Retail Reality, Category Creation, and Profit Drive CPG Growth

The real path to scaling a CPG brand isn't about working harder, but about understanding the hidden dynamics of retail, pricing, and category creation. This conversation with Keith and Ryan DiGregorio, founders of a breakthrough cleaning product, reveals how early exposure to "27 Unbreakable Rules" provided a blueprint for exponential growth. They highlight the surprising reality that 80% of purchases still occur in physical retail, challenging the common e-commerce-first mindset. This insight is crucial for any founder looking to break through digital ceilings. The advantage for readers lies in gaining a strategic framework that prioritizes profitability and market positioning over sheer volume, offering a roadmap to build a brand not just for growth, but for acquisition.

The 80% Retail Reality: Why Digital-First Founders Miss the Biggest Pond

The prevailing wisdom for many CPG startups is to build a strong online presence first, using e-commerce as a proof of concept before tackling brick-and-mortar retail. However, this conversation with Keith and Ryan DiGregorio, informed by the principles of "27 Unbreakable Rules," exposes this as a potentially limiting assumption. They learned that the vast majority of consumer purchases, approximately 80%, still happen in physical retail environments. This isn't just a statistical anomaly; it represents a fundamental shift in perspective for founders accustomed to the digital landscape.

"When people are playing in the digital world, there's nothing wrong with having a big digital business and we encourage that and we do that but no matter how big your company is on amazon on your website you're swimming in a 20 pond right not the 100 pond."

-- Mark Young

This stark contrast between the digital "20 pond" and the broader retail "100 pond" means that even a highly successful online business is only tapping into a fraction of its potential market. For founders like Keith and Ryan, this realization was a catalyst for re-evaluating their entire growth strategy. The implication is that focusing solely on e-commerce, while a valid starting point for validation, can inadvertently cap a brand's scalability. The true opportunity lies in understanding how to navigate and succeed within the retail ecosystem, a space that demands different strategies for pricing, shelf placement, and consumer engagement. The advantage here is clear: by embracing the retail reality early, founders can position themselves for significantly larger market share and faster growth, avoiding the "digital ceiling."

Creating Your Own Category: The Power of Novelty Over Familiarity

A common fear for new product developers is the perceived difficulty of changing consumer habits. The instinct is to make a new product feel familiar, to slot it into an existing category so consumers understand its purpose immediately. However, Keith and Ryan DiGregorio, guided by the principles they encountered, discovered a more potent strategy: creating a new category altogether through novelty. This approach, while seemingly more challenging, offers a profound competitive advantage by sidestepping direct competition and establishing unique market positioning.

"The best way to predict the future is to create it. We've had conversations internally about how hard it is to change habits which we all know that it's difficult but positioning our product now the way that we're going to and you know you guys know as good as anybody better than anybody where we're headed with that it's it's something different that hasn't been done being able to position ourselves in a way that's unique like we talk about authority and novelty that is what's going to set a product apart and set it up for success."

-- Ryan DiGregorio

This insight challenges conventional wisdom. Instead of trying to be the "best" within an existing category, the focus shifts to defining a new one. For Keith and Ryan's cleaning product, this means not competing with existing household cleaners, but positioning it as a superior, do-it-yourself alternative to professional services. This creates a unique value proposition that is difficult for competitors to replicate. The downstream effect of creating a new category is that it bypasses established players and allows the brand to set its own pricing and market perception. While it requires a commitment to innovation and a willingness to educate the market, the payoff is a defensible position and a more direct path to significant scale. This requires patience, as consumers may need time to adopt the new paradigm, but the long-term advantage of being the category creator is immense.

The Retailer's Profit Equation: Why Higher Prices Win Shelf Space

A persistent myth in CPG is that success hinges on offering the lowest price to consumers, thereby maximizing volume and perceived value. This often translates into a race to the bottom, squeezing margins for both the brand and its retail partners. Keith and Ryan DiGregorio, however, uncovered a critical shift in perspective from the retailer's viewpoint: profitability often favors higher-priced products. This understanding is crucial for CPG brands aiming for sustainable growth and strong retail relationships.

