The Smaller the Store…the Bigger the Idea

tip of the month

Written By:
Jay Jacobowitz
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Our industry began with the idea that good food shouldn’t have bad ingredients. While our stores were small, that did not prevent our idea from remaking the world of food retailing within a generation. As our industry continues to grow, “neo-natural” supermarkets are popping up all over the country. For example, Earth Fare in the southeast, Sprouts Farmers Market in the southwest, Sunflower Farmers Markets in the Rocky Mountains and New Seasons Market in the northwest account for over 100 stores averaging about 30,000 square feet each; smaller than the largest Whole Foods Markets, but much larger than the average independent retailer.

Neo-natural stores wow shoppers with their vast size and product mix focused on fresh foods. Because these retailers cater to the “transition” customer—those households that want a healthier diet and lifestyle but don’t know how to do it—the stores typically carry both natural and conventional products. With their large size, convenient locations, and diet and lifestyle guidance, neo-natural markets have hit on a winning formula that will continue to capture the attention—and food dollars—of the 60–70 million U.S. households now aspiring and transitioning to a better quality of life. Where does this leave the small, independent natural products retailer?

Of course, you do have the option of expanding your store to a larger size. But if you are like most traditional independent natural products retailers, you are comfortable where you are, and don’t wish to risk the money or expend the energy it would take to grow. So, how do you make the most of what you have?

Small is beautiful. Small is intimate, personal, helpful and quick. Small is sustainable. Small is safe, controllable, comfortable and not intimidating. Small is friendly. Small is unique, individual and authentic. People appreciate these things, and if you consciously cultivate and promote these small-store benefits, you will powerfully communicate your big idea.

Here’s something else people appreciate: clean. The latest shopper surveys continue to confirm something very important about female shoppers; that before price, selection and convenience, women want their food stores to be clean above all else. While some shoppers may forgive you for being smaller and less convenient than your competitors, female shoppers will not forgive you for a dim, drab, run-down, tired-looking store.

To avoid this fate, you should consider budgeting at least $5 to $6 per square foot per year—of your total square footage, not just your retail space—on updating or replacing, in rotation, your fixtures and equipment; things like shelving, refrigeration, floor surfaces and ceiling and lighting treatments. Most businesses have this “capital expenditure” or “capex,” which usually appears on your profit-and-loss statement as a depreciation expense and lowers your taxable income.

Want to test yourself? Examine your last few years’ tax returns. If you consistently claim little or no depreciation, your customers probably don’t think you have a clean store. That’s big. 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 33 years of wholesale and retail industry experience, Jay has assisted in developing over 900 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 is next scheduled to moderate a panel about natural retailing in the next decade on Thursday, September 16, 2010 at 1:00 p.m. at the Natural Products Association, Northwest tradeshow, Seattle, WA. He can be reached at (800)328-0855 or via e-mail at jay@retailinsights.com