Over the last few years, specialty grocery sales have increased 13% since 2018 to $170 billion. Consumption trends from plant-based to “free from” products (e.g. gluten, lactose, or sugar free) continue to flourish. Despite this, it can be notoriously difficult for these products to get onto shelves and into the minds of consumers.
Enter Emily Schildt, an industry-veteran and marketing guru who’s catapulted some of your favorite brands into stores across the US. Given this deep background in go-to-market, it is no surprise then that she is uniquely positioned to help several brands on a larger scale. With this in mind, Pop Up Grocer was born.
I caught up with Emily to talk about applying what she’s learned, the realities of traditional grocery stores, the future of trade shows, and why her model is economically better for brands.
What were you doing before Pop Up Grocer?
Pop Up Grocer was a natural evolution to what I was doing before. I’ve worked in CPG for the entirety of my career and was an early employee at Chobani before people really knew what Greek yogurt was, let alone having it define the category. That experience made me really excited about food, food as a business, entrepreneurship, and doing things the right way. So I left and started a consultancy of my own called Sourdough. For about 7 or 8 years, I consulted with small food companies, helping them to launch their brands and bring them to market.
It’s through that work that I got my first look behind the curtain at retail. I had never been exposed to that before, exclusively being on the marketing and branding side of things. That’s when I started to understand the challenges that these brands face just simply getting their products on shelves and getting people to know who they are. Those people being consumers of course, but also buyers, retailers, investors, media, and influencers. That is when I had a lightbulb go off and I thought I would create what, in my mind, was the ideal environment in which to launch a product.
What was your thinking behind the strategy for Pop Up Grocer? What do you do that gets missed at a traditional grocery store?
Traditional grocery does one thing right, which is supply you with stuff. But it does a lot of things wrong. It makes it really difficult for you to navigate the stuff because there is so much of it. The average grocery store is 40,000 square feet and has around that same number of SKUs, and it doesn’t make anything feel special in terms of the way it’s merchandised and in terms of how it is being presented. You don’t really get to understand the stories behind the brands and their founders, and you are left to your own devices to understand a product’s makeup, and there is definitely no one around to explain anything to you. Even when you try to shout and holler and track them down, they are difficult.
I wanted to create a space that does both of those things really well. One, we narrow the products so that it’s incredibly easy to navigate and, two, everything feels special because it’s well merchandised. It’s contextualized through the staff, through events, classes, programming and the product gets the chance to shine. The consumer get a chance to see the things that they’re interested in, so it’s a win-win for everyone.
I grew up around a guy who’s family grocery business in Virginia went from being relational with its vendors to very fragmented as it became a regional chain.
There are two interesting things right there.
We work directly with the brands: they ship directly to us, we’re sourcing directly through them, not buyers. We’re not working with distributors, so we have really close relationships with them. I guess that’s how we even come to know the brands’ stories, whereas with a traditional retailer, there are so many intermediaries. They are forced to be disconnected from the products and the brands.
As far as it being small, or it being special and then forced to be big, that’s how the infrastructure of the grocery industry works. It’s the only way that it works. The margins are so small on the sales of these products that you have to sell a lot of things in order to make enough money to operate. And grocery starts having to invent things like slotting fees, marketing fees, promos, coupons, and mandatory marketing spend, and then the founders are just really screwed.
But that’s another thing that I noticed, which is why we created the model that we did. There is a flat fee to participate and that fee is towards advertising because that’s what we do for these brands. So that part is baked in. Naturally they sell more than they would in a traditional grocery store because people are actually seeing their product and not having to dig for it on the bottom shelf. It’s something they’re interested in because they are someone who has similar values to the brands we’re sourcing. We’re trying to resolve a lot of things.
Over the years, it has been perceived that e-commerce is killing brick-and-mortar retail.
It’s not dead, it’s just changing. We see our stores as the compliment to online shopping, for example, because online shopping is so mundane. It’s so routine. That’s great for the tried and true pantry staples that you love, so you have that auto-delivered every few weeks, but you want some kind of complimentary discovery experience, and that’s what we provide. Our thesis moving forward is that that’s the new way to shop.
What did you learn from your first couple of pop-ups?
We had our first two pop-ups here in New York. The very first one was an experiment, and I had no idea what I was doing. The second one came out of learning that the first experiment worked and that I was on to something. So they were both really deeply learning about getting the business model right, the duration, understand if it was accurate, what we believed people would like about us, and how they would use us. So we took that into other markets, leaving the comfort of New York, and we opened in LA, Austin, and Chicago.
Are there things that you did in Brooklyn that were particularly successful that you brought to Chicago?
I think what we learned about our success in Chicago is something about the city that we’ll use strategically in how we select cities moving forward. Chicago is obviously a big city, and its an important city, and I don’t mean Chicago any offense, but I did feel that maybe things come there a little bit later. The city was really enthusiastic about our arrival in a way that LA and New York were a little bit more jaded.
We experienced that kind of excitement in Austin as well; it’s just unfortunate that our timing in Austin was at the height of the pandemic, social unrest, and sandstorm. We are really excited to go back there.
