How to Win and Grow Your Business at Kroger and Meijer - Ep. 45

Foreign.

Welcome everybody to this edition of CPG Insiders. I'm your host, Dr. Mark Young and. And my co host, Dr. Justin Gerard.

No, no, no, no. Not a doctor. Relax there.

So you don't play a doctor on TV either, do you?

No, no, but I've told that I've got the face for it, so I'll take that.

You know, I actually do play a doctor on TV too.

There you go.

See, you happen to know that. So I'm actually a fake doctor and a real doctor all the time. Gosh.

Amazing.

But you do have an MBA though.

I do.

Yes, you do. So it's, he's not like he's a total rube people. Anyways, you know, we're going to continue, we are continuing with some of our shows that we've been doing that have been retailer specific.

Yes.

So you might remember we did a show, we talked about Walmart today. We're going to do a show where we're going to talk about Kroger and Meijer.

Yes.

Now Meijer, for those of you that are not in the Midwest, Meijer is a kind of a Walmart kind of superstore kind of model up in the, in the Midwest area. And Kroger, I think most people have heard of. Our guest for today's show is Phil and Brent Bortman. Now Phil is the president of Bortman and Associates located here in Michigan. And Phil, you were actually the guy who kicked off Breathe Right strips.

I did, I did. That was very interesting.

And Brent is of course Phil's son, protege. Now the, now the guy doing all the hard work over at Boardman and Associates. And you guys have extensive experience with these two brands. So thanks for being with us. Here's where I want to start. Let's start with who these retailers are. Kroger, Kroger's, what, number two grocery retailer in the country.

I don't know if I can classify them as far I would say they're probably one of the largest grocery retailers in the country. National brand, you know, National. So they have the Kroger banners and then they have Fred Meyer out west, Ralph's King Supers. So Harris Teeter, Mariano's Fries, Roundy. So, you know, Kroger's model is they, they're going around, they're picking up all these, you know, smaller successful grocery retail chains and they're adding them, you know, to Kroger. But they're keeping some of the banners as they are, such as roundies, and then they're also moving some banners Into Kroger. So national retailer, you know, you call it around 3,000 stores. In our world, when we get an item into Kroger, for example, we consider chain wide. Anything from like 1600 to 2000 stores would be chain wide. But their real footprint's probably around 3,000.

Yeah. And I think what a lot of people don't realize Kroger has, they have 2,500 pharmacies and they have 250 clinics.

Which I didn't know.

Yeah. Which I only recently learned about. Now let's talk about Meijer. Meijer is, you know, Michigan based, very Midwest. Tell the audience a little bit about Meijer.

Yeah, so Meijer is based outta Grand Rapids, Michigan. They've got, I think now we're sitting on like 253 doors. They've got mostly, you know, they started out as food grocery. They've moved into the mask. So, you know, they have electronics, they have clothes, they have food. Really good stores. You alluded to at the beginning the show that they're, you know, kind of like a Walmart, Walmart, Target, Mass, you can go for your food, you can go, you know, shop there for pretty much anything.

Now I always look at Meijer as kind of like Walmart with cleaner bathroom.

Yeah, I think that's a good way to look at it.

We should, that's a good comment. We should mention, Mark, that Meijer is a privately held company and Kroger is a publicly traded company.

When I look at the difference of Meijer and Walmart, it kind of gets back to Waffle House.

Oh boy.

Because I always, when people haven't been to Waffle House, I always describe Waffle House as what would happen if you turned a gas station bathroom into a restaurant.

So Meijer also has gas stations. Almost all their locations have convenience stores and gas stations as well.

And so Meijer, if so from, from a vendor standpoint, when we're thinking about a Meijer, they should be thinking about a Meijer. As far as think about it like a Walmart when it's as far as the breadth of products and the selections and the type of things they bring in.

Absolutely. So I would say if you're looking at Walmart, correct to be more like a Meijer. Now if you compare like a Meijer and a Kroger, Yes. Food selection similar. But when you're looking at the health and beauty care site, so you're looking at like shampoo, shave, cream, cough, cold vitamins, the sets, so the planogram where the these items live are going to be a lot larger in Meijer than Kroger. So where for, let's talk about like a vitamin set, for example, you might have 24ft at a Meijer where you have 8ft strictly dedicated to gummy vitamins. At Kroger, you might only have in some stores eight, maybe four feet dedicated to that. To that. So Meijer, when it comes to health and beauty care products, personal care products, definitely a larger area to shop.

