It’s Good to Be Natural

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In this issue we present our 37th Annual Retailer Survey Overview, which breaks down the results for independent natural products retailers for the 12 months ending June 30, 2014. In addition, I hope you’ll feast your eyes on Retail Insights’ 2015 Retail Universe for Premium Natural, Organic Food, Supplement, and Personal Care Sales, my company’s latest estimate of total natural products industry size through all eight channels of retail food distribution.

What did we learn this year? Natural and organic products are doing just fine, thank you. Every one of the eight channels of distribution grew, including independent natural products retailers, which added $817 million in sales despite losing 44 stores. How is this possible? Independents are expanding their footprints: average store size increased from about 2,600 ft2 last year to about 3,200 ft2 this year.

Conclusion? The weaker, smaller stores continue to drop out while larger, more dynamic independents capture more market share. This is remarkable as well because the supernaturals such as Whole Foods Markets and Sprouts Farmers Markets added 59 of their approximately 30,000–40,000 ft2 stores, and gobbled up over $2 billion in new sales.

And that’s not all. Compact grocers such as the newly public Natural Grocers by Vitamin Cottage and Trader Joe’s, claimed $1.1 billion in new sales while adding 69 of their less-than-20,000 ft2 stores to the mix.

The larger picture continues to be natural and organic products are outpacing the growth of conventional foods by a factor of four to five times. So even though our products are increasingly available outside the independent natural products channel, with over $5 billion in new natural sales for all of 2014, there’s plenty of market share to go around. And along those lines, as of 2015, our industry crossed the 10% market-share threshold for the first time, with natural products representing 10.23% of total food store sales, or $63 billion of the $617 billion in retail foods.

The average amount of back room plus retail space retailers devote to natural products, as of 2015, whether it is in a small independent pharmacy or part of a 120,000 ft2 conventional supermarket, is 1,036 ft2. The average store sells $569,992 of natural products per year, and generates $550 in natural sales per gross-lease-area (GLA) ft2, or 27% greater sales productivity per GLA ft2 than the $431 logged in by conventional grocers. I don’t know about you, but all this makes me proud!  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 comprehensive marketing service designed especially for independent natural products retailers. With 37 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 jay@retailinsights.com. Listen to Jay speak at NPA SOHO Expo on Thursday, December 4, at 7:30 p.m. Jay will be speaking about the “2014 37th Annual Retailer Survey by WholeFoods Magazine,” covering key findings and analysis from the survey. He will be exhibiting at Booth #406.

Published in WholeFoods Magazine, December 2014