January seems a particularly good time to resolve to improve your business. On the heels of the Great Recession and at the start of a new decade, you may be more ready for change than ever. Here’s what I’ve learned from successful independent natural products retailers around the country.

Jay Jacobowitz

1. All Customers are Not Created Equal. Whether the ratio for your store is 80/20, 70/30 or some other fraction, a majority of your sales probably comes from a minority of your customers. Your best customers are likely satisfied and quiet, so you may not notice or worry about them. But you may have other customers who take your knowledge and then ask you for a discount, or to match prices with competitors. What should you do? The most successful retailers I know have decided not to do business with these “takers,” those shoppers who use you for your knowledge and then ask for a discount. Insight: You CAN distinguish between appreciative customers and “takers,” and politely tell the takers you are doing your best on price and understand if they feel the need to shop elsewhere. Focus your resources—time, money, attention—on the dedicated 20 or 30% of your customers that provides most of your profits.

You will not miss the takers. In fact, your stress level will decrease, and you and your staff will be more productive. Your best customers will appreciate your attention, and will refer their friends, family, neighbors and coworkers to you—especially if you ask them to do so.

Now Foods2. Use Your Right to Free Speech. Every day, it seems, the U.S. Food and Drug Administration (FDA) and Federal Trade Commission (FTC) are cracking down on natural products marketers that make adulterated products or unlawful claims. And the headlines seem to bombard us daily with the supposed negative findings about vitamins and supplements. Coupled with unappreciative customers and new discount competitors (see item No. 1 above), all this pressure may make you retreat into your shell. Don’t do it! We—our industry—fought hard over 15 years ago to pass the Dietary Supplement Health and Education Act of 1994 (DSHEA), which guaranteed the right to truthfully educate customers about the health benefits of dietary supplements and other foods. Did you know that before DSHEA, you couldn’t lawfully tell your customers, for example, that lycopene is good for the heart? While you may not diagnose, treat, prevent or cure disease, you may tell your customers how supplements and foods support the health of body structures, functions and systems. Insight: With a bit of training and discipline, you and your staff can legally and effectively communicate the benefits of natural products to your customers. Being confident you are within the law will reduce your stress. Maximize your right to free speech and help as many people as possible achieve well being. You’ll improve the health of your community and your cash register!

3. Lead from Strength, Not Fear. The natural products industry is growing from its adolescence into young adulthood. This is a two-edged sword for independents: while more households are aware of and buying natural products, most of these new shoppers begin their journeys in the supermarket, not in your store. One thing is certain about the future: Bad ingredients are out, and good ingredients are in. If we extend the natural versus conventional growth trend-lines of the last 30 years, natural products will become half the entire food business in the next 30 years, up from about six percent today. That will be 10 times our present dollar size, over $300 billion more! Someone is going to capture these retail sales. Will it be you? With all this growth, the only reason it won’t be you is because you don’t wish it to be so.

Insight: No one retailer or chain is going to get all the growth in the natural products business. No one will have 100% market share. At Retail Insights, we believe that independent natural products retailers will retain a long-term market share of 25%. While this is lower than our current 30% market share, it will be part of a much larger pie.

For comparison, independent conventional grocers have a 25% market share of the conventional foods business, which is a much more mature industry. Affirmation: “I will move forward with confidence.” Compared to most other stores that offer natural products, you hold the competitive advantages of empathy, knowledge and independent, local ownership. Your best customers know you care about them, trust your knowledge and appreciate shopping with someone from their own community. Use these advantages to help more people get well and they will help you grow in 2010! 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 32 years of wholesale and retail industry experience, Jay has assisted in developing over 800 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 jay@retailinsights.com.

Published in WholeFoods Magazine, January 2010