So there are there some products that you guys that come into you that you look at and you say this is a great Meijer item, but it's not a great Kroger item or vice versa.

Yeah. So what I would say Meijer is a little more, you know, willing to risk on an item where, you know, it's new, it's new to the market. Not as much data driven. You know, they're a smaller company. They're way more, they're a lot more flexible that way where they, they can, you know, invest in an item and put it into 253 doors. And if it doesn't work out, you know, unfortunately, it doesn't work out where with Kroger it's a larger investment. You know, if they're looking at 2,000 doors, you know, they have to merchandise all those stores. There's a lot more cost that's involved. Which makes them kind of not necessarily leaders sometimes. Yes, in certain categories, leaders. But they like to see, they're definitely more interested in data driven products.

And one of the questions I'll ask you about Meijer and then you can jump into some of your questions there. Meijer has a bit of a pension or a lean toward Michigan products too, right?

Yeah. So actually it's funny, I get a lot of brands and you probably see a lot of brands too that, you know, they started, you know, three, one, three. There's some area codes, some things that are specific to Michigan that, yeah, you can work with Kroger and get some stuff in regionally, but when you work with Meijer, they'll definitely, they really like brands that, you know, made in Michigan are made in the Midwest stuff that their shoppers resonates with their shoppers rather than a full national campaign.

Yeah. And that was going to be actually one of my questions to you, Brent, that you kind of alluded to here. So two things. One was knowing that Meijer and Kroger once privately held, one's publicly held. Do you think that affects some of their decision making when it comes to taking on brands or is it, as you said, Most of it's really business decisions where, like you said, Meyer's more willing to take a risk on a new item because frankly, when they're trying to compete with bigger stores like a Walmart down the street, having something newer first in market is going to help them have a leg up potentially.

Yeah, for sure. So just from my perspective, when I take on brands, and I'll say, hey, you know, I think that we can work this in at Meijer and then maybe a year later, let's get some data, let's see, let's check out sales, and then let's go after that Kroger. You got to keep in mind with, you know, brands, these retailers bring in a lot of brands and sometimes they don't work out and you don't want to take your item. Let's say you're a new vendor, you're smaller, maybe have a smaller budget, and you, you go ahead and you say, hey, let's go right into that Kroger or that Target, you got to remember, if they take you in full chain, if they take you, they can also take you out of full chain.

Right.

And then you have, you know, your discontinued products in your markdowns and you know, most of the time the manufacturer is going to be responsible for that. It's a lot lighter hit. If you get into a Meijer, 253 doors and hey, if it doesn't work out, it's not the end of the world for you. Maybe you can fix a few things to get in the next year or in two years, but with like a Kroger, it's something that they're going to remember, hey, we put them in 3,000 doors, 2,000 doors. It didn't work out. It's going to take a lot longer to get back in that store.

Interesting.

And a lot longer for you to recover financially.

Right, Right. So the other question that I had here when you were talking was understanding kind of Kroger's model. Now, as you state, they, they came in and now they're going to all these different local areas and saying, hey, you're a successful chain. Let us buy you up. I don't want to change, keep the name because it's been working. But I just want you part of Kroger now, Right? Yep. Does that present an opportunity for possible some of the regional brands when you go to Kroger, say, hey, we're pitching it for this region. Possibly it is a Fry's business business, you know, when it starts or something like that.

Yep. So we typically, at our agency, we typically only make headquarter calls, which is in Cincinnati. And what happens, let's say Kroger buys Roundy's believe out of Wisconsin and they have their own buying team. You know, some retailers, they might keep that buying team and they might only buy for Roundy's. So you would still present just to Roundies. But let's say, for example, like a, like Fred Meyer, some of most of their products now to merchandise in those stores are bought in Cincinnati. Right. So you're meeting not only with the buyer for Fred Meyer, but the buyer for full corporate Kroger at the same time where beforehand you were only meeting with the Fred Meyer buyer. So it opens up opportunities not only yet you can get that regional piece, get that test they're looking for, but it could turn into something bigger.

