Coming Into Focus: What size is best?

Retailer survey reveals opportunities for success.
Written By:
Jay Jacobowitz
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In this month’s Annual Retailer Survey, natural products retailers give new insight into success. One of the key findings from this year’s survey is that stores that stay small—less than 1,000 square feet—and focus on vitamins, supplements, and health and beauty aids, are very profitable and growing. Larger stores—2,600 square feet or larger—that offer more fresh foods are also doing well. Here’s the rub: “in-between” stores, those with 1,000 to 2,599 square feet, were most likely to show declining sales. Why is this?

At Retail Insights, we track natural products retailers all over the country, and this year’s survey confirms what we’ve been seeing. Stores in this “in-between” size carry more foods than smaller stores, but not enough to compete with conventional supermarkets, which now carry as many natural foods, and more fresh natural foods, than the “in-between” retailer. Stores that are smaller than 1,000 square feet don’t depend on food shoppers.

As with most things in life, things are the way they are because they got that way. What I mean is many “in-between” stores started at about 1,000 square feet and, as food sales grew, added space, knocking down a wall and building out the next 500 or 1,000 square feet. This worked well as long as supermarkets weren’t competing on natural foods, but as competition heated up, growth slowed.

The result is that retailers got stuck in this “in-between” size; not growing fast enough to need more space, and not being able to give space back to the landlord. The reality today is that most conventional supermarkets have about 2,000 square feet of natural products, plus more perishables such as organic produce, dairy, frozen foods, and hormone-free meats and poultry than do “in-betweens.” Merely being on par with—or slightly behind—conventional supermarkets puts “in-between” retailers at a disadvantage.

Larger stores in the survey—those 2,600 to 10,000+ square feet—are also doing well, increasing customer counts and sales. One of the main reasons, I believe, is that these stores get more than 20% of their sales from perishables, putting their fresh offerings in the running with conventional supermarkets. As the song goes, “Accentuate the positive, eliminate the negative, but don’t mess with Mr. In-Between.” WF

Jay Jacobowitz is president and founder of Retail Insights®, a professional consulting service for natural products retailers established in 1998, and creator of Natural Insights for Well Being®, a holistic consumer marketing service designed especially for independent natural products retailers. With 31 years of wholesale and retail industry experience, Jay has assisted in developing over 800 successful natural products retail stores in the U.S. and abroad. Jay is a popular author, educator, and speaker, and is the merchandising editor of WholeFoods Magazine, for which he writes Merchandising Insights and Tip of the Month. Jay also serves the Natural Products Association in several capacities. Jay is next scheduled to speak at SOHO (Orlando, FL) on December 3 at 7:30pm on “How to Get New Customers into Your Store.” He also will be on the panel, “Find Our Blind Spots” on December 4 at 3:00. Jay will be available at Booth 304. He can be reached at (800)328-0855 or via e-mail at jay@retailinsights.com.