"The best way to predict the future is to create it. We've had conversations internally about how hard it is to change habits which we all know that it's difficult but positioning our product now the way that we're going to and you know you guys know as good as anybody better than anybody where we're headed with that it's it's something different that hasn't been done being able to position ourselves in a way that's unique like we talk about authority and novelty that is what's going to set a product apart and set it up for success."

-- Keith DiGregorio

Retailers earn a percentage of the sale price. Therefore, a higher-priced item, even if it sells in slightly lower volume, can generate more profit per unit for the retailer. This doesn't mean abandoning value for the consumer; rather, it means positioning the product so its value proposition justifies a premium price. For Keith and Ryan, their cleaning product isn't competing with budget brands; it's competing with the cost of professional cleaning services. This framing allows for a higher price point that is still perceived as a bargain by the end consumer, while also being attractive to retailers seeking robust profit margins. This insight directly impacts pricing strategy, marketing messaging, and even product formulation, encouraging brands to focus on premium attributes and demonstrable effectiveness rather than simply being the cheapest option. The delayed payoff here is a stronger, more profitable partnership with retailers and a brand perceived as high-value, creating a durable competitive advantage.

The 10x Leap: Exponential Growth Over Incremental Grind

Many founders believe that scaling a CPG brand is a linear process--work harder, spend more on ads, and achieve incremental growth. This conversation, however, emphasizes the power of exponential thinking, a concept that transforms the approach to growth from a grind to a strategic leap. The core idea is that aiming for a 10x increase in a compressed timeframe, such as 36 months, forces a radical re-evaluation of strategies, cutting through noise and focusing on truly impactful initiatives.

"If you're trying to and the future you're trying to go towards again you can look at the past or you can take a look at everything that competitors are doing or or what has been done and if that's all that you do then all you're going to do is at best what they have done but they're already doing it and so you're not going to be able to really pave your way and find your space and create that novelty and that new experience for the customer which then why do i buy it right so so you have to go and look at and say this is my future this is our brand this is our ability now let's go create that create that value for the customer which in turn will also create the value for your business right."

-- Justin Girard

This exponential mindset is not about working harder; it's about working smarter and more decisively. It requires identifying the few strategies that can deliver disproportionate results, rather than spreading resources thinly across many less impactful tactics. For Keith and Ryan, this meant recognizing that certain experiments, like podcast ads, while yielding some return, were not part of their 10x strategy and could be deprioritized or eliminated. Similarly, it led to the strategic decision to sell off another business to maintain laser focus on their core CPG venture. The advantage of this approach lies in its efficiency and its ability to create significant separation from competitors who are still operating on an incremental growth model. The discomfort of making bold decisions now--like cutting off less effective channels or divesting other assets--creates a powerful future advantage by concentrating all efforts on the highest-leverage activities, accelerating the path to significant scale and potential acquisition.

Key Action Items

• Re-evaluate your primary sales channel: If e-commerce is your sole focus, actively explore strategies to enter brick-and-mortar retail. This is where the majority of consumer purchases occur.
  • Time Horizon: Immediate assessment, Q1 planning.
• Challenge your pricing strategy: Instead of aiming for the lowest price, assess if your product can justify a premium. Position it against the cost of alternatives (e.g., professional services) rather than direct competitors.
  • Time Horizon: Q1 review of pricing and messaging.
• Define your unique category: Identify opportunities to position your product as a novel solution that creates its own market space, rather than competing within established categories.
  • Time Horizon: Ongoing product development and marketing strategy.
• Embrace exponential growth thinking: Set aggressive, time-bound growth targets (e.g., 10x in 36 months) and ruthlessly prioritize initiatives that directly support this goal, eliminating "noise" activities.
  • Time Horizon: Strategic planning for the next 1-3 years.
• Build a business that can run without you: Document systems and processes, delegate responsibilities, and empower your team to ensure the business can operate and grow independently of the founder.
  • Immediate Investment: System documentation and delegation training.
  • Payoff: Enables scalability and potential acquisition (12-18 months).
• Be ruthlessly honest about your product and market: Utilize self-assessment questions to confirm your product solves a real problem, possesses unique differentiation, and has broad appeal beyond a niche.
  • Time Horizon: Continuous self-evaluation.
• Seek the right "Who, Not How": Focus on identifying and onboarding the best people to execute tasks, rather than trying to learn how to do everything yourself.
  • Time Horizon: Ongoing hiring and partnership strategy.