Small business and retail: how retail chains work with local producers

The "ECO Market" chain has started looking for local food producers in the regions where the company's stores operate. Partners can include farms, small manufacturing enterprises, family-run businesses, and craft brands.

"We have launched an initiative that opens doors for regional producers," says Oksana Shpak, Commercial Director of "ECO Market".

Is such cooperation interesting for small producers? What are its features, and what should both sides be prepared for? To clarify these questions, the correspondent... LIGA.net spoke with top managers of retail chains, manufacturers' associations, and entrepreneurs

What does "ECO Market" offer?

One of the obstacles for small businesses on their way to the shelves of large chains is the complex bureaucratic procedures or requirements that only large factories can handle, admits the commercial director of "ECO Market". Dozens of documents, multi-level approvals, and strict standards are required, she says.

To attract small businesses, the network decided to simplify the conditions. Product manufacturers only need to have basic mandatory documents – quality certificates (DSU, HACCP, sometimes ISO) and confirmed registration.

A special system has been created for submitting applications. platformOn it, you just need to fill out the registration form and upload the product specification.

"Our team will work with the manufacturer next," says Oksana Shpak.

It is difficult for small producers to supply goods to all the chain's retail outlets, of which there are 81 in ECO-market. Production volumes don't always allow for such a large output.

"ECO Market" is open to individual cooperation formats. It will be possible to agree on supplying specific stores in one region, gradually scaling up deliveries.

"Our strategy is: better to have less, but consistently and with quality," assures the commercial director.

Two cooperation formats are offered for logistics. Manufacturers will be able to deliver products to the "ECO market" distribution center, from where they will be distributed to stores. Another option is direct delivery to stores by the supplier.

"ECO Market" also promises to help with product promotion. For example, involving the supplier in participating in festivals.

Festivals are themed periods during which individual product categories receive special offers, informational support, and online promotion. This format allows local producers to quickly present their products, and buyers to pay attention to local brands.

"For example, it could be a 'Berry Festival' or a 'Vegetable Festival' — discounts on seasonal products, separate shelf space, and an advertising campaign," explains Oksana Shpak.

Experience of other networks

"ECO Market" is not the first retailer to pay attention to local craft producers. Similar experience is held by NOVUS ("FoodNation" project), Silpo ("Lavkа Traditsiy"), WINETIME, METRO, and GoodWine.

Silpo has had a "Shop of Traditions" department since 2011. As of 2024, the chain has collaborated with 240 local producers. Their products are available on the shelves of 186 Silpo supermarkets. As part of this project, the chain organizes festivals, market days, and training for food entrepreneurs.

For example, in 2024, the network held three "True&Local" festivals. The events were attended by 3,500 people, and average sales increased by 180%, according to the report. reports company.

NOVUS stores have special "FoodNation" zones where products from local and craft producers are displayed. "FoodNation" was created after the start of the full-scale invasion, in response to customer demand for Ukrainian goods.

"We gather unique, organic, and truly authentic products from different regions of the country, which in terms of quality can compete with European ones, and sometimes even surpass them," says Daria Ivanchenko, Commercial Director of NOVUS.

To ensure the quality of goods in the network, audits are conducted jointly with suppliers at all stages: from verifying documents and production conditions to controlling supply.

Is small business ready to enter large-scale retail?

Businesses have different attitudes towards the cooperation of small producers with supermarkets.

Such partnerships present a number of challenges. One of the most problematic issues is the payment terms for goods sold. Depending on the type of product, networks may pay one month or three months after delivery or after the sale of the goods.

"For a craft producer, this is unrealistic. He is used to this: he made it, sold it, got the money, made it again," explains Oleksandr Taranenko, head of the All-Ukrainian Association of Bakers.

Meat and sausage producers in the regions are opening their own retail chains. Under these conditions, a meat processing plant may not be very interested in retail, says Mykola Babenko, head of the "Meat Industry" association. For example, the "Meat Master" chain, a local producer, is developing in Vinnytsia region.

To supply products to retail chains, you need to constantly take care of their quality. This is well known to Oleksandr Melnyk, the founder of the Kyiv-based company "Melnyk Sad". Seven years ago, he began supplying potted herbs – rosemary, basil, thyme – to the METRO chain. Today, in addition to METRO, he works with Silpo, Auchan, and WINETIME.

Retail sales in this product category account for up to half of his sales. He sells the rest through his own outlets and to wholesale suppliers. His product, the entrepreneur says, is seasonal, and sales often depend even on the weather. The manufacturer bears the risk of unsold goods; he takes them back and disposes of them.

However, Melnyk believes that cooperation between retailers and small businesses has prospects. A large manufacturer will not produce niche goods in limited batches. This demand can be met by a small enterprise.

Such cooperation can be interesting for entrepreneurs who are looking for new sales channels. For example, the family of Inesa and Taras Petukhovych from Lviv region. They produce walnut paste under the brand ITARA. They sell their products at exhibitions, through social media, and in individual stores and cafes.

"We are already ready to move from the fair format to the 'business-to-business' format," says Inesa.

In the autumn, the family plans to expand. They intend to move production to a separate facility and hire employees. This will allow them to increase production volumes. The entrepreneurs are interested in cooperating with retail chains.

The couple is currently working on certifying their ITARA pasta. However, Inesa says it's important to understand the necessary supply volumes. For now, they could supply three to five stores.