Word-of-Mouth. So…20th Century?

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­One of the biggest “Aha!” moments from WholeFoods Magazine’s 40th Annual Retailer Survey, was the jump in marketing spending reported by independent natural organic retailers. In prior years’ surveys, independents told us they relied heavily on word-of-mouth to drive sales increases, often spending less than 1% on marketing and advertising. No more, apparently.

On average, survey respondents spent 2.12% of net sales on marketing, with about 40% of respondents spending more than 3% of sales on advertising and marketing. (Please visit www.WholeFoodsMagazine.com for the complete survey results.)

tip of the monthYou’ll recall the Annual Survey separates stores into groups according to the percentage of overall sales from fresh perishables foods. In the above table, Group 1 gets an average of 55% of net sales from perishables; Group 5, less than 1%.

Even the smallest stores in the survey, in Group 5, with average annual sales of $911,739, spent nearly $3,000 per month ($2,923) on marketing and advertising.

Where Marketing Dollars Go
Fresh-food focused stores in Groups 1, 2 and 3 found TV and direct mail advertising most effective, spending a monthly average of $3,299 and $2,428, respectively, on these two traditional venues. Online ads for the three groups averaged $1,201 per month.

Vitamin and supplement-focused stores in Groups 4 and 5 spent most on radio, averaging $1,274 per month, followed by direct mail and TV, at $523 and $518 per month, respectively. Online ads, by contrast, averaged just $192 per month for these two groups.
What does this tell us? We believe independents are adapting to technology by increasing online ad spending and reducing ineffective traditional advertising. For example, Yellow Pages spending has nearly crashed, at just $108 per month.

But radio, TV and direct mail must be providing a good return on advertising dollars to capture a two-thirds (66.36%) share of all marketing spending: 1.41% of total 2.12%. Perhaps these local, geographically concentrated advertising venues continue to reliably deliver eyeballs of shoppers who are open to receiving the message that natural organic retailers offer safe, effective, affordable and convenient health and food solutions, every day.

Tune In to April 24 Webinar
For more in-depth insights, please join us on Tuesday, April 24, at 2:00 p.m. Eastern, when WholeFoods Magazine Editor Laurie Petersen, and yours truly will host a free interactive webinar covering the highlights of the 40th Annual Retailer Survey and the 2018 Retail Insights® Retail Universe. We invite you to join in and ask your questions, or just enjoy the conversation. Click to register here. Send any advance questions to editor@wfcinc.com with Retailer Survey in the subject line. We hope to see you there! 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 40 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. Jay can be reached at (800)328-0855 or via e-mail at jay@retailinsights.com

Published in WholeFoods Magazine April 2018

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