2019 Retailer of the Year: Rainbow Blossom

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Talk about planting a seed: 42 years ago, Rob and Pumpkin Auerbach were young trailblazers, ready to make a difference. And that they did. In 1977, the couple established Louisville’s original health food store with a dream of bringing vegetarian offerings to an area that wasn’t exactly a hotspot of the natural foods movement. In the 42 years since, there have been some clouds for Rainbow Blossom—but the future looks bright. Today, Rob and Pumpkin’s daughter, Summer Auerbach, manages Rainbow Blossom’s four market locations (in Kentucky and Indiana) and wellness center—and she’s keeping true to the company’s roots while helping it grow.

Rock-n-roll beginnings

Rob and Pumpkin Auerbach, 1980.

Rob and Pumpkin met in New Orleans, and spent the early days of their relationship traveling—Haight-Ashbury in 1969, Woodstock, Colorado. WholeFoods met up with Summer at Expo East, and she shared the story of how it all started: “They spent time in these different cities where the natural food movement had already taken root, and when they went back to Louisville they saw an opportunity. They were vegetarians, and there were not that many options for them. As consumers, they really wished they had opportunities to get that natural food.”

And so, in 1977, Rob and Pumpkin opened their first location, which was more of a cafeteria that also sold the ingredients that were used in their recipes—bulk items, produce and from-scratch treats. The food was good, but as the pioneers who were introducing natural foods to the Louisville community, business got off to a slow start.

Until… “The band YES was coming through town,” Summer recounts. “They were a vegetarian band, and the promoter called and asked my parents if they catered. In those days they were barely getting by so they said, ‘Yeah, sure we cater.’ They had never taken a catering job before.” It was an opportunity—and Rob and Pumpkin nailed it.

“My parents made this great vegetarian food that was so much more sophisticated than the food the band had been getting on the road,” which was basically just cheese sandwiches and the like. “There just wasn’t a lot of thinking outside the box with vegetarian food. But my parents ended up making quiche and homemade whole wheat bread and all of these things, and YES told the promoter it was the best food they’d had on the entire world tour.” Things took off from there. “The Rolling Stones, Liza Minelli, Elvis Costello, Van Halen…Rainbow Blossom catered to all of them,” says Summer. “Really what carried the store in the early years was the catering to the rock-n-roll bands that came through town.”

Meanwhile, the store started to grow its customer base as consumer interest in natural products grew—and the Auerbach family grew, too. “My sister and I were born and somewhere along the way my parents realized that catering these nighttime events was getting harder to manage,” Summer shares. “So they started pulling back on that, but the timing was right because the retail side started to pick up just as the foodservice side was becoming more challenging. There was a balance to it.”

Navigating a rocky road

Years passed, and business was humming along…until the “supernaturals” came to town. When Summer came home from college in 2004, her dad was battling cancer, and the business was suffering. “Whole Foods Market and Wild Oats moved into town across the street from each other, and we were this business on the sideline that ended up suffering tremendously. When I came home our sales had fallen by about 50% almost overnight.” The biggies were engaging in price wars with each other, she says, and it looked like Rainbow Blossom might be the casualty.

2nd generation success Summer Auerbach.

“I came back and the stores were a skeleton of what they used to be, and the energy was just so stagnant,” Summer shares. She was heartbroken, because Rainbow Blossom was more than just a business. “The stores for me really were this safe place where everyone in my life intersects. Whether that was family or friends or customers or employees—they were the people who made up my childhood and I always associated the store with being vibrant, healthy places. I came home and the stores were just devastated and on top of that my dad had major health issues.”

Rob and Pumpkin didn’t have the time to dedicate to a competitive strategy, Summer says. “Nor did they feel like they had the ability because they were working with the same margins they already had. They also didn’t have philosophies around how to compete—they’d been the only ones in the area before that, so they didn’t have to deal with competition.”

