Fitting Into Mainstream

As the specialty food industry gathers in Chicago for NASFT’s Spring Fancy Food Show, the fact that the show is now co-located with FMI’s supermarket convention is a kind of parable for the enormous opportunity and intense frustration that the specialty food industry presents to mainstream retailers.

This issue of FDM focuses on category management, and the dilemma is clear. If a supermarket is going to compete – either for the best customers or against a competitor such as a Wal-Mart Supercenter – clearly it is a not a strategy destined for success to simply duplicate Wal-Mart’s product offering.

So, for a supermarket, handling specialty food is essential. Not only for the profits these products generate but because an appropriate specialty food offering is, along with fine perishable departments, the point of differentiation for one store from another.

NASFT has a terrific ongoing study that cuts to the heart of the matter. It demonstrates that the high-profitability consumer purchases specialty foods. In other words, the specialty food consumer buys more expensive and high margin items.

So specialty foods are a slam-dunk for supermarkets. Which raises the importance of the question: What in the world is a specialty food?

Or to put it another way, if virtually every supermarket should be selling specialty foods, why has the industry needed this whole roster of specialty food shows. Why aren’t these items just incorporated into shows like FMI?

Actually, they are. Specialty foods have been sold for a long time at shows like FMI. But being in the industry teaches one that there are specialty foods…and there are specialty foods.

The NASFT’s research features most prominently what I would call mass-market specialty foods. When studying consumer purchases related to specialty tea, for example, it focuses on Twinings Tea. It does not analyze the effect of a retailer selling any of the dozens of obscure brands of fine tea – many of which wouldn’t even deign to call Twinings a specialty item.

To say this is not to find fault with the NASFT’s methodology. How could they possibly study items so obscure that not a consumer in a thousand recognizes the name? Items are often so difficult to obtain that not one store in a hundred sells the product?

Yet to a large extent, these rarified items are the specialty food industry. They make up the vast bulk of the trade show floor at the big Fancy Food Shows in New York and San Francisco.

Now, after the NASFT study, these smaller producers are standing before supermarkets waving the results, claiming that specialty foods are what attract high-value consumers and urging supermarkets to take in more specialty items and to keep them on the shelves even if the sales aren’t great.

Well to the extent that the NASFT study reminds retail buyers that there is more to life than movement reports, it does good service.

But to the extent that the study is abused as a kind of all-purpose crutch to excuse poor sales, it allows specialty food manufacturers to continue bad habits. Among some portions of the specialty food community, there is a kind of snobbishness, a sense that a product that sells well must have sold out in terms of quality.

But this is simply not true. A brand like Walkers Shortbread is built, first and foremost, on the quality of a product, and it is presented with respect for tradition. Yet it is also expected to sell. And one can purchase it from the finest specialty food store to a single-serve pack at 7-Eleven to a private label presentation at Disney World.

In fact, it is characteristic of successful specialty food manufacturers and retailers that they find bizarre a claim that failure to sell bestows some kind of moral superiority on a product that perversely should guarantee it a place on the shelf.

The truth is that many producers are hobbyists, not prepared to step up to the plate and do what has to be done to earn shelf space. A product can justify itself by its own sales or by its attraction to a certain class of shopper, but one can’t just assert that one’s product is a draw. One has to demonstrate it.

Research – name recognition studies, shopping cart studies – has to be conducted. Even a small producer can study what shoppers who bought that manufacturer’s product in a particular store also bought.

It is unacceptable for specialty foods to be defined as foods that don’t sell well. To point out that category management can’t mean simply eliminating the slowest selling item is absolutely correct, but neither can the slowest selling item be given a virtuous halo because of that fact.

As the industry convenes in Chicago, we’ll be working out the kinks of how a specialty foods show can co-exist with a mainstream food show. Much as every day we have to struggle to resolve exactly how specialty items can best contribute to mainstream venues.