In my July 2013 Merchandising Insights column, I outlined a strategy to help independent natural products retailers create more competitive retail pricing while preserving healthy profit margins. The strategy rests on identifying vendors—usually direct vitamin lines—that offer ongoing wholesale purchase discounts. Several of you subsequently contacted me to discuss pricing, which leads me to provide a few additional thoughts here.
The technological strides we’ve made as a society are incredible when you think about it. The plethora of communication and information tools we have at our fingertips is mind-boggling. The lion’s share of these advances has impacted our lives for the better. However, there is one group that is dealing with some blowback—brick and mortar shops.
The times they are a changing. Born between 1946 and 1964, many Baby Boomers fulfilled the American Dream by owning houses, raising families and living comfortably. Companies courted them, tailoring products to meet their specific needs for joint care, anti-aging, blood sugar support and more. However, a new group of consumers is coming of age with the potential to change our market: Generation Y (AKA the Millennials).
Imagine this scenario: you’re standing in line at your favorite store with your purchases in one hand and your wallet in the other. As the line starts to move, you notice a product on display beside the register. The bold packaging and convenience draw you in. It’s not something you need, but the price is right, so you begin to consider the idea. For the rest of your time in line, you toy with the notion of buying it until, at the last possible minute, you add it to your purchase.
The full implementation of the 2010 Patient Protection and Affordable Care Act (AKA ObamaCare or ACA) is set for 2014. Insurance companies, hospital systems, doctors’ groups and related health care stakeholders, including chain-store pharmacies and even conventional supermarkets, are scrambling for position in this new world of expanded coverage for millions more Americans.
Once upon a time, companies that wanted to sell their products hired authentic experts, authority figures or authors with advanced academic or medical degrees, who seemed incorruptible, ethical and thoroughly reliable. They possessed a high degree of credibility and their own notoriety rubbed off on the brands they endorsed, either blatantly or subtly. They were and many still are powerful influencers of human behavior.
Every calendar quarter, public companies provide guidance to Wall Street to explain recent performance and project future results. In these quarterly telephone conference calls, investment analysts responsible for recommending stocks to their clients get to ask management questions to shed light on company strategy. While the “scripted” portions of these calls are interesting—where corporate executives read prepared remarks—the Q & A sessions that follow can reveal the most meaningful information. This was the case in the November 2012, fourth-quarter conference call hosted by Austin, TX-based Whole Foods Market.
The produce section can be a profitable department in any natural products business. While customers may come in to purchase supplements on a monthly basis, a well thought out produce department can keep them coming back multiple times throughout the week. In 2012, perishable goods averaged over $1.5 million of sales per natural products store, with over one-third from fresh produce alone (1). However, there are several key items to focus on to run a successful produce section.
For the third year in a row, I’ve been honored to assist in analyzing the data from WholeFoods Magazine’s Retailer Survey, which starts on page 20, and this year is outstanding! We’ve had the largest response in 35 years of doing the survey, and the quality of stores is truly remarkable. With nearly one million square feet and $665 million in sales represented, the survey offers a comprehensive view of our dynamic industry, from the smallest supplements store to the largest fresh-foods supermarket.
Color is more than a visual element; it’s also an important psychological motivator. “We react on multiple levels of association with colors—there are social or culture levels, as well as personal relationships with particular colors. You also have an innate reaction to color,” Leslie Harrington, executive director of The Color Association of the United States, told The Huffington Post in a November 27, 2011 article. “As you get older, you become much more conscious of those learned reactions than the innate ones.”