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.
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.
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.
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.
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.
Would you like an extra $30,000 to promote your store every year? There’s a rather large and open secret in the natural products industry: independent retailers are consistently losing out on their share of cooperative advertising dollars that manufacturers have allocated to spend on them. But, if manufacturers are ready to fork over these dollars to you, what do they do with them if they aren’t writing you a check? Let’s take a closer look.
In 1980, you couldn’t find yogurt in a supermarket. By the early 1990s, Peter Roy and John Mackey of Austin, TX-based Whole Foods Markets were “rolling up” the largest independent natural products retailers around the U.S. to form the first national chain of “supernatural” supermarkets. By the 2000s, every conventional supermarket of any size was carrying not only yogurt, but also all natural foods categories and capturing significant natural market share.
Washington, D.C., 10:00 p.m., Tuesday, May 22, 2012
Late in the evening on Tuesday, May 22, 2012, the advocacy team of the Washington, D.C.-based Natural Products Association (NPA) became aware that longtime natural products industry opponent, U.S. Senator Richard Durbin (D-IL), planned to introduce an amendment that could severely damage the natural products industry—as an attachment to an FDA user-fee bill shortly being considered by the Senate.
Recently, several natural products retailers have asked me about discounting in the form of “rewards” or “loyalty” programs. Because most natural products retail stores operate on thin net profit margins—usually 4–6% before paying taxes—discounting in any form can badly damage your profits and, at worst, may be devastating to your entire business.