So the buyers that the, the buyers that have been kept on, does that tend to be the more recent acquisitions?

Yes.

Yeah. I mean they move and keep in mind they're moving buyers around all the time. You know, every year or two. They don't want, they want buyers not only just, I think they don't want them to get comfortable, but they want them to know every category around the store. You know, I've seen buyers go from cough cold to shave, you know, to oral care. You know, they're always changing things up and that's pretty typical at most retailers.

So when you're calling on a buyer, whether it's Meijer, whether it's Kroger, and feel free to define the difference, what, what's important to them, what what is, what is the things that, that you know, you need to accomplish when you go into call on them.

Yeah, I would say definitely, you know, different at, you know, by retailer, but they definitely want to make sure, I mean with everything going on, things have changed with COVID going on and supply chain, they want to make sure, hey, you're presenting this product, are you going to be able to ship this product to 253 doors or are you going to be able to ship the opening order and then you know what's, what's going to happen. And it's the same thing, you know, with the larger retailer. They want to make sure that it's a solid CPG and that not only do you have great, you have a great product, but do you have a marketing plan in place, not only in store, but Mark, obviously what you do out of store is huge component. Are you is this company I'm going to put them in. Yeah. You know, I really like the product. Are they going to be able to generate customers coming to my store or is Meyer have to do all the advertising to get them in the store or. So it's got to be. They got to have bring something to the table to help customers, you know, come to the store, I would say.

And so kind of on that, on that note, and it's. Cause it's interesting and I want to keep it specifically to Meyer and Kroger here also because I think those are fantastic things and it's always great when we have great guests like yourselves come on here and keep reinforcing what we keep telling our audience. So we appreciate that. But when you're prepping for that Kroger meeting, does that change anything from what you said, obviously supply chain or how are you going to sell it? Is there anything else specific that you're like, guys, you need to make sure that this is ready to go?

I would say samples is a huge thing. And packaging. You'd be surprised how many companies come to me and they have their product and then, you know, when you go to present, they have an old package and they say, hey, we'll get, you know, we can provide a render, which is fine sometimes, but these buyers really want to see, they want to be able to look, touch, feel the product. Because let's say you're talking about external, you know, a pain relieving cream and you're telling them exactly what it does, but you give them a sample. You know, this is the consistency of what will be of the product. But this isn't exactly the product will get you that. I would say if you can have your samples and your products finished, at least a finished product sample with full package upc. So UPC with the item code right on the. So the store can scan it, that you can send to them and they can keep. So what they do, you go, right, you go in a typical meeting, you present the products, you show them data, you show them the products, you leave samples. They, they ended up taking these samples to their planogram room. Right. It's like a simulation store that they had. Kroger has a simulation store, Meyer has a simulation store. You go in and it's not a real store, it's just something that they have. So they know where every item sets, that the buyers can play with, switch items in and out. Well, they also will scan the UPCs off these items. Say, okay, I'm going to put. It gets a little complicated. But every retailer has multiple planograms. So Hey, I want this in the 200 store set so they scan it. If you don't have this stuff ready to, ready to go, they're not going to. They're going to go to your item. It's not ready to scan in the planogram room, you're going to miss that opportunity and it could be another year before you get to present. So you're going to want to be button up, you know, A to Z on the product, the pricing, the cost. Sometimes they are going to ask for. You have to be ready to answer any questions on cost. You know, what your costs are, what their margins are. There's a. There's a lot of things that go into preparation for a meeting.

So let me direct this question to Phil. Phil, you and I have been around this world for a long time. How has the business changed in the past, you know, five, ten years? What's different today than what it used to be?

Well, everything has moved, obviously, with technology. I called on Kroger. I'll give you an example. See, I called on Kroger 30, 35 years ago. @ that time, they did have other chains around that they owned that weren't Kroger. I'll give you an example. You had to go to those chains after you went to the headquarters and we called it a fishing license, where you could walk into the chain and say, I've got corporate approval on this item. And the guy would hold his hands up and with a stop sign and he'd say, hey, look, you might have corporate approval, but I've got to approve this item. That's a perfect example of what's changed. Because now corporate approval, or go, as they call it, usurps that individual regional chain. When, when the corporate office wants that item in for that chain, it's in whether that individual buyer wants it or not.

Does that create hostility? Sometimes.

