Microbrands are on the Rise

A dichotomy is emerging on the shelves of stores across the country: large, well-known products are now competing with smaller, emerging microbrands. These up-and-coming brands are not necessarily spin-offs that were created in the R&D department of a large conglomerate. These brands were created by passionate entrepreneurs who have unmatched local insight and passion. This phenomenon is often called “microretailing.”

Microbreweries are an example. Megalith brands were created from those that grew up and prospered. Anheuser–Busch InBev has recently purchased its 10 th craft brewery. These frenzied acquisitions – combined with the Americans’ love for beer – have fueled even more beer startups. There were 2,475 craft beer brewers in the U.S. in 2012. By 2016, that number had increased to 5,300.

We are seeing the same thing in beer across all retail channels – food and beverage as well as home furnishings, fashion, accessories, and even pet food. Consumers want something unique and special. This is the trend. Big brands still hold the majority of the consumer dollars. Microbrands are gaining market share by chipping away at the dollar. These upstarts are often called ” ankle-biters.

Interest is driven by authenticity, realness and innovation

The GrommetIt has created an online platform that displays innovative solutions to everyday problems. S’well, OtterBox and Fitbit were first to see the e-commerce platform. They highlight the products and their makers. After watching a video from their website, I bought metal molding glue for my moped after it had suffered a minor accident. Although it may sound like QVC, The Grommet taps into the buyers‘ desire for core values and not corporate jets. The Citizen Commerce platform of the Grommet supports sustainability, domestic production and preservation of craft. Buyers respond with their wallets.

The trend doesn’t exist only online. The Grommet, like other pure-play ecommerce companies, discovered that buyers still crave an in-person experience even after they move to the digital age. It opened its first Massachusetts store nine years after it launched.

The growth of B8ta is also driven by the brick and mortar advantage. This gadget store is a hit in Silicon Valley. It offers consumers the opportunity to test-before-they buy, and features exclusive products that are not available elsewhere. Startups have the ability to get their products in the hands of potential customers. Customers can also get a firsthand experience with the technology before spending any money. This is something that you cannot do online. Nearly one million demos are performed each month in the company’s nine standalone stores. With Lowe’s, the home-retailing giant, b8ta’s in-store partnership, that number is on the rise.

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Corporate-sponsored incubators are changing how launching is done

There are several ways to launch brands.

  • You can knock on the doors of many small retailers (very labor-intensive and time-consuming, with little ROI).
  • It is really hard to get in front of a buyer at a major chain or store.
  • You can sell directly through Amazon and receive very little margin.
  • Register for a spot on an online platform that supports entrepreneurs (see The Grommet above).

There’s a new route to growth and it’s being funded now by big names.

To gain attention from a retailer or manufacturer, a brand must achieve a certain level of sales. (See Anheuser-Busch InBev above). There are many business case studies that highlight the acquisitions of brands such as Bear Naked, Kashi and Nantucket Nectars and Burt’s Bees. Many times, the buyouts led to a loss in the genuine feeling that made consumers fall in love with the brand.

The new model sees the big boys getting in earlier and helping incubate brands. Target announced recently its continued partnership with Techstars – a top startup accelerator, after a successful initial round. Pam Tomczik (target’s Vice President of Corporate Development) stated that the Target+Techstars retail accelerator aims to discover, validate, and scale these ideas by helping startups bring new experiences and products to retail. These 10 startups will receive guidance on scaling and merchandising as well as pricing and a dizzying array of other issues faced by startups.

Target’s goal is to reduce the time it takes for innovative products to go-to market. It’s also helping products to retain their unique brand identity. Target offers its customers a mixture of ubiquitous brands and brands that they can’t find anywhere else. This creates a pipeline for in store shopper moments (r).

Kraft Heinz has also entered the startup market with Springboard, its brand incubator. Kraft Heinz has created Springboard to help develop food and beverage brands with authentic essences and inspiring founders. The four sectors that are chosen for the award are Natural & Organic (Specialty & Craft), Health & Performance, Experiential, and Health & Performance. Sergio Eleuterio is the General Manager of Springboard Brands. He stated, “We are actively looking for authentic brands that can expand into other categories and are looking to create a network to help shape future food and drink.”

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In-store signage and display convey authenticity

How can you communicate this unique feeling at Target, Lowe’s, or Kroger, if there aren’t disruptive retailers like Grommet.com and b8ta? These incubator programs have taught us a lot about the importance of signage and display. In the past, new brands relied on their intuition and/or advisory boards to help them gain customers’ attention. Many find that their marketing budgets are exhausted by the time they reach the product display phase. Experiential partners will confirm that this is the right time to push the accelerator at point-of purchase and not let your foot off of the gas.

It’s crucial that you display the uniqueness of unknown brands to draw attention and inform people. The signage must tell the brand’s story clearly and engagely, as part of the trend to connect to the founders and mission of a brand. As we can see from both the success of b8ta and The Grommet’s shift to physical retail space in their move, signage must encourage interaction.

It’s thrilling to create a product. However, it is vital that the product gets in-store visibility. Microretailing. What’s new in your microretailing?


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