Selling CBD Products at Mass Retail: A Category Manager's Perspective 2/13/2019
One thing that was made clear to me during ECRM’s Hemp/CBD Health & Beauty Care session last month was the fact that for many startup CBD brands, mass retail is a completely different animal than dispensaries and independent natural products retailers with which they typically do business. For one thing, while they are very interested in entering the CBD arena, they are taking a more conservative, “fast-follower” approach, carefully vetting suppliers, their products, and their supply chains before jumping into the segment.
Mass retail also means dealing with wholesalers, brokers, and a lot more paperwork than the average CBD startup brand is used to dealing with. At the same time, many non-CBD CPG brands that already have relationships with mass retailers are beginning to launch CBD products, so competition is going to be pretty strong in this market.
During the session, ECRM VP of Content sat with Becky Shipp, Category Manager for Health and Personal Care at Ahold-Delhaize-owned Giant/Martins, to get a mass retailer’s perspective on the CBD products industry.
ECRM: Can you give us an overview of Giant/Martin's and why you’re here meeting with CBD suppliers?
Shipp: Giant/Martin's is based in Harrisburg, Penn., and we have just under 200 stores. I manage the Health and Personal Care desk. Our customers are looking for products that will make them healthier and also help with pain and things that CBD will hit. I came to this session looking for those products and looking for suppliers that can partner with us in this industry that everybody's trying to figure out.
ECRM: You've been through a day of supplier meetings -- what were some of the issues that you touched on with these companies that are relevant to larger retailers that they may not be facing in dealing with the independent chains?
Shipp: The biggest topic was how to get product to the stores. They're not familiar with the distributors that a company as large as us uses. They aren't really familiar on how to make a sales call with a buyer, and it's really hard to understand what grocery stores legally can put on the shelf. There is a lot of gray areas and until the FDA gets involved, it’s difficult to understand what we can and can't do. There're a lot of smaller CBD suppliers, so we need to meet with all the companies and understand who the true partners are. We need a strategic plan, we need to SKU rationalize and brand rationalize and make sure that we're not just putting everything on the shelf.
'We need a strategic plan, we need to SKU rationalize and brand rationalize and make sure that we're not just putting everything on the shelf.'
ECRM: During one of your meetings we happened to sit in on, you discussed the fact that you're looking for a partner that who can also provide some guidance in navigating the regulations.
Shipp: We need help with the legal piece, as well as how we educate the customer. The FDA's going to place a lot of rules on what can be on the package, so because of that, we're really going to have to use education at the shelf and education through digital means as well as through the pharmacy.
ECRM: What about breadth of products? What are you looking at now in in the hemp and CBD realm?
Shipp: Well, my thoughts on that subject changed from the beginning of the day through the end of the day. At the beginning of the day I was really thinking more along the vitamins category, looking at different ways to have the vitamins, pills, drops and things like that. As the day progressed, I saw nutrition, I saw a lot of topical things, just all different other categories that I hadn't really thought about, even bath bombs. And they're getting into a lot of new categories; they've pretty much covered everything. Now I'm looking at the category more as a destination and these meetings made me think about the category a lot differently.
ECRM: Would you envision a CBD section in the stores?
Shipp: I think that's what's going to be the future. You might have the topicals, the drops, the pills, sprays and water all in one section.
ECRM: Dave from A.T. Kearney recommended that larger retailers might want to start of slowly, maybe add an impulse area or throw in a shipper that's temporary so you can test the waters out without making too much of a commitment.
Shipp: Correct. You also have to be careful with the price point. I think consumers are much more eager to spend the price point in a specialty store, but in a grocery store you have to be really careful with price. They're already spending money in a grocery store and to add another higher price point can sometimes be a challenge.
ECRM: As a larger retailer, for the CBD suppliers out there, what would be an ideal checklist -- some things that they will need to have in place in order to get your confidence to do business with them?
Shipp: I always say, "a vendor’s purpose is to make our jobs a little easier," and I feel that they need to come with a plan and don't come in just to sell their products. They need to make sure they can go through the distribution centers that I use, they need to come with a strategic plan, and have somebody to call on us and be able to get through all the paperwork. The load of paperwork that's involved is probably something they're not used to if they're dealing direct with a natural food store, and we don't want to have to train our vendors on how to do paperwork. They also need a very specific SKU count and a promotional plan to educate the customers.
ECRM: Will they be dealing with different category managers as well?
Shipp: Yes, so they're going to have to get used to that, too. You're not going to be dealing with one store owner and then that's it; you're going to be dealing with several category managers.
ECRM: Any other parting advice for the suppliers based on your meetings today?
Shipp: I think it's exciting. I think that there's a need out there for customers and personally, I think it's a great product. I think that consumers are just waiting, I think they're eager. So it's time, we just have to figure it out together.
Full Q&A with ECRM's Joseph Tarnowski and Giant/Martin's Backy Shipp