Know-How Exchange : Strategy

I agree with querciwa. In my area (Silicon Valley of CA), there are a variety of grocery stores aiming at different markets. Safeway and Albertsons are the general ones, Grocery Outlet is a low price, often closeout products. Whole Foods is high price, healthy/organic products. And Lunardis and Draegers are high price, high service stores. You should choose which stores in the areas you want best fit your product strategy, and target them.

While targeting the right supermarket (i.e. sharing your focus on high-quality for a price) is important, you will anyway want to put together a very convincing presentation, including:
1) how other distributors have adopted your product with great success (some manufacturers advertise their early success in supermarket-oriented magazines),
2) exactly how you generate consumer pull for your product and which funds you are committing to it in the future
3) how your brand is going to contribute to the retailer's bottom line, in terms of category margin and store traffic (see above answers), but also in attracting the right kind of profitable shoppers: people who buy your quality product typically buy other high-margin products while in the store (I am currently working on developing software that allows manufacturers to do just that)

In other words, you want to convince your target supermarket that adopting your product will benefit them, and that not adopting your product will harm them (eg because their competitors will: point 1)

I think you may be surprised to learn that the supermarkets have an enormous amount of power in deciding which products succeed and which don't. If they're telling you your prices are too high, or their margins are too low, they're probably right -- even if it seems unfair or unreasonable to you.

Without their cooperation and acceptance, your product quality and your brand name are not likely to be worth much at all. You need to have a plan for working with them, not against them. It's frustrating, I know, but it's the way you have to play the game if you want the big volume they represent.

You may be well advised to seek some professional help in the form of a consultant with retail grocery distribution/sales experience. This is an important decision for you and your company. Get the advice, guidance, and direction required to make the right decisions.