And Brent and I are very familiar with one that took over. We. We called on. On Fred Meyer. Not to confuse it with Meyer, but Fred Meyer me y E R on the West Coast. And we went to their headquarters the day the deal was completed for Kroger taking over Fred Meyer. And we met with the category manager that day. Brent, I don't know if you remember it. Yeah, I do, but I certainly do. And I remember the line. We a couple, I think we called on him for like three separate vendors that day. And the buyer was not real happy that day.

Yeah, he basically told us, take a hike. He.

I don't.

It's not my responsibility anymore. Yeah.

So he was just, just collecting a paycheck until they got rid of him at that point.

Yeah. And you know what Mark? It took many years for the regional change to understand for, for Kroger to really lay down the law. The Geo calls the shots and this is the way it's going to be. Took many years.

So was there was a lot of pushback from the, from the small chains.

Absolutely tremendous because they were losing all their power.

Yeah.

The category manager is caught in the middle where you know you have a shave buyer ad. I'm just using you know, Fred Meyer as an example because it's easy. And you have a shave buyer there and you have a shave buyer at corporate and like who's, well now Kroger owns Fred buyer who's who takes you know, the number one spot.

So that I'll tell you, not talk over you Brent, but I, I'll tell you another big one was when they took over Ralph's out in California. Ralph is a really high powered chain. Brent might have the figures but the, the latest figures that I had was Ralph's was doing approximately 25% of the Kroger business. I mean Ralph's, when you walk into a Ralph's store, they're lined up. I mean that's a, that's a high velocity market. There was a tremendous amount of pushback at Ralph's when this happened.

What's the biggest mistake you see new brands do and then after that one, what's the biggest mistake you see emerging brands do? And let me position that so one, let's say let's in fact let's back up. What's the biggest mistake that first time people do when you take them into Meyer or Kroger?

I can tell you and this isn't just because we're on your podcast. I would say not having a defined marketing plan in a spend that you have to in this business, in retail it is not a cheap business to get into. It's expensive. You're going to have to spend money on marketing and with the retailer not only on outside. So with companies like Mark's but with the retailer you're going to have their circulars, going to have to participate in. There's tpr temporary price reductions. That's when you go into store at shelf. You see approximate dollar off. These are funded by the vendor and set up by the vendor. You're going to have to participate. And these cost money and a good amount of it. You go in, you go in and you say hey, you come in with a Budget and you're a new brand and you're trying to, you know, come in and have. Have success. You. You can't go in and say, I'm going to spend 5% of sales your first year. Typically, you're going to probably spend 15, 20, 25% of what you're selling to Meijer. And then from there, once you have success, you can bring it down. I like to use a rule of thumb of like 10 to 12% around there or 10 to 15% and then you get down to 10% as you grow. But you're going to have to spend it. And I see a lot of new brands come in and you tell them how much it's going to cost, and they say, well, I can't. I don't have the funds for that. So I would say funding is the number one thing I see from new brands, the understanding of how much money is needed to be successful at retail.

And one of the things I'll add to that is Brent's completely right. You need to be spending at that 20, 25%, even higher rate when you're first starting off, and especially if you're only in a Myer.

Right.

So you don't have Walmart and CVS and Rite Aid to help, you know, help add to the sales. But what the other thing that people miss, and that is they'll come in and say, well, I'm going to. I'll spend the 15%, but I'm going to spend 15% of current sales. No, you need to spend 15% of the Mendoza line that you need to maintain in order to not get kicked out.

Right. That target sales number, you need to.

Look at that and say, how many pieces a week per. Per store do I need to sell? That's the number that you need to sell against, not what this week's sales were. Because this week's sales may be the right number to get you thrown out. Go to my second question.

Sure.

You guys and us, we both experienced this. We launch a new brand, and we're 12, 18, 24 months, 30 months into the brand, the brand's doing well. We've got one good SKU and it's doing all right. What is the big mistake that you see most brands do after they have this one good SKU?

Yeah, it's 100% complacency and thinking that you can just stay the course, stay with that one item or two items, and stop investing in your product and say, hey, everyone knows about it now.

We're doing well.

