Amid these stressful economic times, independent natural products retailers can feel good about at least four things. While many other businesses, and entire industries, are suffering huge sales hits and major restructurings, natural products retailers are staying relatively healthy. Instead of growing at the typical 8% to 10% per year of the last 30 years, independents are reporting average growth of about 4%. This proves a fundamental point about our industry. At base, we are in the food business, and people still have to eat.
Compared to the acute downward pressure independents can feel from new competitors—sales can take a 10% to 40% hit when bigger naturals retailers come to town—the global economic downturn is merely muting growth in natural foods stores. In this sense, independent retailers can better deal with today’s general slowdown than face a large, new direct competitor across the street.
Here’s another thing independents can feel good about. The softening economy is slowing the expansion plans of some of the most aggressive natural products retailers. This should give independents some breathing room and time to regroup and adjust strategy.
And here is perhaps the most interesting opportunity presented by the economic meltdown: consumers are shifting their shopping habits. As households are forced to rethink their budgets, shoppers are more open-minded to change than at any other time in our lifetimes. Marketers refer to “inflection points”; those moments in life when consumers change shopping habits and brand preferences. Examples include marriage, birth, death, illness and new households. This economy is such a moment. Independent retailers who promote their own, unique message that tells shoppers why they should shop with them will win new, increasingly hard-to-get customers. WF
Published in WholeFoods Magazine, Dec. 2008