Kroger recently announced its commitment to becoming the leading retailer of natural products. More than ever before, it's time that natural retailers unite to take a proactive leadership role in the natural industry.
The news goes well beyond disagreements on the definition of "natural" or the importance of non-GMO. This cuts to the very heart of our industry and challenges our future.
Kroger's announcement means greater opportunities for top-selling brands to be represented at their stores. While I applaud their commitment to natural brands, their success could potentially stifle local and national natural retailers' growth. This will also have a dramatic impact on small local and regional natural brands.
Mainstream retailers like Kroger cherry pick the top-selling natural brands in addition to providing a wide variety of natural private label items. Their reach and their ability to connect with consumers is far greater than even Whole Foods Market.
This is an unparalleled threat to the natural products industry. Kroger has some of the strongest consumer loyalty rates in the entire food industry. Their true strength is converting consumers to loyal shoppers. The Organic Trade Association states that 54 percent of organic food sales were in mainstream retailers (in 2010). That number will only continue to grow.
It's time that natural retailers maximize each and every selling opportunity. This means turning occasional shoppers into committed loyal shoppers.
Focus on five key strategies
It is imperative that natural retailers offer the top-selling items in each category, in addition to unique items that differentiate your store from mainstream retailers. Consumers unable to find their favorite brands in your store will shop elsewhere. You need to give them a reason to shop your store often if you hope to convert them to a loyal shopper.
For example, if a consumer spends $400 a month on food and supplements, the goal is have them spend that $400 in your store. This is called their shopping basket. Don't give them a reason to go to your competition.
Out-of-stocks must be eliminated. Promotions must be carefully orchestrated to reach the maximum number of consumers to encourage them to shop your store.
Playing the pricing game will not help you. You will never be able to outspend a large national retailer. You need to provide value for the price differential. Consumers will gladly spend more for value. The value includes your friendly staff waiting to answer any of their questions.
Strong national brands
Strong national brands drive consumers to your store, help support your marketing programs, create excitement in the categories for the consumer, and help differentiate you from your competition. Private label should not be considered a strategy to drive consumer traffic. Strong natural brands offer the promise of consistent quality and value.
Exceptional customer service
Most natural retailers provide phenomenal customer support. This is what the channel does better than mainstream and where you have an unprecedented opportunity to sell the value of a natural way of life.
Do you think Kroger poses a big threat to natural retailers? Share in the comments.
Daniel Lohman is the owner of Category Management Solutions (CMS) which provides innovative strategic solutions for natural and organic CPG companies interested in gaining a significant competitive advantage.