It’s classic – small, triple bottom-line company creates a great product, gets some traction, raises friends and family (and maybe angel) money, gets a toe-hold into the natural products industry and then BOOM! “MASS APPEAL” STRIKES!

Mass retailers come a ‘callin’… “We love your brand! We need to move into the ‘green’ space! How can we partner? We will bend our terms for you! We recognize you’re a small company and we will work with you! Don’t worry!”

Listen to me natural products’ entrepreneurs… Don’t fall for it! I am here to tell you that brands under $10,000,000 in revenue (except on rare occasion) have no business being in mass retailers!

I define “mass” retailers as the classic food, drug, mass, and club retailers – this includes Kroger, COSTCO, Walgreen’s, Target, Wal-Mart, etc. They are trying to understand the natural products market and the LOHAS consumer… Often, they don’t get it, so they try to align with small manufacturers that do; manufacturers with passion and purpose and with brands that reflect this and appeal to the coveted LOHAS consumer. Mass retailers will sometimes promise the world to get your brand on their shelves…

Again, DON’T FALL FOR IT! Here’s how the “MASS APPEAL” phenomenon works:

1. 1.Small triple bottom-line company (usually under $5 mil in revenue, sometimes much smaller) is approached by a mass player (seems like Walgreen’s, Target and COSTCO are very active these days)
   

2. 2.Typically our new organic company is focused on the natural products retail marketplace prior to the mass introduction. Things are going well – demos, trainings, education, grass-roots marketing, etc.
   

3. 3.Once the investors and the entrepreneur hear that Target is interested, for ex., they immediately start counting the money – because their “baby” is SOOO BEAUTIFUL! “Wow! Our baby gets to play on the greatest of stages very early in her development!”
   

4. 4.The pressure on the entrepreneur to chase the mass opportunity can sometimes be stifling – it seems like the yellow brick road to riches…
   

5. 5.Sadly, it’s often not.
   

Let me tell you how I see it once your baby ends up on mass retailer shelves:

1. •Your brand typically gets shelf placement, but not end cap or display, so there is little messaging to the consumer
   

2. •Your brand typically gets placed right beside the “name brand” that has been in the market for many many years, spends $5-20 Million per year in marketing and has the lion’s share of the market share
   

3. •The consumer walks in – walks up to the brand they know – plucks it off the shelf and off they go
   

4. •A little while passes and your brand “does not meet retailer expectations” and the relationship ends
   

5. •In the meantime, your company has alienated the base retailers you need to build a truly credible brand – the natural products’ retailers… Many times they will black-ball your brand because you have “sold-out”
   

6. •Now, you’re stuck! You have spent your time, energy and money chasing after “mass appeal”, your baby was not ready for the big stage and the small stage that knows how to raise your baby is no longer interested
   

What a shame… I have seen some great brands go down to mass appeal. It is truly sad. I personally know of three companies that have fallen prey to “mass appeal” – each has raised $2-5 Million in friends, family and/or private equity money and after 2 years have just over $1 Million in revenue to show for it. I can tell you, this was not expected. When the mass retailers come callin’ the glass half full sentiment often gets sucked dry very quickly.

Here is my prescription to the “mass appeal” disease:

1. 1.Commit to saying “no” to mass retailer overtures until your brand hits at least $5-7 million in sales
   

2. 2.Be up front with any investors in your company that you will follow rule 1 no matter what (they will still pressure you when the mass players come callin’)
   

3. 3.Commit your brand to the natural products’ retailers – focus on the base, the core retailers that will fall in love with your baby just like you have; they will nurture it, talk about it, show it to others and build a credibility with core consumers that will never be built at mass
   

4. 4.Focus on cultivating these retailers and their consumers – email newsletters, demos, constant communication – the goal should be 250,000 active consumers in a database that absolutely are in LOVE with your baby!
   

5. 5.About the time you hit $5 Mil in sales, the mass retailer demand may be overwhelming – tell them that you will sell to them on your terms:
   

6. •Must have display; free-standing preferable
   

7. •Must have favorable up-front terms
   

8. •Must have a no return clause (this one may be hard to get, but if they balk, say “let’s start smaller by region”)
   

9. •Must do a test market in a much smaller area – never go national out of the gate – you must mitigate risk and the data you will gain is crucial for future supply chain and marketing planning
   

If the mass players do not want to play by your rules, then walk away! This will be the hardest thing you will ever do, but if you walk, they will want you more… Repeat the steps above until you reach $15 Mil in sales. Why $15 Mil? The ramifications of dealing with a mass player are easier to absorb the bigger you are – things like returns, slotting allowances, ad fees, etc. will not put you out of business once you grow to a respectable size.

If you make it through the steps above and grow past $15 Million, you will have a new problem, strategic and private equity investment interest! Congratulations, you now have a whole new set of issues! More to come on this subject.

Look, I am not anti-mass retailer at all – my history with Procter & Gamble steeps me in this sector of retail and I have deep respect for the mass “best-practices.” I am also deeply in love with the natural products’ industry and retailers. I believe that the natural products' sector has an incredible ability to:

1. •Support unique natural products’ brands
   

2. •Push these brands out to consumers with very passionate store personnel who want to know your baby and want to have a stake in raising it; they take deep pride in this
   

3. •Connect directly to passionate (and core) consumers. These consumers are needed to build credible, triple-bottom-line brands
   

I also believe that natural products’ retail can only take a brand so far and that the mass retailer is not the “bad guy” it is just the “big leagues!” Every brand wants to make it to the big leagues and there is no shame in this. If passionate entrepreneurs can build solid brands based on triple-bottom-line principles that are baked into the very soul of the brand, then I believe that strategic investors and mass retailers would be foolish to try to remove this soul – meaning they will take your baby to new heights all over the world! This is great for our cause – this is great for spreading the triple-bottom-line message! My only contention is that this process needs to be metered, one small baby step at a time!