So in 2004, Summer’s parents asked if she would step in. She was 22, but already had a long retail history. “I had worked in the stores pretty much my entire life,” she says. “When I was old enough I bagged groceries, and when I was a little older I worked the register and then I got older and worked the smoothie bar. I managed stores for the summer when I was in college.” She agreed to help out for four months before hitting the road again—her next adventure, working with Americorps, was already all lined up.

Fast forward 15 years: Americorps’ loss was Rainbow Blossom’s gain, as Summer manages the four markets and wellness center. “At first thought I was just helping my family in need, but as I started to see where we were as a business and as a family, it became clear that leaving wasn’t an option. So I rolled up my sleeves and got to work. At the time it didn’t feel like every little thing I was doing was making a difference, but obviously it was.”

At a Glance: Rainbow Blossom’s Growth

1977: Rainbow Blossom’s first location, St. Matthews, opens. The store moves to different locations over the years, settling into its current space in 1999.

1989: Middletown opens, then moves into a new, expanded location in 2012.

2003: Springhurst opens, right before Wild Oats moved into the area. The store is converted into the Wellness Center in 2015.

2005: The New Albany store opens. “This was the first store that I opened, shortly after taking over,” Summer says. “It was a risk because we were not thriving, but it helped us increase our overall revenue and it sent an important message to the community that we weren’t going anywhere.”

2009: The Gardiner Lane store opens; it was the first LEED certified retail space in Kentucky.

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“We’d love to add another store in another area of town,” Summer shares. “I’m not interested in expanding outside of the Louisville market, but I believe there is potential in some underserved areas where our competitors would likely not locate.”

8 Success Secrets

Today, Rainbow Blossom is a place customers go for supplements and healthy food, with fresh organic local produce, specialty foods and a knowledgeable staff—as well as the Wellness Center, a “one-stop” for resources, education and products for mind and body. A look at the beliefs and actions driving success:

1. Know that you don’t know it all. One of the first things Summer did was join the Independent Natural Food Retailers Association (INFRA; www.naturalfoodretailers.net), which was established as a cooperative in August of 2005. “We were the 14th member to join—we joined in 2005,” Summer says. And while the decision to become an INFRA member may have seemed like a “little thing” at the time, it has paid off in a big way. INFRA membership, Summer says, “has been one of the most valuable things for our business. I’ve really been reflecting on that a lot this year. The opportunity to be able to connect and network with other retailers and see how they’re doing things and learning best practices…because I really did grow up in the store and I had worked all different aspects, but just because you know the way you do things doesn’t mean you know what the best way to do things is or other ways that are out there. My dad instilled the way we do things, but the industry changed so much and I feel certain that if I continued to do things the way we always had, we would not be standing here as a success story.” Today, the Rainbow Blossom team continues to gain knowledge—and to share the knowledge they have gained with fellow INFRA members. Summer also now serves on the INFRA Board of Directors.

Rainbow Blossom’s involvement with the Louisville Independent Business Alliance (www.keeplouisvilleweird.com) has also been beneficial. “It really spoke to me as a way to get out the message about the importance of buying locally,” says Summer. “I encourage all independents to connect with a buy local movement, if one exists in their area.”

2. Never forget that the “little” matters a lot. The power of small actions to deliver big results is something Rainbow Blossom’s CFO, James Followell, credits with their success. “Even at the smallest level, things that happen within the business have a direct correlation to its financial success,” says James, who has been with the company for three years. “Being the ‘numbers guy’ means having a hand in all aspects of the business. My favorite part of the day is being able to interact and help employees at every level of the company. People rely on me to provide answers and solutions to make smart decisions that will keep Rainbow Blossom’s success trending upward. The most exciting part of my job is being able to see the rewards of our hard work, especially the impact Rainbow Blossom makes on the local community.”

