If you are an independent natural products retailer with a brick-and-mortar store, you may be feeling a bit perplexed about how to move your business forward. In today’s marketplace, several forces at once are bearing down on independents as never before.
First, technology in the hands of shoppers has shifted control of the market to the consumer and away from manufacturers and retailers. Second, an anemic economy and high gas prices make shoppers take fewer trips and visit fewer stores per trip. Third, traditional food retailers, mass merchants, club, drug and other stores now carry a “critical mass” of natural products that drain shopping trips away from independents. And, vitamin chains and Internet and catalog supplement retailers are putting downward pressure on independents’ profit margins because these specialists either manufacture their own supplements, don’t have the overhead of a physical store with trained staff, or both. Fourth—and perhaps most important—consumers themselves are changing. People today are beginning to desire a more holistic approach to well being; they wish to eat and enjoy food as their main source of nutrition.
Make Mine Fun
It is the consumers’ increasing desire for enjoyable eating experiences—as the main way to get good nutrition—that has put pressure on natural and other food retailers to offer more fresh and prepared foods. This is difficult, expensive and risky to do, and these barriers are why most independent natural products retailers have opted not to invest in larger perishables presentations.
But the alternative; offering mostly shelf-stable, non-refrigerated packaged foods, supplements and personal care items, makes for a much less interesting and exciting store. When a store doesn’t offer many perishables, shopping trips decline to once or twice per month from multiple times per week. And recent industry survey data confirm that small vitamin/supplement stores are continuing to struggle with declining sales and profits while larger naturals stores with more perishables are increasing sales and profits.
Natural products retailers that don’t offer a full array of perishables today will fall short of consumers’ desire for “food-as-fun,” so shoppers will tend to pigeonhole you as a “limited diet” store. Gluten-free is a great example of this limited-diet identity, as are previous fad diets such as low-carb and low-fat. Like these restricted diets, gluten-free will continue for a while, but eventually shrink as those not suffering from actual Celiac Sprue tire of the taste compromises, higher cost, inconvenience of eating with others and lack of fun in eating alone. The trend-line is clear: U.S. consumers want eating for nutrition to be fun and enjoyable and will increasingly demand food experiences that meet this expectation.
What You Can Do
I assume that most of you—as a result of reading this—are not going to expand your stores, hire a chef, and add a deli, grab-and-go refrigerated case, salad bar and fresh produce. But if you are, please seek help before you do. For everyone else, let’s take a look around the country at what’s working for independents and what’s not. Unlike yesterday, when you could throw a bunch of unique-at-the-time natural products up on the shelf and wait for shoppers to rush in, today you need more proactive energy.
Independent retailers succeeding today have some common traits:
1. Driven by higher values: Everyone wants to make money and needs to be profitable to stay in business. But above and beyond profits, independents who continue to be successful today not only believe in natural health alternatives, but truly want to help as many people as possible in their communities achieve well being. In a word, this is passion. If you believe in the products, but don’t have the all-consuming desire to help others, you will not succeed in today’s marketplace. Competition is too tough, and shoppers are too demanding.
2. Holistic: This deep, genuine desire to help others extends to employees as well, with successful retailers allowing and encouraging increased skills and responsibility. This can mean paying for continuing education, delegating important store operating duties and elevating those with initiative to supervisory roles. To these retailers, mistakes are an investment in the future, and the primary way employees learn and grow.
3. Proactive in the community: An independent has a built-in advantage over non-local chain stores; you live in your community. The most successful retailers use this connection to raise store visibility and win hearts and minds. This could mean sponsoring a softball team, adopting a classroom, or providing store tours for students, diabetics and other “metabolic communities.” Also, participating in the many charitable opportunities creates a “reciprocity” effect; the desire on the part of community members to return the favor by staying loyal to you and shopping in your store.
4. Honor the business: Although their businesses differ greatly from one another, independents succeeding today are careful to feed the needs of the business itself. This could mean a fresh coat of paint or refinishing the floor, new lighting or signage. It means being familiar enough with buying, inventory levels and department profit margins to know when things are out of whack. It means a not necessarily large, but consistent investment in marketing. In a word, these folks are serious about the business part of the business.
Today, shoppers want to know the story behind the products and services they buy. Where do the products come from? How are the employees treated? What are the values of the owners? As an independent retailer, you have—potentially—a powerful story to tell. If you believe with a passion in serving others, if you truly enjoy increasing the skills of your employees, if you—or someone from your store—are outgoing in your community, and if you have the patience and foresight to see your business surviving you…then you are much more likely to succeed in this vibrant market. 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 Natural Products Northwest, scheduled for Thursday, October 20, 2011 in Seattle, on the topic of “To Keep and Win Customers Today, Tell YOUR Story”. Retail Insights® will be exhibiting at the show, and will also be exhibiting at Natural Products Expo East in September. He can be reached at (800)328-0855 or via e-mail at firstname.lastname@example.org.
Published in WholeFoods Magazine, July 2011