We can Pull back the marketing. We can pull back, you know, our TPRs, we can pull back on circulars. That's when competitors come in and just crush you. The companies that I have seen that you start with is a 1 or 2 SKU and have grown into 60, 120 SKUs in Meijer is. They're constantly thinking, what else can I do? Not only advertising outside, what can we do inside the store? You know, what other categories can we get into? Hey, we're in cough cold, we can get into vitamins, maybe we can. We're in shade. Maybe we can get into personal care, soap, stuff like that. You have to honestly keep looking at different categories that you can break into.

Now you just said something was interesting, though, because you're saying we have to start looking at other categories, which I agree with. One of the mistakes that we see and we'll see if you guys do this, we'll have people. And I've got this. I have this one great mint flavored mouthwash and I'm hitting the number. I'm going to survive. So now I come up with three new flavors and I pitched three new flavors and I turned one good SKU into four bad sku because now I just took all my mint business and I divided it up between mint and spearmint and chocolate mouthwash. So is that a risk that you see also don't take your SKU and start slicing and dicing it.

I mean, that's natural. To do that is to come out with a sku, whether it's a different scent or different flavor, overdoing it.

You.

Yes, you can add the incrementality to the business is what the buyers are looking for in the category is looking for. But if you get into too many different scents or flavors or whatever it is. Yes. Eventually you're going to hurt your original item or, you know, your second item that you had out and it's going to be taken out and then it's just going to go back to, you know, where you were at. So rather than do that, I would look at different formats of the product. So, you know, I'm trying not to get too.

Let's say I'm bringing shave cream, which we've done together. Let's say I'm doing shave cream. Maybe I can do beard oil or maybe I can do hair color or maybe I can do grooming. Hair grooming, yeah. You know, but I don't need to come up with 15 different shave creams. I need to have two or three hit shave creams.

Right.

It's like. Yep, it's. It's exactly what Brent said. Incrementality is the key there. It's. You have to be able to display that you're getting incremental sales. You're getting new sales out of this. That's the key. So come in and understand that. I'm trying to grow, essentially I'm trying to grow a different business. And it's about understanding that if that SKU has a risk of cannibalization on the current business, then it's not a good SKU to bring into. But if it brings in new business, new consumers and there's many different ways to do that, then you might have.

A winner there for sure.

Now, if you had the choice, if you guys had the choice between having a low price me too product in a category or a product that is in the. In the upper category of the highest price range of the product but offers real innovation, would you rather have the expensive item or the low price item?

So really good. So that's a really good question. And it depends on category. I would say it depends on category for me. Like I'm very concentrated in personal care and health and beauty care. And I would say premium is what's driving those categories right now and innovation. But if you look at, you know, we have successful food items where they're, you know, standard items that are lower priced and they do really, really well. So it depends what category you're getting into. But right now I think a push for premium in showing the category manager that you can increase the basket size where, you know, shape creams are really one easy to use. Whether it's, you know, typically they see like a 399 basket.

Right.

They buy one Shape Cream 399. Well, we can get into a premium item that they're going to buy just as often and instead it's going to be a 799 ring instead of 3.99. So I think premium right now is what's pushing in those categories.

And so that's kind of a great segue for where I wanted to kind of take this conversation to is you guys are working with Kroger and Meijer every day. It's your world. Right. So what's new at Kroger and Meijer? What are the current trends that are happening at that business that brands should be aware of?

Yeah, I would say, you know, what a lot of talk lately and a lot of companies are moving into this is I see, you know, natural is still a big play and it's just getting stronger, organic as far as vitamins go, stuff like that supplement is getting stronger. And even to go further on that, typically someone who wants natural, organic also they care about sustainability of not only the product but the packaging. And you guys have probably seen a lot of this is retailers are really hot on post consumer recyclable packaging. So in simplest terms it's say you have a plastic bottle of Coke and you recycle it. Well, that recycling company then turns it into PCR that can be used, which is a resin. Right. That can be used on a new package. And I have a lot of vendors that are looking at their products and when we go into meetings, the buyers are saying, I like your product. So and so is doing this. Are you guys going to do it? Are you going to change your packaging? So I think packaging is huge now.

Digital presence.

Yep.

