New Economic Realities   //   May 22, 2024

How Misfits Market rescued products previously destined for Foxtrot

Misfits Market is known for rescuing unwanted grocery products. Typically, that means scooping up produce that’s still edible but doesn’t meet grocers’ aesthetic standards. But recently, Misfits Market has been focused on a different type of rescue.

This week, Misfits Market is adding 35 products from 15 emerging brands to its offerings that were supposed to be sold at Foxtrot locations until the retailer’s sudden closure. The rescue plan, which came together over the last few weeks, allows a number of food and beverage brands to find a new home for their unsold products by rerouting them directly to Misfits Market’s warehouses. The brands include Bon Bon, Deliciously Ella, Leisure Hydration, Spring & Mulberry chocolate, Couplet Coffee and Courtside. According to Misfits Market, the company bought these products from Foxtrot’s former distributor in a bid to grow its snack, beverage, and candy assortment while creating new partnerships with the brands involved.  

Anytime a small business needs to reroute products to new retailers, it can be an expensive headache. Jessie Kimsey, senior category manager for snacks and beverages at Misfits Market, told Modern Retail the company is looking at incidents like the Foxtrot shutdown as an opportunity to help small brands while also adhering to its mission of reducing food waste.

Kimsey said Misfits Market’s nimbleness allows it to quickly scoop up products — like it did following the Foxtrot closures — much faster than brick-and-mortar retailers. “It’s devastating the impact this has on these small businesses,” she said.

This program is part of a bigger announcement by Misfits Market. The company bringing on a new wave of buzzy brands, like Magic Spoon, as well as expanding its private-label line. When the Foxtrot shutdown news broke in late April, Misfits Market reached out to Pod Foods, Foxtrot’s food distributor of choice. From there, brand founders were able to connect with Misfits Market to further coordinate the transfer of inventory.

The partnership is also a way for these brands to enter a new grocery channel — and for Misfits Market to see if these products are a permanent fit. “We are seeing this as a 90-day introductory testing period, and if the items perform the brands will secure a permanent spot in our assortment,” Kimsey said.

Much of Misfits’ assortment focuses on produce, pantry and meat. The service works by giving customers a window of time each week through which they can shop, adding to their grocery order based on what is available through the Misfits Market app at that time. Then, their box of groceries are delivered to their doorsteps.

However, the company is looking to grow in snacks and beverages. And, many of the brands that previously sold through Foxtrot fall into this category.

“Snacks is a category where we have what we call ‘opportunistic buys,’” Kimsey said. That is, it’s an area in which Misfits Market thinks it can really introduce customers to new products.

Much of Misfits Market’s product assortment comes from sourcing excess inventory. Kimsey said the company uses several strategies to take products off brands’ hands. Misfits Market frequently accepts products that have labeling errors or misprints. Receiving products that are close to the sell-by date is another way Misfits Market refreshes its weekly assortments. Most of Misfits Market’s inventory comes from brand suppliers themselves, but the Foxtrot rescue haul represents an opportunity for Misfits Market to work more closely with distributors.

This strategy is also part of the company’s main mission: to find organic produce and sustainably sourced food and deliver it to customers, promising up to 40% off store prices. According to Misfits Markets’ 2023 impact report, every box shipment helps save about five pounds of grocery waste. 

Kimsey said that when it comes to balancing assortments, the Misfits Market team tries to keep a set of popular SKUs consistently available while also introducing newness. Since 2022, Misfits Market has also been growing its pantry private label, Odds & Ends. Since it acquired competitor Imperfect Foods in 2022, Imperfect’s private label items have been added to the assortment. 

Misfits Market’s assortment consists of about 75% everyday items and 25% is what Kimsey refers to as “opportunistic” sourcing. Currently, Misfits has 610 items for sale, and that’s expected to nearly double by the end of the year. “I see that 25% as a great place to build on trends and be a safety net for suppliers,” Kimsey said.

Ice pop brand GoodPop is one brand that has been working with Misfits Market for two-and-a-half years to ensure it is reducing inventory even as it introduces new products or refreshes old ones. For example, GoodPop CEO Daniel Goetz said the brand worked with Misfits Market to offload products when it updated packaging for its freezer pop and mini can lines.

“Given our sustainability commitments, we wanted to make sure that we weren’t wasting any packaging in the transition of those new items onto retail shelves,” Goetz said.

Kimsey said that as CPG startups continue to face challenges in traditional retail, Misfits Market wants to become their go-to inventory solution. At the same time, these newcomer brands on the app can help attract bigger basket sizes among Misfits Market

Reducing food waste in retail can be complicated. Historically, most brands and retailers have resorted to selling inventory through third-party online platforms or liquidators, said Marco Valentini, a managing director at Alvarez & Marsal. But that presents challenges when trying to offload perishable foods.

With the risk of retail partners pulling orders or even closing, Valentini foresees the waste-reduction model growing, especially as more volatility springs up in the physical retail space. Operators like Misfits Market and Thrive Market are part of a growing segment,” Valentini said. However, he added that as retailers and manufacturers continue to focus and improve their forecasts, waste-reduction players “may lose traction.”

For Misfits Market, part of its growth strategy includes consistently bringing on new brands its e-commerce shoppers would be interested in. “Our customers love surprise and delight, and lean into trend-forward products,” Kimsey said. “We’re here to help, and brands can think of us as guinea pigs to test how customers react to their products.”