What products should you carry? The answer to this question 20 years ago was fairly simple, since natural products weren’t widely available; you just carried them all. But today, with retail competitors in eight separate distribution channels offering some or all of the same products you carry, the answer becomes more complex.

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Please take a careful look at the photo nearby. Notice the not-so-subtle LARGE numbers for the produce this conventional supermarket carries, and the teeny-weenie numbers for its “competitors.”

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A couple of weeks before my mother passed away, and knowing she soon would, I asked for any advice she would give me. I was 31 at the time. After pausing for a moment, Mom answered, “Try to build something.”

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Every business owner does it; thinks about selling from time to time. If you are an independent natural products retail store owner, chances are you’ve owned your store for a decade or more. Could it be time to pass the torch?

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A Brief History
In June of 2002, H.J. Heinz Co. introduced the first organic ketchup by a mainstream, mass market food producer. Up until that time, only then-niche organic brands such as Muir Glen, Walnut Acres and the private label line of supernatural retailer, Austin, TX-based Whole Foods Markets, had risked venturing into the small but fast-growing branded organic foods segment. Around this time, conventional supermarkets were in various stages of toe-dipping into the natural and organic waters, expanding and then shrinking shelf space for the products depending on their stomach for risk. By 2003, the U.S. had entered a recession—mild by comparison to the Great Recession of 2007–2009—which caused a slowdown in sales of natural and organic foods within these traditional supermarkets.

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The natural products industry is a pretty comfortable place to be. I say this as someone who unintentionally swerved into the business 36 years ago when my friends encouraged me to interview for sales manager at a start-up New England natural foods distributor. I wanted to teach classical guitar. Well, I got the job, for $150 a week. Of course, my living expenses were $140 per month for rent, and food costs were heavily subsidized by mysteriously damaged cases of Wha Guru Chews and miscellaneous organic free range grains, nuts and seeds from our warehouse and returning delivery trucks.

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The pace of retailing is breathless. You have a mile-long list of “to-dos,” and three feet of runway. You are not really in control of what happens today, or any day. Customers, order deadlines and deliveries drive the tempo, and employees who don’t show up and equipment that breaks down move the needle to prestissimo; like switching from Ravel’s Bolero to Rimsky-Korsakov’s Flight of the Bumblebee.
In this sort of environment, it’s challenging to make long-term progress on improving your store, or to do any planning beyond the moment. So, how can you bend the curve of your business more toward your vision? By taking small bites.

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Truth #1: Competition tends to reduce profit margins by putting downward pressure on retail prices.

Truth #2: The more competition, the greater the pressure to lower prices.

Truth #3: A growing industry will attract more competitors.

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In seminars around the country, I ask independent natural products retailers if they believe their store is a distinct brand. Usually only a few raise their hands. But even if you don’t think of yourself or your store as a brand, your customers do…and I can prove it to you.

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Last month, WholeFoods Magazine published its largest-ever survey of independent U.S. retailers representing nearly one-million square feet and $665 million in natural products sales. Retailers large and small, from every part of the country, responded to the survey questionnaire, giving us a full and balanced view of natural food and supplement retailing in 2012.

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