Natural products are growing sales across every channel and every category. At the heart of all things natural is the natural retailer. Natural retailers are the launch pad for the most disruptive brands and emerging trends and concepts. This is where the real innovation first appears. There is no dispute that natural retailers “do natural” better than everyone else, especially their mainstream competition!
Mass slippage (a term coined by MegaFood) is when natural products slip from our key categories onto mass grocery and retail shelves. Natural retailers face a myriad of competitive threats from mainstream retailers and online retailers. The majority of natural product sales are made outside the natural channel.
Total mainstream category sales are flat or declining in the absence of natural products. Therefore, natural products are key to the survival of mainstream retailers. This is their Achilles heel.
Natural retailers have a real opportunity to “own” a greater share of natural. You have heard the expression: “lead, follow, or get out of the way.” Our industry can no longer afford to allow mainstream retailers to cherry pick the best of natural. We need to be more strategic and not give consumers a reason to shop our competition. This is done by making certain that we have the right product assortments that satisfy shoppers’ needs. Listed below are some sustainable strategies to help natural retailers compete more effectively across any channel and in any economy.
Strategic Partnerships• Natural retailers and brands need to work collaboratively together to support each other.
• Natural brands need to become the experts in their categories and they need to help educate retailers on how to best sell, distribute, and merchandise their products and the categories they compete in.
• Natural brands and retailers need to work together to identify strategic solutions to increase shopper traffic and shopper market basket size. Consumers have a lot of shopping choice. Natural retailers need to do a better job of meeting ALL of their needs.
To accomplish this, natural retailers must eliminate out-of-stocks, improve inconsistent merchandising and distribution practices, improve and eliminate inefficient trade spending for brands, and leverage their strengths to better satisfy their shopper’s needs and wants. Natural retailers have a significant competitive disadvantage compared to their mainstream counterparts with all of the layers of cost between the brands and their shelves. They must work closely with their brand partners to reduce these costs.
Provide Variety at Fair PricesNatural retailers need to offer the right product assortment that includes some of the top selling items in the market in addition to the niche items that differentiate them in the marketplace. This is the most important suggestion I can make! Shoppers perception is the key here. If consumers can’t find their favorite items, then they perceive an assortment to be poor. Develop a strategy to get their honest feedback. What do they like about your store and what could you do better? Retailers must focus on their product selection. What items do they purchase at your competition?
Competing on price is a really bad idea. Natural product shoppers will pay a premium for products that meet their needs. Brands must highlight the benefits of the products they sell and educate consumers on why these benefits are important. Natural products do a much better job of providing the quality nutrients their bodies need.
Follow these simple solutions to improve shopper loyalty, increase sales and profits, and compete more effectively.
Daniel Lohman, CPSA is an Organic & CPG Industry Strategic Advisor and Category Management Expert. His company, Category Management Solutions (CMS4CPG), assists companies in expanding their retail distribution, improving their promotional efficiency, and their merchandising. He can be reached at Dan@cms4cpg.com.
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Published in WholeFoods Magazine July 2017
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