Insights from the 36th Annual Retailer Survey
What distinguishes a natural products store from all other retailers? More than anything else, I believe we are aligned by a shared ingredient standard; we endeavor to offer only high-quality, clean ingredients. As a competitive difference in the marketplace, this standard, above all else, distinguishes “natural” stores from all other stores.
Yet, within our industry, there are two very different types of store: those that are food-focused and those that favor supplements. Running one is nothing like running the other, from the number of employees per thousand square feet, to the skill sets they need, to waste control, cost of real estate and overall complexity.
How, then, do you understand, and then describe, the different operating results across this diverse universe? At WholeFoods Magazine, we’ve chosen to view the natural products retail world through the lens of how much perishables food a store sells. Perishables include fresh produce, refrigerated, frozen and prepared foods. And, we’ve discovered a linear relationship: the more perishables, the larger the store footprint, the bigger the workforce and the higher the daily customer count.
So to get the most out of this year’s survey (beginning on page 20), the first thing you should do is tally up your store’s perishables as a percentage of your total sales. Then, compare your results to stores in the survey with the closest percentage of perishables to yours; choose one of the five categories from 0–9% perishables all the way to 55% or more.
This is so important because we have two such distinct business models: food-heavy and supplement-heavy. The average of the two, the center point, may not be all that useful as a guide to running your store. And, in fact, it may be a bit dangerous to dive only this deep into the survey data.
For example, the average gross lease area (GLA) square footage of all survey respondents was 4,511 square feet, yet within the five individual store groups, there is no 4,500 square-foot store. Food-heavy stores are 9,000+ square feet. Supplement-focused stores are 2,400 square feet or less.
Here’s another example: inventory turns. The average among survey respondents was 11.61 inventory turns per year. But, look at the five individual store groups and you will not find any group that actually turns their inventory 11 times. Food-heavy stores have more than 14 inventory turns per year, supplements stores, nine turns or less. You get the idea.
Another insight from this year’s survey is the two “middle” groups of retailers that sell some perishables, but not enough to be a full-line grocery—those that have from 10% to 34% of sales from perishables—have a challenge keeping costs down while maintaining good customer service levels. It’s the curse of being “in between.”
I hope you enjoy this year’s survey. We certainly had fun putting it together. Please let us know your thoughts. 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 36 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 email@example.com. Jay will be speaking at SOHO Expo in Orlando, FL, on Thurs. Dec. 5, 7:30 p.m., about “The Latest Natural Industry Data.” He is also speaking on Fri., Dec. 6, 4:00 p.m., about “Improving Your Profitability.” He will be available at booth 406.
Published in WholeFoods Magazine, December 2013