One question I hear a lot from CPG founders centers around how to decide what retailers to launch. To caveat, many variables go into whether or not a retailer is good for you or not. These variables are before you even look at the retailers. Things like, who do I want my customer to be, what is the product, what is the frequency people purchase this product, what is my branding, and more. I cannot emphasize enough how important it is to nail this before scaling. Sure, things change along the way, but dialing in on this early is crucial. After all, entrepreneurship is risky, and you are a visionary founder, this is where you differentiate yourself.

Based on all the work you did honing in on your target customer, this is where you put it into action. Match it up with the right retailer. Are you a more premium product? A value product? Is it a frequently used product, or is it something people only use once in a while? Is it a product that is good for a club? Every retailer you go to should be able to provide some information on who there customer is, and you can do your own research too! Look at basket size, income demographics, shopping frequency, and category behavior - whether that is provided by the retailer or from your own research. Study where your competitors are winning and where there may be whitespace. Visit stores in person and observe who is actually shopping the aisle and how they are interacting with products like yours. When your customer demo and price point, match the retailer’s shopper profile, you dramatically increase your odds of success.

Things are going great, you are in a couple of smaller accounts that really match your profile. Now, it’s time to expand. Then what? It is super important to optimize the right locations. First off, it’s a balance between expansion and cannibalization, you don’t want to hurt those early retailers that took a chance on you, but you do not want to stifle growth, so you need to add incremental locations. Then, with those expansion locations, it’s important to understand their profile in terms of location. Typically, the first locations for any CPG will be single locations or very small chains. Once you are getting into the conversation with larger chains, it is important to evaluate regional chains vs national chains. National chains can be great, but are you ready supply chain-wise to handle them? Even if you are only doing a regional pilot, what happens if they ask to expand, can you handle the additional distribution? I generally recommend geographic density first before national distribution, but a lot changes when you can just inject into the retailer’s distribution and not rely on a distributor.

In addition to cannibalization optimization, it is super important that the retail accounts a CPG brand enters have the potential to hit the velocity needed for the account to be breakeven, if not profitable. Some questions to ask here:

Luckily, there are also many great tools out there that can help with tracking all this, too. It is important to leverage the data here, but there will also be a lot of art to this science in understanding the underlying factors that drive the velocity.

CPG is really interconnected. Which locations you are in, and how well you do in those locations, only really matter if you have enough product to service those locations. That is product is at your distributors, but also at your product level too. I would not recommend relying on your distributors to do the selling for you, but I would recommend maximizing the sales through each distributor, and each of their respective distributor operations centers, by making sure you are in the retailers that come out of that location. Supply chain is a major cost center, with all the deductions and fees, so it is super important to nail this as you expand.

Last, but not least, and arguably most important for a CPG brand, is the feedback loop. Early on, it is super important to be able to react and test as quickly as the archaic retail supply chain allows you to. In order to do this, data access and transparency around the performance are super important. It is also very costly, as data is one of the most valuable things a retailer possesses. I am not saying that you should drastically overinvest to get data, but it is definitely something to ensure access in order to

Bonus: I also would not underrate the importance of being able to run demos in-store. Real-time feedback from customers, plus the opportunity to drive trial and make an impact on customers, is a big difference.

So, what do you think? What factors did I miss? What else is important for CPG brands deciding which retailers to launch? What would you do if you were a CPG founder trying to launch more retailers?

This week, Toast and Instacart announced a big partnership. However, it is not exactly what you think. Here are the key details:

Bullet #4 is what interested me the most. You would think that with this integration, Instacart would want to tap into all the Toast restaurants, but surprisingly, Instacart still has not gotten into the prepared food delivery game. Maybe concerns about canibailziatioin. Regardless, only a matter of time before Instacart does from my POV.

In 2014, two friends from the Marines entered the coffee shop business. They wanted to bring the cafes and coffee shops they saw in NYC to Washington, DC. At its peak, Compass reached about 24 locations, but seemingly never hit product-market fit. That culminated with a bankruptcy filing last month, and a bid from Cafe Nero to buy the assets for pennies on the dollar value of their true value. In the deep dive from The Washington Post, there are a lot of good lessons for retailers. Ultimately, they expanded too fast before product market fit, had leadership partnership issues, were spending too much on capex (especially rent and product development), plus got hit with some major macro-economic issues that were out of control. Good lessons for retailers and aspiring retailers out there - stay disciplined, hit product market fit, and keep capex burn LOW.

Last week, a big milestone occurred. Walmart became the first retailer to cross $1 Trillion in market cap, previously only surpassed by tech giants, like NVIDIA, Apple, Amazon, and others. Despite fierce competition from Amazon, Walmart has been able to succeed by growing its eCommerce business via expanding its third-party marketplace offering and growing the ads business. Investors really like the higher margin of these business units compared to traditional brick and mortar, although these businesses would never be able to exist without the core business. Plus, the core business is bolstered by Walmart being able to attract more high-income shoppers. This milestone comes at a time of transition for Walmart, as Doug McMillon has just stepped down.

It is great timing too, because next week I am going to be diving deep into the Walmart earnings call on Thursday. What do you want to hear from earnings?

In 1992, Eric and Bruce Bromberg, two brothers, founded Blue Ribbon Brasserie, a high-end restaurant. One of the standout dishes at the Brasserie was the fried chicken, so much so that it was eventually spun out to a more fast-casual joint, called Blue Ribbon Fried Chicken, in the East Village in 2013. It was successful, and seemingly an opportunity to take their brand national in a fast casual way. Despite that, and their expansion nationwide with their high-end restaurant concepts, Blue Ribbon Fried Chicken never expanded. That all changed this week, with the announcement that Wonder, the food hall turned food holding company, would be acquiring the brand and its single Manhattan location in the East Village. As for what Wonder plans to do with this new brand, it plans to introduce the brand at existing locations plus open new standalone Blue Ribbon concepts. One interesting aspect of this acquisition is that Wonder already owns a fried chicken concept, Streetbird, in partnership with Chef Marcus Samuelsson. Wonder has big expansion plans, and a rumored IPO on the horizon, it will be interesting to follow along.

Trying out this whole sponsored thing - let me know what you think!

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