10 Terms Every Food Business Should Know (Part 2)
Small business owners often find that the retail food industry has its own unique language. To effectively communicate with retailers, buyers, and other companies, it's important to familiarize yourself with the following terms:
Sell Sheet: These marketing tools are used to inform retailers about new or upcoming products. They typically include:
- Full-color images of the product(s)
- Product specifications (size, package quantity, flavors, etc.)
- Key features and benefits of the product(s)
- Ordering information (SKU, UPC, item number)
- Promotional discounts for initial orders (usually passed through distributors and specific to each store)
- Sell sheets can also showcase top-selling SKUs or the entire product catalog when presenting to new stores and buyers.
Slotting Fees: Also known as "slotting allowances," these fees are paid by food brands to secure initial placement of their products on store shelves. Slotting fees cover costs such as storing products in the retailer's warehouses and entering product information into their systems. Retailers use slotting fees as a way to protect their investment and recover potential losses. Not all stores require slotting fees, and certain products like meat, sugar, and non-frozen dairy typically don't incur these fees. Beverage, frozen food, and snack food manufacturers, however, often have to pay slotting fees.
Pay-to-Stay Fees: Sometimes used interchangeably with slotting fees, pay-to-stay fees are paid by brands to ensure their products remain on store shelves.
Free-Fill: Free-fills are promotions where stores receive a certain amount of free product (usually measured by the case). They are given to new retailers to encourage stocking a brand or to existing retailers for introducing new products. Distributors typically pass on these promotions to smaller retailers.
Scheduled Process: This formal document allows your food product to be manufactured for retail sale, typically by a co-packer. To obtain a scheduled process, your entire manufacturing process, including the recipe, procedures, ingredients, and packaging, must be evaluated. The FDA requires scheduled processes to ensure the finished products are safe for customers. Process authorities can be found at universities and colleges.
Shelf-Life: Shelf life refers to the duration your product can be stored before its quality deteriorates. The sell by date, use by date, or best before date on the packaging indicates the shelf life. Depending on the food type, shelf life can range from a few days to several years. Dairy and meat products generally have shorter shelf lives compared to dried pasta or canned goods. Retailers often require shelf life testing by private labs to ensure product quality under different conditions, including changes in taste, odor, texture, appearance, and the impact of packaging.
In-Store Marketing Terms
Point of Sale (POS) Displays: These displays are used in stores to draw attention to products and brands in off-shelf locations. Examples include endcaps, free-standing shippers, countertop displays, and shelf-talkers.
End Cap: Located at the end of aisles, end caps are displays used to promote specific products and increase overall sales. They are usually changed regularly and can feature products on sale or follow specific themes (e.g., holiday baking, summertime barbecue foods). End caps can be dedicated to one brand (full end cap) or mixed (shared end cap). Securing product placement on end caps can be costly, as they are considered prime retail space. While smaller local stores may choose end cap items based on buyer or manager preferences, most retail stores charge high fees for placement.
Shipper Display: Shipper displays create promotional opportunities outside regular store shelves. Also known as point of sale displays, shippers are self-contained, stand-alone displays typically made of cardboard. They are often single-use and come with the necessary product quantity to stock the display. Shippers can promote new products or be themed for holidays or seasons. There are different types:
- Floor shipper: These sit directly on the floor and can be placed at various locations as instructed by retailers. They feature large headers to promote the brand.
- Counter shipper: Smaller than floor shippers, these sit on countertops and hold smaller products like candy, chocolate bars, energy bars, and snacks. They are commonly placed near cash registers, deli counters, etc., to encourage impulse purchases.
Shelf Talker: Shelf-talkers are signs displayed under products to grab customers' attention. They can be retailer-produced to inform customers or provided by companies to promote their brand. Unlike sales tags that focus on promotions, shelf talkers often highlight product or company features and benefits. For instance, they may mention charitable donations or industry awards. Sharing more about your company can help differentiate you from competitors and boost sales.