What were your sales results for 2016? Overall, according to the just-released Retail Insights’ Retail Universe for Premium Natural, Organic Food, Supplement and Personal Care Sales (see WholeFoods Magazine, January 2017, page 26), total natural products industry sales increased by $2.78 billion, rising 3.8%, to $75.2 billion. Supernaturals including Austin, TX-based Whole Foods Market and Phoenix, AZ-based Sprouts Farmers Market captured the lion’s share of this gain, adding $1.15 billion, while conventional supermarkets were next in line, adding $549 million.
Independent natural products retailers followed, bringing in $409.8 million more, meaning these three retail channels; supernaturals, conventional supermarkets and independents collected over 75% of the total sales increase for 2016.
If you are an independent natural products retailer, this raises the question: If your sales did not increase, why not? WholeFoods Magazine’s 39th Annual Retailer Survey, also published last month, provides an answer.
In what was WholeFoods Magazine’s largest survey to date, among independent retailers from all over the country, representing every type of trade area, 70% reported a median growth rate of 11%. What did these retailers do right? Turns out, they had something very much in common: the decision to reinvest in their stores.
Nearly four out of five (78%) of survey respondents put money back into their stores, on average spending $45,583 to renovate or expand roughly 2,231 ft2, or investing just over $20 per ft2. On top of this, nearly nine in 10 (86%) told the magazine they plan to expand their stores by an average of 1,120 ft2 next year. Still others wish they could expand, but are landlocked in real estate that prevents this.
Business or lifestyle?
Independent natural products retailers are the heart and soul of this industry; true believers in the health-giving virtues of the natural lifestyle, patiently and willingly sharing their nutritional knowledge with the public to its benefit. Many independents got into the business because of a personal or family health concern that was solved by natural and complementary approaches. This true belief, driven by real-life experience, is the independents’ great strength.
But it is also the independents’ Achilles’ heel. Too often, dedicated independents focus almost exclusively on the products and customers, forgetting about the setting; the store and space in which these daily interactions take place.
More than a simple transaction
On the surface, the interaction that takes place between you and your customers is a simple transaction: solving a health concern. But as independents are painfully finding out, simply giving advice isn’t enough to prevent shoppers from swiping their smart phones and checking for better prices — right in front of you!
This is why independents must raise the value of the customer interaction. How can you do this? By supporting the interaction with powerful cues; a more attractive presentation, cleaner floors, neater shelves, better lighting, more circulation area. And, a little selling technique, including creating liking, scarcity, and reciprocity, can make the difference. JJ
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 39 years of wholesale and retail industry experience, Jay has assisted in developing over 1,000 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 can be reached at (800)328-0855 or via e-mail at email@example.com.
Published in WholeFoods Magazine February 2017