The focus on community as a driver of success can’t be stressed enough. Caring for the customer is central to every aspect of the business. “Rainbow Blossom is dedicated to not only offering the healthiest options to our customers, but also educating the community on how the things we put in our bodies impact overall well being,” Followell says. “Many of our customers desperately want to make the leap from conventional products to organic, natural, and healthier options. They often don’t know how to make this transition and need guidance. As a company, we work tirelessly to provide the most current and relevant workshops, training, education, and information about the products we carry. This is a service you won’t find at most of our competitors.” A few examples: Rainbow Blossom hosts weekly “Wellness Wednesday” events with wellness practitioners, as well as special events like Vinyasa Yoga, Mom and Baby Time, The Rainbow Blossom Gluten Free Fair and more. Beyond its doors, Rainbow Blossom supports organizations that are working to strengthen the Louisville community, especially those focused on health and wellness and food and farming.

Rob bought this in China, says Summer. “It is fun watching customers rub its belly!”

3. Focus on the personal touch. “As an independent retailer, we thrive because we provide what either big box natural food/gourmet stores or mass market retailers can’t/don’t: customer service,” says Marc Fulkerson, who serves as assistant store manager at Rainbow Blossom’s main location, and has been with the company since 1999. “We know the products, what’s trending, and how to guide folks through what’s oftentimes a new world for so many of them. The ‘big guys’ don’t have that ability based on their scale and often transient workforce.” He adds that many of the people who choose to shop in a store like Rainbow Blossom are looking for alternatives. “In a world where few people listen or take interest in others, someone to listen and give feedback on health issues/journeys gains a ton of positive traction and, in the end, loyalty.”

Followell shares a shining example of payoff for the customer, the employee and the business overall: “I recently spoke with a woman who came into the store to purchase CBD. Before finding CBD, she was on pharmaceutical medications for several health issues, but nothing seemed to help her completely. Knowing she could trust the products Rainbow Blossom offered, and taking advantage of our educational services, she was able to find the perfect brand to suit her needs. Since beginning to take CBD on a regular basis, she has quit taking several pharmaceutical prescriptions and feels better than she ever has. It is inspiring to speak with customers whose lives have changed because of the products Rainbow offers. Working for a business, and in an industry, with such an uplifting impact on the people living in our community allows me to sleep well at night. Everyday I can go home knowing the work we’ve done has positively impacted many people. Not everyone can say that.”

3rd generation success in the making!
Simon Zephyr, Summer’s son, samples the fresh produce.

Simon Zephyr, Summer’s son, is already making a splash at the store, and he’s not even 2! “I’ve been bringing him to the store since he was a baby,” Summer says. “We are a baby friendly work environment. We let people bring their babies in for the first six months.”

Now that Simon is older, his visits can be a bit of a handful. Summer shares the story of a “day off” when she popped into the store to do a few things. “I don’t really know how to not work, so I see a customer who needed help and I have my son on my hip and I’m trying to help them and all he wants to do is get down and run around and move all the products on the shelf—he’s rearranging. I ended up telling the customer, ‘I guess this is payback because I hear from the customers about how I was like that as a child in the store.’” Which brings up a good point to illustrate how loyal these shoppers are: They’ve been going there since Summer was toddling around the aisles. “It’s fun to hear those stories where a customer says, ‘I was getting bulk items and you’d come over and throw beans on the floor and then run around.’” Now Simon is doing the same, helping himself to apples and making people smile. “It’s neat to have him in the store,” Summer says. “Productivity goes down but morale goes up. He’s our most popular employee.”

4. Stay true to you…but keep evolving. “Our mission is to be a resource for improving the quality of life for ourselves, our community, and our company. I think we’ve been pretty focused on the same mission over the years,” Summer says. To help ensure that they are always serving as the most relevant resource, Rainbow Blossom maps out a strategic plan defined by a different agreed-upon theme each year. “We’re always asking our staff what they think the theme for the following year should be,” Summer explains. “Right now we are surveying to see what the 2020 theme should be. Part of the way we try to execute these themes is we have our team co-author the plan. Everyone comes up with their roadmap for the year and what they want to accomplish. Every store manager writes their own, and category managers really think about how that is going to tie in to the product selection and what items we want to bring in.”