Digital presence for sure. You know, with COVID going on is huge. I know it's a big push for Meijer typically Meijer right now, they're not, it's not true E commerce because when you order off of Meijer.com, that it's still a third party that's going to the store, you know, picking it up and taking it over to you. Not shipped from a specific DC warehouse where Kroger is huge push where they're trying to catch up with an Amazon and you see Target and Walmart or they have their ship to home program that they have a warehouse dedicated to that program for their E Commerce. So a lot more digital presence. I see a lot of marketing material that used to be circulars. So paper circulars have turned into only digital programs. You're going to have a good chance of getting into retail if you actually start like a direct to consumer business with a digital business.

Any categories that are just hot right now, I mean whether it's is it beauty, is it keto dieting? I mean what, where's the hot thing where the buyers are looking for more stuff?

Yeah, I think I'll answer that. I'll let Phil kind of get into it. I think fitness nutrition right now is really hot. I think personal care that I touched on earlier is really hot. And for men especially so, you know, even more not just a lotion, but you're looking at, you know, stuff for eyes that you typically wouldn't see in a Meyer for. For men is now, you know, in every day. So getting more specific with men's grooming, I think it's really, really hot right now. Organic proteins, fitness, nutrition, Bars. That's where I've really. Vitamins. That's where I've really been concentrating.

Yeah.

Any.

Anyway, Brent's talking specific categories. I'm thinking in terms of opportunities today. When I turn on the tv, all I hear about is supply, supply chain, backup supply chain, supply chain. These store shelves are either fairly empty or not at 100% where they should be to drive the kind of revenues to grow the business. So which, which leads to an opportunity of in and out promotions. Whether it's a floor stand, end cap display. If you have that product and it makes sense for the store, they will take it in. We're doing business today as we speak. I just finished the deal. Okay. On an in and out item because that retailer is not driving the kind of revenue he needs to drive with this current inventory because half his product is not showing up.

And this really happened and we really saw a lot of this last year with sanitizers.

Oh, yeah.

Disinfectant, wipes, tissue. They would bring in any hand sanitizer. They didn't care who made the hand sanitizer.

Exactly.

Yeah.

That kind of backfired on a lot of retailers now because they're sitting with no, no name brand sanitizers and they overbought. So you'll see, I mean, you go into any store, you'll see end caps full of sanitizers, buy one, get one, stuff like that. But yeah, supply chains are huge. Typically, you know, it takes a lot of manufacturers think that, hey, let's, I have an item, let's get into Meijer tomorrow. It's not like that. You know, these buyers are meeting once a year or twice a year. So do a major planogram once a year and then, you know, a cut in sometimes. So you only have two times a year that you can, you know, typically get items into store. We've had retailers like Phil just said, reach out and say if you have any vendors that have product that fit can fit in this category, I could probably get them in and out. So things are changing. Hopefully supply chains get back to, you know, where they were. It's just, it's tough right now for not only the manufacturers, but the retailers.

So the grocery retailer by our house, which, you know what it is, but I won't use the name. They have end caps at the cash register with hand sanitizer in 1 5th vodka bottles that they can't give away because they bought so much of it. And what they did is had a vodka company that switched making vodka into making hand sanitizer. And they packaged it in vodka bottles.

Oh, yeah.

So you have these enormous fifths of hand sanitizer sitting on the shelf with no brand on them that they're still trying to move through.

I believe it. Yeah.

I launched Purell way back when.

That's right.

That was not an easy sell, by the way, because it went into the soap area, where items like soft soap from Minnetonka were there at 99 cents. And this was a lot more expensive. But I could tell you it really did catch on.

Your row became the tail wagging the dog, too, at that company.

Yeah, yeah.

Oh, sure did.

Because that was. Who was that? Was that Gojo?

Gojo Industries, Akron, Ohio.

Yep.

Right. They used to make kind of the gritty hand cleaner for mechanics.

Exactly.

And then the whole company, they actually. They came up with this little product, and then the little product ended up taking the company over.

Yep. Right.

