Negotiating for profit
For small to medium-sized food businesses, getting your product onto supermarket shelves is a significant milestone. However, negotiating a deal that ensures profitability—and keeps your product on those shelves—is just as important.
Before sitting down with buyers, it’s critical to have a clear understanding of your total cost of production. This includes not only manufacturing costs but also packaging, transport, marketing, and any promotional activities required by the retailer. Taking the time to fully assess these costs is an investment in your business’s future. If you're unsure, seek professional advice—incorrect pricing at the outset can jeopardise profitability, and once a price is set too low, it can be extremely difficult to recover.
Prepare before you negotiate
Ahead of any negotiation, do your homework. Know your unique selling point (USP)—whether it's local sourcing, sustainability credentials, health benefits, or heritage. Understand the product category within each retailer, get a sense of expected run rates, and benchmark the retail pricing of competitor products.
It’s essential to enter discussions with a clear negotiation plan. Define your ideal outcome and identify areas beyond price that are open for negotiation, such as:
Distribution
Merchandising
Promotions
Trade terms
A well-prepared approach gives you flexibility and a stronger position at the table.
Staying on the shelf
Securing a listing is only the beginning. Retailers expect to see sales momentum. Engage with them on shopper marketing initiatives—from in-store tastings and signage to aisle fins and shelf talkers. If budget permits, amplify your efforts with social media campaigns and PR to drive consumer awareness and footfall.
Build strong relationships
Be professional but personable in your dealings with buyers. Remember, their goal is to grow their category. Keep them informed, deliver on your commitments, and maintain regular contact. Over time, a trusted relationship can unlock further opportunities to increase consumer engagement with your product.
At ifac, we have a dedicated team of food retail specialists ready to support you as you navigate the challenges of dealing with retailers. From negotiation strategies to ongoing relationship management, our experienced team is here to help you succeed in this competitive environment.
If you're starting your journey with retailers or looking to strengthen existing partnerships, get in touch—we’re here to help.