead,” said Meagan Nelson, director of SPINS Retail Partners. “Mediocre retail is dead. If you’re going to be mediocre and like everyone else or if you don’t have a differentiation strategy, yes, you’re going to die – you’re not growing and changing with the consumer. But for these brands which are? “There is strong growth in all categories.

Nelson joined moderator Bill Capsalis, Executive Director of Naturally Boulder, and Perteet Spencer, Co-Founder of AYO Foods, to discuss how brands can be part of this growth in the Yes Retail is Still Relevant! Why a Dual DTC and Retail Channel Strategy Works Best Panel Session at Natural Products Expo East in Philadelphia. (Editor’s note from December 27: the replay is currently unavailable.)

How the pandemic accelerated change

Five to eight years ago, when natural product brands shared their strategies with Capsalis, they expected about 15% of sales to come online, he said. “Now it’s more like 40%. And last year we saw some planning for 100% online.

“E-commerce was always coming, especially on stable shelves. Other areas, like frozen and fresh, are much more difficult,” said Nelson, who works with more than 200 retailers to understand trends. COVID-19 hastened its arrival by at least five years, she said. “Necessity breeds many inventions.”

And the evolution of chains is not going to stop. “It’s not going to get any easier. The future looks complex. There will always be two channels… one day three, four and maybe five.

Choose your channel(s)

A food industry veteran with years of experience at SPINS and General Mills, Perteet Spencer saw a gap in the market that she passionately wanted to fill. The West African food she grew up with was missing from the mainstream market. Together with her husband, Fred, she created AYO Foods as a platform brand to celebrate the ingredients and flavors of West Africa. “AYO” means “joy”, in Yoruba, a nod to the joy of sharing with family and friends. The company launched in July 2020. “Our pandemic baby,” Spencer said.

The brand’s first retail partner was Whole Foods. It sold off shelves in 50 outlets in the South West. It will be sold in 3,500 retail stores by the end of 2021. Brick and mortar was simply the most practical choice for frozen foods, as shipping on dry ice is prohibitively expensive. “Frozen was super intentional for us,” says Spencer. The Spencers wanted consumers to experience all the flavors of West Africa and believed the best way to do that was to offer frozen meals that were easy to enjoy after three minutes of heating.

They used the pandemic to refine their strategy and pivot as they scaled, adding three more frozen items and two stable, e-commerce compatible hot sauces. Since the brand primarily offers frozen products, the company plans to pursue a plan to sell primarily (85%) bricks-and-mortar for next year, then scale as AYO’s portfolio expands. will diversify.

For AYO, online channels and retail channels “play really important roles”. It’s essential to clarify the experience you want the consumer to have in each channel and to determine “how to present yourself in each to most effectively meet those needs,” she said. For the web, that meant finding an expert partner. “E-commerce was not something I spent a lot of time in. Our partners were invaluable in helping us get started and thinking about the strategic role of the channel. They were key in helping us get rich information that also informs our brick and mortar strategy,” she said.

Spencer pointed out that how a brand leverages different channels is not a one-size-fits-all proposition. The optimal mix of channels for your brand should use physical commerce and e-commerce to complement each other and drive brand growth, she said.

Tasters and taste makers

The Spencers anticipated that the launch of AYO would be primarily in stores, with in-store sampling to showcase the brand. The pandemic shattered those plans. “It forced us to be sharper marketers,” Spencer said. They had to think hard about how to create the online sampling experience. They produced a slew of virtual live events where they brought people into kitchens to experience their food. They sent samples directly through partners so consumers could try it out. “And, we’re so excited to be at a show like this to put our food in people’s mouths,” she said.

To help break down barriers between AYO and people who may never have considered West African cuisine, the Spencers have teamed up with beloved Top Chef finalist Eric Adjepong, a Ghanaian-American known for his passion happy for West African foods and flavors. Adjepong helped create two dishes for the brand. “Partnering with someone like Adjepong makes it easier for people to understand foods they’ve never tasted before,” Spencer said. She encourages brands with more disruptive products to think seriously about who can help amplify the brand proposition.

Make sure that proposition is articulated seamlessly across whatever channels you choose, Nelson said: “You have to have a consistent voice. One-channel marketing benefits all channels.

Panelists agreed that retail, for some, is still relevant. And, Capsalis notes, it’s still not easy or cheap. “Don’t fall for the old game that it’s cheaper to sell in DTC than in retail. Neither is cheap.

(Editor’s note from December 27: the replay is currently unavailable.)

Watch the replay

The Natural Products Expo East 2021 session Yes, retail is still relevant! Why a Dual DTC and Retail Channel Strategy Works Best is available for replay on the Natural Products Expo Virtual community platform.

Tanya J. Hill