Because that Purell is the big deal. So, Phil, I'm going to again go back to that longer window that these young whippersnappers might not have when we've been through downturns. So one of the concerns that I have right now is we're seeing a lot of inflation. And it hasn't really cut into the retail sales too badly yet because people have been swimming in cash, because we gave people all kinds of money to stay home. But some of that money has dried up now. It's finally starting to go away. One of my concerns is that if inflation continues to work, which it would appear is going to be the case, then my history tells me that consumers start trading down to store brand a lot. That we see that kind of trade down. And I. And I believe that we see that kind of trade down when people think that the category is a commodity. So an example would be Preparation H versus the store brand. Preparation H still in the yellow box, still has blue ink on it, still looks like the same product. It's been around forever. Or aspirin or Tylenol versus the store brand. What do both of you guys think brands need to do to defend themselves? To make sure that consumers are not trading down during a price increase and to keep their numbers up? Because obviously, just because people are trading down to store brand doesn't mean that Kroger and Meijer is going to accept that you're selling less product. They still expect you to hit those minimum numbers regardless. Right, right, right.

I think that's a good question. First of all, I agree. I don't. Number one, I don't believe inflation is transitory.

All right.

I believe inflation is really with us and will be with us for quite some time. I'm talking two, three, four years down the road. All right. And I think it's well proven that it will not be transitory. That's such a ubiquitous term. I mean, what does transitory mean anyway? Anyway, trading down. I do believe that consumers, if the vendor, if the manufacturer does not watch his pricing. All right. Will trade down from his product to private label. However, remember, it's still all relative. Private label. Cost of their active ingredients, shipping, labor, the whole bottle of wax is also going up. So as it's, it's, you know, it's, it's all relative. To me, the brand goes up. Let's say the brand goes up 7%. Private label will probably increase their cost. 7%.

All right.

It still leaves a gap between them. However, I do believe there's a dye in the wool. Private label buyer. But to answer your question, the private label company is competing against the brand and they only exist because of that brand. And it's up to the manufacturer to prove that he is the one. He is the key guy on the block and he has to do that with his marketing and advertising.

I agree with you on inflation is going to be with us for some time.

Oh, yeah.

And we're going to have to deal with that. So to add to what you're saying, manufacturers are going to have to get out there and keep reminding the consumer of why they bought the brand in the first place.

Exactly.

Not just new first time buyers, but now we need to start talking to our old buyers too and reminding them why they like us. So, guys, tell us a little bit about Boardman and Associates. You guys are located here in the Detroit area. Tell us a little bit about your business, what you do and what are you looking for? What are the type of products you want people to bring to you?

First of all, we look at ourselves as more of a boutique manufacturers representative agency.

All right?

We focus on a lot of health and beauty care. I originally took on a lot of items because I was a pharmacist. I did deal in chain drugstores and independent drugstore stores. And we focused on a lot of health and beauty care with emphasis on products, merchandise by the pharmacy. So they had a pharmacy recommendation, for example, blood pressure kits. Okay. Blood pressure kits was something, a line that I've represented probably for 30 years. Different companies. And the consumers obviously still buys them. They need them. We did speak about hypertension. And, and it's recommended by the pharmacy.

Go ahead.

Talk about a business that has increased since COVID We saw in our blood pressure business retailers saw like 30% uptick the last two, last two years, like huge. And most of that product is made overseas. It's very, it requires a lot of them have Bluetooth chips as well. So that is, that's a business that has been tough on supply chains especially. But go ahead. All right.

We also do a lot of food, food business, a snack business and general merchandise business in different capacities. Meaning that a lot of our food business is sold to what we refer to as non food accounts, meaning like mass merchandisers or drugstores or you know, other. Other than food stores, which would be basically what we require. Referred to as a food broker.

Do you call on any other retailers other than Kroger and Meijer?

Yep.

Who else do you call?

Sure, I'll tell you. So we call on Target, Meijer, Kroger, Publix, Florida. And then Phil handles big lots, Ollie. So big lots, 1500 stores out of Columbus, their national chain. And typically they were a closeout house, you know, to a couple of years ago. And now they're. They have inline products. Yeah, yeah, yeah. They have planogram, you know, just like any other store. But they do keep money open for opportunities. So we not only do everyday inline products that you would see if you, whether you go to like a, you know, a Target in Michigan or a Target in California, we do those, you know, in line every day you look for shave cream, you know where to find it and then. But we also do opportunities. So a lot of companies come to us that have package changes, the products going out of date. They only have, you know, three or four months left on the dating and they're trying to just get this stuff out of the warehouse. We handle that. We do a lot of that.

That's about to say so Big lot. So if, if, if we've got, if we have a listener who is sitting on an inventory of a, of a discontinued sku, we can move it, then you guys might be the guys to go to. You're not going to, you're not going to get your wholesale price for it.

