DTC Briefing: How protein bar brand Aloha re-entered Target 7 years after being dropped

Rekindling the relationship wasn’t easy. In between, Aloha had to reinvent the struggling business from scratch and become profitable before pursuing retail again. The brand did so by reformulating its products and growing its sales through its DTC website, Amazon and other grocery marketplaces. This multi-year overhaul was spearheaded by CEO Brad Charron, who joined the company in 2017. Last September, Aloha was able to relaunch in Target with two SKUs rolling out in about 600 stores. Over the past month, two more SKUs were added and its door count within Target doubled.

As startups clamor to get into retailers like Walmart and Target, Aloha’s story serves as a cautionary tale. If brands launch into big-box retail before they are ready, it can take years to restore the relationship.

When Charron arrived in fall 2017, he said that Aloha was close to going under, as the operation was losing money. “I knew that when I came into this, it was going to need a resurrection,” he said.

One thing the company did have going for it was distribution in Target. Aloha had launched in Target about a year prior to Charron joining. But it hadn’t figured out how to handle the slotting fees and high marketing costs associated with launching into mass retail.

“The Target buyer said ‘Look, I really like the idea of the brand, but I’m taking you out,'” Charron recalled. That decision was terrifying, he said, “because that’s half of your revenue going to go out the door.”

“The old Aloha was anxiously saying yes to everything as opposed to thinking about the cadence of how to build a company,” Charron said. “There was also cash flow mismanagement, and you can’t be poorly financed entering a big-box retailer.” Moreover, Charron said, “the product just wasn’t good enough” to compete in such a cutthroat category. 

Aloha had to figure out quickly how to make up this delta of revenue. But, the sudden change also gave the company an opportunity to shift and become more of a digital-first brand. “We decided to focus on the product and getting the math right first,” Charron said.

After Aloha pulled out of Target, the company immediately shifted its resources to building out a DTC website, and shortly after, it launched an Amazon store.

Aloha also pulled out of the drugstore channel and some grocery chains. “I wanted to make sure that when we were going into grocery and retail, we came in from a position of strength,” Charron said.

Improving product taste became another top priority. In addition, Aloha tweaked its products’ ingredients to get the right balance of protein, fiber and sugar levels. “No sugar alcohols, no shortcuts, just food that tastes good and has the right texture,” Charron said. Additionally, Charron said it was important to earn certifications that add trust and value that better-for-you consumers care about, like being USDA Organic and Non-GMO Project verified. 

Then, it was time to find other online partners who could help boost Aloha’s presence as it rebuilt its business model. Aloha launched on Thrive Market, for example. Then came a return to grocery expansion. In 2019, Aloha landed at Sprouts and Harris Teeter.

By the time Aloha relaunched in Target last year, the brand had a better idea of how to succeed in retail. As just one example, Charron said the first time Aloha launched at Target, it was sold in the supplements aisle; now it’s sold in Target’s grocery department.

And overall, Charron said Aloha’s slow-and-steady approach helped the brand build a diverse channel mix and ensure it’s not too reliant on a single account.

According to Genevieve Gilbreath, founding partner at Springdale Ventures, “Brands have become hyper-fixated on landing at big chain retailers like Whole Foods and Target without the foundation to support it.”

Sometimes, these partnerships are struck before a brand has done enough to build demand online. “And without enough proven demand or proper cash reserves, these channels end up becoming a liability instead of a growth lever,” Gilbreath said. 

She said she is seeing more brands succeed with “a strategic mix of channels,” which may include independent grocers or alternative channels like food service.

Charron said that while brands may find it exciting to land a big new retail partner, that’s just the beginning of the hard work. “Before you go into a place like Target or Whole Foods or Wegmans, you better be ready to go,” he said. “Because once you’re out, be prepared to sit in purgatory for five to seven years.”

By the numbers: The menopause market

Later this week, Modern Retail reporter Melissa Daniels will have a feature on the menopause market. She spoke with half a dozen brands about how they are increasingly looking to win over women in their 40s and early 50s. It’s a demographic that many marketers and brands consistently overlook. Here are some key numbers to know about this demographic:

90 million: The number of women in the U.S. projected to be postmenopausal by 2060, according to nonprofit practitioner certification group The Menopause Society.
314%: The percentage increase in the amount of venture capital going to women’s health between 2018 and 2023, according to Silicon Valley Bank.
80%: The amount of health-care decisions made by women, according to a recent report from Women’s Health Access Matters and KPMG. –Melissa Daniels

How to stand out as a challenger brand

To kick off the year, investment bank Solomon Partners put out a report on the trends they believe will impact retail M&A this year. In the report, Solomon Partners predicts that strong next-generation and challenger brands will continue to emerge, citing Alo Yoga and Vuori’s outsized growth when compared to the category, including leaders like Lululemon.

“We’re bullish on these [challenger] brands. These are the exceptional leaders of this generation,” David Shiffman, partner and head of consumer retail at Solomon Partners, said.

Brandon Yoshimura, director of the company’s consumer retail practice, walked Modern Retail through what opportunities there are for challenger brands in the year to come, including where they can gain an edge.

Brand and product differentiation. “Consumers today are experiencing decision fatigue as they shop from a seemingly endless aisle of options while being inundated by information,” the report states. Yoshimura brought up the example of buying a black T-shirt. “It’s one thing to be in a store and have two black T-shirts you can try on. Your ability to distinguish between options in physical retail tends to be better,” he said. But it’s another thing when you’re trying to pick just one of a hundred black T-shirts that might be found on Amazon.

Increasingly, Yoshimura said, challenger brands have to stand out through steady brand building. When customers are combing through thousands of black T-shirts online, they are more likely to remember the brand that, say, ran a billboard ad featuring a celebrity. “The customer attention today is so fragmented,” he said, so “finding that relevance is really, really hard.”

Social Validation: According to the report, the best challenger brands also stand out by establishing “legitimacy and social relevance through peer adoption and validation from relevant authorities, influencers and celebrities.”

Some brands, like Skims, find validation by partnering with a celebrity. But others find validation through loyal members of a community or category enthusiasts. If you look at a brand like On Running, Yoshimura said, “it was validated by experts in running boutiques.”

But it’s hard to come up with a playbook for building social validation because it’s not dependent on one thing, he said, adding, “You can’t just lean into celebrity. … You can’t just go all-in on influencers.” –Anna Hensel

What I’m reading

• DTC brand Birdy Grey, known for its bridesmaid dresses, named a new CEO after doing $100 million in revenue last year.
• It’s been a challenging week for beauty as both E.l.f Beauty and Estée Lauder issued disappointing earnings.
• Controversy brewed over Hims & Hers‘ Super Bowl ad.

What we’ve covered

• Venus et Fleur is betting on ultra high-end products, like a $1,699 arrangement and a $4,999 arrangement, to win over more customers this Valentine’s Day.
• The parent company of Sheertex placed nearly 40% of its workforce on a temporary layoff last week. “The impending U.S. tariff changes and delays in closing the final portion of our fundraise have led to tremendous financial uncertainty,” the CEO wrote on LinkedIn.
• Faire launched advertising last year. CPG brands sound off on how these ad units have performed.

This article has been updated to clarify a quote from David Shiffman.