91Ï㽶»ÆÉ«ÊÓƵ

You should weigh up the advantages of disadvantages before deciding to supply your food or drink products for a supermarket or retailer to sell. This will help you decide if it is right for your product and business plan.

Advantages of supplying to supermarkets

The benefits of selling through supermarkets include:

• It is easier to deal with one large customer rather than a number of smaller independent customers.
• You can increase sales with access to a larger customer base.
• You can increase brand awareness of your product with possible nationwide coverage.
• It may be easier to access financial assistance as banks may be more willing to lend to your business if you have a supplier contract with a well-known supermarket.
• Supermarkets have a lot of experience in selling different products and may be able to offer you advice and guidance that will help increase your sales, eg through product design and packaging design. 
• Some supermarkets or retailers run business improvement schemes that can help their suppliers improve process efficiency and grow their operations.

Disadvantages of supplying to supermarkets

Some of the downsides of selling through supermarkets are:

• The price you get for your product will be much less than if you sell directly to customers.
• You could become vulnerable to a drop in demand, price decreases or a squeeze on profit margins from the supermarket.
• You will be under pressure to keep up with demand if your product sells well. You may have to invest in new equipment or expand premises to manufacture more of your products.
• Your product may only be given a trial period on the supermarket shelf.
• Some supermarkets or retailers may insist on being the exclusive seller of your product or may insist on your selling elsewhere at a higher price.
• Some supermarkets or retailers may audit their supplier to ensure certain criteria are met or insist on a business achieving certain food safety accreditations before being considered as a supplier

If you think supplying to supermarkets is a good option for you, see if you are ready to sell your product to a supermarket and find out how to pitch your product.

You need to fully understand your product, its unique selling point and the market before you approach a supermarket with a business pitch.

Branded or supermarket own brand product

There are essentially two options when supplying your food or drinks products to supermarkets or other retailers. The first is supplying your product labelled with your own brand name. Your product would need to be entirely unique and different from other products they currently stock in order for the supermarket or retailers to be convinced to sell your branded product.

The other option is to supply your food or drinks product unbranded, known as a white label product, which the supermarket will sell under their own brand, eg Tesco Healthy Living. Supplying white label goods may mean you sell more products to the supermarket or retailer but the price they pay you is likely to be a lot lower than if you supplied your branded product.

Research and preparation before pitching to a supermarket

Before approaching any supermarket or retailer with your business pitch you should do your research by going into stores and looking at their existing range of products. Supermarkets will expect you to know your product and your market very well. You should ask yourself:

• Do I have a finished product or just a prototype? You may need to hit the ground running. If a supermarket agrees to sell your product, they may demand delivery within weeks.
• Where would my product fit in? Study the store aisle-by-aisle so you know exactly where you think your product should be located on the shop floor.
• How does my product differ from other similar products currently on offer? Does it fill a gap on the supermarket shelf? What sets my product apart from my competition? Supermarkets want to diversify their product range and not just replicate what they're already offering.
• Is my product visually attractive? Does it stand out from the crowd? Think about the branding, design and colour of your product and compare it to similar products already on supermarket shelves. See using design to boost our sales - Mullins Ice Cream.
• Would my product compete with a supermarket own brand product? If a supermarket thinks your product is just a direct competitor for a current own brand product they are not likely to be interested.
• What about price and quality? Look at the prices and quality of similar products. How does my product differ?
• What type of person shops in this store? Is the type of person who shops in this store likely to buy my product? Could my product attract new people to this store?

Don't be afraid of seeking advice from brands or local businesses that have their products listed in supermarkets or retail outlets that you are targeting. Some businesses are happy to offer advice to others.

After completing your research, you should prepare to pitch your product to supermarkets or retail outlets.

Once you have fully prepared and researched the market you should feel confident to pitch your product to supermarkets or retail outlets.

Pitching your business

Ensure you have a marketing plan in place and be prepared to present this to a supermarket or retailer. This should outline how you will be able to cope with meeting demand and any potential increases in demand for your product. See how to write a marketing plan.

The supermarket may also carry out some financial due diligence on your business. If your product is already on sale before you approach a supermarket you should provide details of sales figures and customer feedback or testimonials. Always bring samples of your product when meeting a supermarket buyer.

Supermarket jargon

Familiarise yourself with supermarket jargon. Make sure you know the difference between net profit, operating profit and gross profit. Supermarkets will also talk about units which is the word they use for amounts of your products. Using the jargon supermarkets use will show you are professional and the more prepared you are the less intimidated you will feel when you meet with supermarket buyers.

Supplier certification and food safety standards

Although not a requirement some supermarkets may look more favourably on businesses that are supplier certified. is a food-safety standard that is granted to suppliers who are able to demonstrate that they are able to produce safe and legal food and are committed to continually meeting the requirements of the SALSA standard.

The can be used by any food processing operation where open food is handled, processed or packed. The standard can help you establish good manufacturing practices so you'll produce safe, legal food products that meet the quality levels expected by your customers.

How to approach a supermarket or retailer

If you’re interested in becoming a supplier partner to a supermarket, you will typically have to submit a proposal or fill in an online form. Most supermarkets offer information on this via their websites:

• (including Spar, Eurospar and Vivo)

The list above is not exhaustive so you could search for other supermarkets that may consider stocking your products.

Other supermarkets with a presence in Northern Ireland include Marks & Spencer, Dunnes Stores, Musgrave Group (brands include SuperValu, Centra and Mace), Costcutter, Iceland Foods Ltd and Today's Group.