In 2018, Summer says, “the theme was Healthy Babies & Healthy Families, so we tried to weave that through every aspect of the store.” Take marketing, for example: “Knowing how to focus our resources and look at the community and see what kinds of things we want to engage in helps,” Summer says. “With the family focus we made special expectant mother parking spaces, added coloring tables inside and we made sure our kids shopping carts were refreshed.” In 2019, the theme is sustainability, with a focus on sustainability as a business and offering a product selection to help shoppers in their own efforts.

5. Prioritize what will always be “on trend.” “Various pockets of this industry are often fueled by trending items and ‘booms’ that occur with any number of hot products as they develop in the marketplace—think melatonin, ginkgo, among others, and now CBD,” says Followell. “One thing that never goes out of trend is quality sourcing, uncompromised standards for product ingredients, and digging deep into the research to make sure the products we offer our customers are the very best.” Using CBD as an example: “From the beginning, we scrutinized every Certificate of Analysis (COA) to make sure it met our high product standards. We developed a stringent vendor screening application and turned most products away because they didn’t meet our stringent standards. We took time to develop our CBD offerings based on quality. Now that CBD can be purchased virtually anywhere—even some gas stations—people are becoming more aware that sourcing, extraction method, ingredient transparency, and testing really matter. This most recent trend has impacted our business substantially. We have been forced to maintain focus on our values during this tidal wave of CBD that’s flooding the market. We have passed on the opportunity to earn a quick buck while this expanding market opens up and have turned back to the community in order to educate and guide customers as they search for the right product.”

6. Find your unique way to be the only show in town. “We have found that our customers (via a customer survey) shop with us because of ‘a unique product selection that they can’t find anywhere else,’ so we’ve worked really hard to make sure that we have niche products that help us stand a part,” says Summer. “Our category managers also look at SPINS reports to make sure that we are following the trends and have the products that are taking off in other parts of the country.”

7. Think beyond the bottom line. “My main driving goal is to ensure Rainbow Blossom can fulfill its mission ‘To be a resource for improving the quality of life for ourselves, our community and our business,’” says Followell. “To do this, Rainbow Blossom must be a financially healthy, stable, and growing business. We are not able to improve the quality of life for anyone else if we cannot first take care of our business. Operating an independently owned natural food store is difficult, especially with the intense competition that exists from the larger corporate ‘supernaturals.’ That is always my number one goal.”

To excel in that goal, Rainbow Blossom utilized CoMetrics, a tech company serving independent businesses, cooperatives such as INFRA, nonprofits, foundations and social enterprises committed to using data to improve performance. It was another decision that paid off—Rainbow Blossom’s financial numbers improved (details on www.cometrics.com). Awards followed: Rainbow Blossom received INFRA’s 2018 Innovation Award in recognition of embracing new technology and business analytics to foster success. And at INFRA’s 2019 Annual Conference, they won the 2019 Sales Growth Award for Medium Store (Middletown).

While financial health is an essential, Followell adds, “I never want to lose sight of what we value as a company. Being an independent, family-owned business allows us the freedom to make decisions beyond the income statement. Not every decision we make is governed by gross margins, operating expenses, or dollars and cents. We truly care about our community and always work hard to give back as much as possible. I don’t ever want that to change.”

8. Empower and celebrate your team. Rainbow Blossom has roughly 100 employees, and aims to uplift every one. “We strive to have an inclusive and empowered team, where everyone feels heard. We solicit feedback from our team for direction, strategic planning, and practice open book management so everyone can feel like they are in the know about our operations,” says Summer. Being honored as WholeFoods Retailer of the Year, she adds, is a testament to the team. “It’s about getting the right people who have their own leadership skills who are leading their team and who have vision and bringing everyone together with ideas that they want to accomplish.”

Rainbow Blossom staffers gather outside the store.

With a team this driven, passionate and in sync, we can’t wait to see what comes next! WF

1 COMMENT

  1. Great article. Reminds me of why I have been working for 26+ years helping companies improve their financial results AND the lives of the employees that drive those results.
    If anyone from Rainbow Blossom reads this article, we are doing research on great companies with Harvard Business School. I would like to get you involved in this research, at no cost to you…

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