You're not, you're not in. That's typically something that manufacturers struggle with is they're holding inventory, they know they can't sell it and then we tell them, you know, what the market is going to give them and they'll say it's too cheap. Well, you're going to lose money on it either way. Might as well get it out of your warehouse.

Look, Mark, I've been doing. And we've been doing together with Brent, closeout business, which is a section of our business for many, many years. I can, I can name them all. And the key that the vendor really wants is to keep this merchandise out of their regular flow of merchandise. Right, Exactly. They want it in retail stores that are closeout stores so he can identify where that merchandise is. All right, so we deal with them all, whether it be big lots, Ollie's Grocery Outlet on the West Coast. I mean, I know them all. There's a lot of feeders in that business. It's a first tier, second tier, third tier business. And it's different. It exists. Okay? That business exists and will always exist.

But it's better to turn that dead inventory into some cash than to just let it date code out and put it in a dumpster take.

Yeah.

And if you are saying stuff that's about to go on a date, act faster than. Don't just wait. Because every 30 days makes a difference.

So I think that's a great added thing here. One more question for you. How difficult is it right now to push through a price increase to any of the retailers? Because everybody's trying to get price increases.

Yeah. So it's funny is a couple of price increases at Target. I think last year I sent them one and I had the buyer respond and said, we're not taking price increases right now. So, yeah, you might have a price increase, but we're not taking it. So, I mean, you'll see it in a lot of these situations. The retailer has. They have the leverage over the manufacturer they can get. You know, unless you're an unbelievable product and, you know, a lot of manufacturers are middle of the, you know, middle products are good products. But a retailer can say, hey, I got this manufacturer that wants to come in, so we're not going to take the price increase. But in the. I would say I've had price increases from all my vendors. Maybe two have not pushed the price in the last year.

Let me say this. If you were going to have a price increase, now's the time to implement it.

I would think so. Because the mindset is there, right?

Absolutely.

And obviously, if you're Campbell or you're P and G and you're tied, then pushing your price increase is a lot easier to do than if you're. If you have two SKUs.

If you're a struggling vendor with one or two SKUs, you might want to bite the bullet for another year.

And it's tough because we're seeing all of our, you know, we're all seeing it. You're seeing it, we're seeing it. Our clients are having increases in cost. We have some clients who can't find caps for their tubes and some clients that can't find a key ingredient that's in the goop. And some clients. We have some clients who can't get enough people to come to their plant to make their product.

Oh, I experienced that on a daily basis.

We have one client who has increased wages in their plant by over 50% and still can't get sufficient people to come in and work the shifts in their plant.

I would say the retail landscape right now, it's tough to navigate, but I think there are. It makes for some bigger opportunities for some manufacturers that they can make their product and get it shipped on time. It could be very, very lucrative right now.

In fact, we're all working on one of those cases right now.

Sure are.

We had a client who could come up with a flavor of a product that no one else could come up with. That flavor, by God, that's. That's how they got in was because nobody else could ship it.

Yep.

Well, guys, really appreciate you being here. So, folks, if you go to the show Notes for CPG Insiders, go to cpg insiders.com and look for the episode with Phil and Brent Bortman. And there you'll find links to their website, their contact information, how you can get in touch with them. And remember this, you can work with these guys for Meijer, for Kroger, Publix, Target. And I really think people should take advantage of the big Lots kind of environment because everybody who's been in this business for three to five years has made mistakes and they've got inventory sitting in a warehouse someplace is date coding out. Get it out of the warehouse, turn it into some cash. Some cash is better than a dumpster fired.

For sure. Hey, guys, thanks for having us. That was awesome.

I really appreciate it.

We appreciate you being here. That's it.

Thank you, guys.

For us on CPG Insiders, if you like today's show, please make sure you go to wherever you get your podcast and leave us a five star review. Tell them how much you really love Justin when you write that review.

Exactly.

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When you do that, we'll see you on the next episode of CPG Insiders. If you're looking to greatly increase sales on your CPG product, don't hesitate to contact us at Jekyll and Hyde Advertising and Marketing. By the way, the only advertising agency with a guaranteed result. Just go to jekyllhideagency.com or feel free to give us a call at 800542RA.