Making contact with a supermarket

Supermarkets usually employ buyers for different product areas so make sure you speak to the right person. Don't be put off if you are a small business as supermarkets currently sell products from small local suppliers. Some retailers might decline your product initially. It usually pays to be persistent and you might be more successful through a face-to-face meeting rather than email or telephone contact. If the supermarket doesn't seem initially interested you could consider offering a trial period for your product.

Once you are successfully selling through one supermarket you may find it easier to get listed by others.

Before signing a contract with a supermarket, make sure that you consider how you will meet supermarket demand and manage the supermarket supplier relationship.

Before signing a supplier contract with a supermarket, it's crucial for business owners to carefully consider several key factors. From pricing and shelf space to exclusivity and supply terms, understanding these aspects is essential for building a successful partnership. Further details on each of the factors are outlined below.

Price

Determine margins needed for viability and ensure the price aligns with this. Watch for clauses allowing re-negotiation of price, which could reduce profit margins later. Consider how supermarket promotions may impact prices, potentially affecting profit margins.

Shelf space

Map out the allocated shelf space, including the number of stores, product placement, and duration. Understand the distribution across stores to optimise visibility.

Exclusivity

Assess any demands for exclusive selling rights and ensure a realistic expiry date clause is included if signing an exclusive contract.

Supply

Understand the quantity and frequency of supply required. Accurate supply agreements facilitate production and delivery planning. Avoid overpromising to secure the contract, as this may harm your business reputation.

Payment terms

Clearly define payment terms to forecast cashflow accurately and ensure timely payments.

Consider seeking legal advice from a solicitor before finalising any supplier contract with a supermarket. See how to choose and work with a solicitor.

Fulfilling orders and selling in supermarkets

You will need to work out how you will deliver your food or drink products to the supermarket. Few supermarkets or retailers accept direct deliveries to a store, so you will have to supply your products to a central distribution centre. To reduce delivery costs you could look at sharing deliveries with another local supplier.

You should make the effort to promote your product in-store. For example, you could focus on selling points such as making your product as regionally identifiable as possible. This is something that customers are currently keenly aware of. Make sure your product is displayed properly and look at doing in-store tastings. It is only the start to having your product on the supermarket shelf - you must work to keep it there and hopefully sell more or other product ranges.

Relationships between the retailers and the companies who supply the products they sell can sometimes be complicated. You should try to establish good relationships from the outset when selling to new supermarkets. 

Supermarkets exert considerable buyer power and their behaviour and buying practices can adversely impact suppliers. Common concerns include:

• delayed payments to suppliers
• demands for lumps sums in order to continue stocking products
• making suppliers pay for better positioning on shelves

In the UK, legislation is in place that aims to ensure retailers treat suppliers fairly and lawfully, in good faith and without duress.

Groceries Supply Code of Practice

The (GSCOP) is legislation designed to regulate the relationship between supermarkets and their suppliers. It puts certain restrictions on the purchasing activities of the biggest supermarket chains, aiming to protect suppliers from some of their more extreme buying practices.

Which supermarkets must abide by the Groceries Supply Code of Practice?

The code only applies to certain 'designated retailers'. To be classed as a designated retailer, a company's UK grocery sales turnover must be greater than £1 billion. Because of this, the list can change.

Currently, the following retailers are covered by the code:

• Amazon
• Aldi Stores Ltd
• Asda Stores Ltd
• B&M European Value Retail SA
• Co-operative Group Ltd
• Iceland Foods Ltd
• Lidl GB Ltd
• J Sainsbury plc
• Ocado Retail Ltd
• Marks & Spencer plc
• Tesco plc
• TJ Morris Ltd (trading as Home Bargains)
• Waitrose Ltd
• Wm Morrison Supermarkets plc

What protections for direct suppliers are set out in the code?

The Groceries Supply Code of Practice requires the regulated retailers to deal fairly and lawfully with their direct suppliers across a range of supply chain practices. These include:

• making payments on time
• not varying supply agreements without notice
• paying compensation for forecasting errors
• not charging for shrinkage or wastage

There are also restrictions on listing fees and marketing costs as well as particular processes that should be followed when retailers are de-listing suppliers. This list is not exhaustive. Full details of the provisions are available in the Groceries Supply Code of Practice.

Dealing with issues

If you are in a disagreement with a supermarket that is selling your product, and the issue falls under the remit of the Groceries Supply Code of Practice, in the first instance you should . If this doesn't help resolve the issue, you can reach out to the Groceries Code Adjudicator.

Groceries Code Adjudicator (GCA)

The GCA monitors and encourages compliance with and enforces the Groceries Supply Code of Practice in the UK. They also investigate complaints and arbitrate in disputes.

The GCA cannot advise you about whether the retailer has breached the code, because they may later be asked to arbitrate on the issue or may launch an investigation into the practice. However, if asked, the GCA Team will often be able to direct you to the relevant part of the code, a case study or guidance. You can contact the GCA Team via email enquiries@groceriescode.gov.uk or Tel 020 7215 6537.

The Adjudicator is not able to consider issues that do not relate to the code. Before raising a complaint with the GCA, read their .

Making a complaint about a supermarket as a direct supplier

If your business is a direct supplier to a supermarket and you feel that you have been unlawfully or unfairly treated by the supermarket, you can complain to the GCA.

You can raise a complaint directly with them at enquiries@groceriescode.gov.uk or use their confidential reporting platform - – if you want to remain anonymous.

If you are seeking arbitration, you should refer to the . You should send the to enquiries@groceriescode.gov.uk and the other party at the same time.