Experience + Confidence = Success

Written By:
Jay Jacobowitz
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In this month's issue, you’ll find WholeFoods’ 34th Annual Retailer Survey. There’s lots of good news to report. Smaller stores, those under 2,600 square feet, which have struggled the last few years, showed signs of strength, reporting higher sales, profits and larger basket sizes. Overall, two main trends emerged from the survey: mature stores—those in business longer with the most experience—and proactive stores; those that willingly, consistently educated their customers and publicly promoted their nutritional expertise community-wide, did best.

Trend 1: Experience. Veteran stores in the survey, operating for 38 years on average, have medium-sized (3,399 ft2 GLA), efficient spaces that generated annual sales of $883 per square foot, versus $346 for all respondents. These retailers offered two- to four-dozen SKUs of private label supplements, indicating their managers recognize the brand-value their store name and reputation have, separate and apart from the third-party-branded products they sell.

Another example of experience comes from stores generating 30–39% of sales from perishables, and 28% from supplements. This group had the highest dollar and percentage profits; $311,667 and 15%, respectively. These stores balanced strong supplements and perishables departments, with enough fresh foods to attract customers interested in dinner and daily shopping, but not going overboard with two riskier departments: fresh produce and prepared foods, which were 7.9% and 4.2% of sales, respectively. Stores with much larger produce and prepared foods departments were less profitable.

Trend 2: Confidence. Stores that were passive, spending most of their marketing budgets on Yellow Pages advertising, had the fewest customers per day. Stores that used marketing dollars more dynamically; on newspapers, radio, website, flyers, community outreach and in-house nutritional newsletters, had the highest customer counts. 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 comprehensive marketing service designed especially for independent natural products retailers. With 34 years of wholesale and retail industry experience, Jay has assisted in developing over 900 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. He will next be speaking at Southeast NPA’s SOHO Expo (Orlando, FL) on December 1, at 7:30 p.m. on “To Keep and Win Customers Today, Tell YOUR Story.” Jay will be available at booth #606. He can be reached at (800)328-0855 or via e-mail at jay@retailinsights.com.

Published in WholeFoods Magazine, December 2011