Moving forward, we are looking at cities like Dallas, Philadelphia, Pittsburgh. Places that don’t have as much access to the kinds of products and the kinds of events, if you see us that way, that some of the coastal or more jaded cities do.
How much of your thinking is about the practical solutions that retail can provide versus the fun or cool factor of the retail experience?
We’re definitely joy-first, and that is through what I would call ‘food theatre’. I like next-level sampling, which we unfortunately had to put on pause amidst COVID, as well as our events and programming, but we are opening our first permanent store here in New York. I am hesitant to say when; it was slated for the end of this year, and now it’s becoming Q1. I’m hoping it’s still Q1. We’ll have space in there to do proper classes and tastings.
It’s very much about creating the experience and then the functional aspect of it is this narrow selection that makes shopping a bit easier and makes discovery possible, as well as a compliment to your routine online shopping.
In the past, you’ve talked about your modern, alternative sourcing methods for discovering new brands. What is the criteria when selecting new products?
There are three parts.
First, it has to be interesting. That’s really the most important criterion, and its pretty rich in that interesting to us means a new ingredient in a new format, or a new ingredient entirely, or something about sustainability, interesting founder story, or an underrepresented or under-resourced founder who could use our support. This is essentially how we differentiate ourselves from any other grocery store.
The second part is about ingredients and responsible sourcing and some specific yes’s and no’s on some thing we allow and some things we don’t allow.
The third is about packaging. It has to be additive to the design and overall look-and-feel of our space, and I realize that is very subjective, but at this point we’ve come to know what our audience appreciates and gravitates toward as well so we know what they like. Each pop up has around 150 brands, somewhere around 400 products, and we’ll keep it about that size within our permanent space too.
Where is your permanent space going to be located?
It will be in downtown Manhattan.
We’re starting to see a lot of people move into tier-2, tier-3 cities. I know a guy who opened a bakery in Des Moines, and the landlord gave him $100 per square foot for build-out on a 7,000 square foot space. There’s also been a lot of real estate developers investing outside of New York. So why New York?
The density here. The influence here. The other cool grocery Erewhon, part of their success is their celebrity attendance and it could be a big deal for one of these emerging brands to get an organic photo from Gigi Hadid or whomever lives around the corner. We want to put ourselves in the sphere of that influence and then our second location will be, maybe not Des Moines, but Cleveland or something. We’re going to continue doing the pop ups because we love them and they work and we’ll be able to use the insight and the data from that city to determine if it has the potential for us to open a permanent location there.
What has been your best selling category?
It’s been a surprising insight that the best-selling category in our stores, regardless of the city, is the treats and candy section. I don’t refer to us as a health food store because we’re fun-first and about discovery, curiosity, and creativity, but obviously we have these standards and we source against very specific ingredient criteria. 80% of our items are vegan. Somewhere around the same percentage are gluten-free, so we are a health food store, and I think it’s interesting that the people who are coming to us because we are better for you are leaving with gummies and chocolate bars.
Given all the challenges that trade shows now face, what do you think the future holds for them?
They still have a certain audience who relies on them. It’s been interesting for me to learn when I talk to buyers and they ask me how I find these brands and I’ll be like, “Well, down the rabbit hole on Instagram”, and some of them are like “What’s Instagram?” So I think there is a generational difference in how we source new brands, and maybe when trade shows become less used they will die. Or maybe, like retail, they will just become different because I do think there is real value to in-person interactions and tastings.
I just think that, much like a grocery store, the trade show is incredibly difficult to navigate because it is so big now, that there’s just too much crap to sort through and no way to understand the credibility or validation of any one vendor. So maybe they will become a bit more fragmented and smaller, more regional. That’s kind of what we’re doing as well, though we’re more the trade show for the consumer with a secondary audience of B2B.
I think they are doing some interesting things with virtual trade shows also. If you just want to know what’s up, you can get the in-person later once you go through that first filtering process. I think these virtual showcases are cool.
Do you find that the showcase model is easier than being a traditional retail buyer and going to a distributor or broker? Generally, returns have always been difficult, but with recent wholesale platforms, brands are able to return items for free. In the showcase model, you don’t have to deal with return items because they are paying a fee for placement in your store.
Do I think it’s easier? Yes.
Products are on consignment with us. Irrespective of not having to carry inventory, I think we are in somewhat of a unique position to do it that way because, for example, with remaining inventory, we can use it in our boxes, and so it is still being sampled to a really valuable audience and nothing is really going to waste.
When you actually map out the mathematics of the wholesale model, we’ve been surprised to learn that it can actually be more profitable, particularly with scale, which we don’t really have today, than to work with a distributor, with a broker, with all of these discounts, the buy-backs. It just becomes almost impossible to make money. I think a lot of these founders don’t know enough, and it’s not their fault, but they don’t know enough to calculate the different scenarios in the beginning and understand what the potential, or lack thereof, actually is.
You can learn more about Pop Up Grocer here. This interview has been edited and condensed.