We have good news to share about the state of independent natural products retail…and not-so-good news. Find all the data from WholeFoods Magazine’s 45th Annual Retailer Survey. This year, we asked respondents: Please tell us anything that is on your mind about your business. Here, the top issues retailers are facing, in their own words:
Competition from online, big-box & DTC
“Brick and mortar is dying a fast death due to COVID and the internet as well as large box retailers.”
“The biggest challenge I think we face as small business owners is the unlimited amount of resources on the internet. I have signed papers with companies saying that I will not sell their product online, so I do not. Then I have customers come in and tell us that they will order it online, and sure enough they are able to. It would be nice if that was monitored more and people were honest about their intentions with a product. Shipping is a problem at this point. The smaller stores are being pushed out by large order minimums and put on alternative trucking routes because our orders are not large enough. This just gives the larger companies an advantage again.”
“Online vendors continue to impact our in-store sales, offering deep discounts, which make it hard to maintain our margins.”
“The main impact on our store has been a sales decline in vitamins due to Amazon.com and the fact that most major groceries carry our same products at a much reduced price.”
“Suppliers offer direct to consumer deals lower than or at our wholesale prices, especially during slower times.”
Supply chain issues
“Inventory and supply chain seem to be the theme this year. Manufacturers are way behind on production, delivering orders, and most have increased pricing; some I feel are just using inflation as an excuse to charge more.”
“Issues continue for us with out of stocks and customers being unhappy as well as suspicions that we’re just not ordering to keep products in stock. At times, they will go online and find a product that we’ve been out of for months and that can confirm to them that we’re just not ordering.”
“A lot of our brands had production issues because of supply issues. Most have moved their ingredient and package suppliers to the U.S. for better production time. Most brands have also had to increase their wholesale prices.”
“Supply Chain Stress: [I] worry it will cause compromises of integrity in finished product and ingredients that will lead to bad marks for the industry vs. strategic planning, capital investment to ensure quality product delivery.”
“Supply and inventory is an issue for us still to this day. Being a small business requires us to order less and pay more for shipping, which causes us to raise the prices. The customers now walk in, look at the product, and order it on Amazon.”
Staffing
“We are still having an issue with hiring people or people staying. Nobody seems to want to work retail.”
“Finding quality labor is next to impossible, especially in food service…with much higher labor costs and declining sales revenue. It is making life very difficult on the retail front.”
“Being an independent retailer, we have the challenges of employee pool shortage, supply chain short falls, company acquisitions, rising costs, and margin challenges.”
“The tight labor market is one of the most immediate realities we face. This has especially affected our deli, which has gone full-service but is half the business it was before the pandemic.”
The economy
“[The] biggest issue is increased shipping costs, both in and out, and the effect on margins. We can only increase prices so much.”
“Rent is still increasing and utilities continue to increase. Hourly wages are going up annually too.”
“Since gas and all prices have gone up we are not as busy.”
“Cost of freight through UNFI and KEHE. The cost is high and even with gas prices going down they are not lowering freight delivery charges.”
“Things are challenging, rising costs and price increases from almost every vendor. Of course, we lost some customers to online ordering and we are working hard to get them back.”
“Inflation and disposable income of the consumer will have a negative impact on the store’s growth and profit.”
A changing industry
“Supplier consolidations and lack of relationships with these companies will have a negative influence on margins and marketing dollars.”
“The industry’s history and roots are being forgotten, it’s becoming a ‘hip’ industry. Consolidation and corporate purchasing of brands is diluting the quality and destroying the trust consumers had in brands.”
“The industry is changing from educational brick and mortar to mass-market corporate mayhem.”
“More support for independent stores needs to be done and in a practical way. I am an independent mom-and-pop brick and mortar. I do not have a marketing department, so for those of us left in this industry practical support is needed, not off-the-cuff suggestions.”
Find more industry insights throughout this issue, including the retailer survey and a deep dive into natural & organic sales in Retail Insights® 2023 Retail Universe for U.S. Premium Natural, Organic Food, Supplement & Personal Care Sales.
