Natural Foods Merchandiser

Extend Yourself: Extras Shore up Bottom Line

If you live in central Pennsylvania, chances are good you'll need a sweater to take the edge off of the cold, damp winter weather.

And since clothing made without the use of harsh chemicals is a natural extension of the foods and services The Healthy Grocer already provides its customers, why not make it an organic Merino wool sweater, reasons Claudia Ward, grocery buyer for the Camp Hill, Pa., store.

"People are going for natural products," Ward says. "They've read a lot that makes them nervous about chemicals." In November, she was working with Lands Downunder Int'l. on an in-store special-order program that would allow customers to order high-end organic sweaters, blankets, mittens, hats and baby items. She was hoping to replace an earlier, successful natural clothing program that ended when the store's distributor stopped carrying the line.

"We're a store that wants to maintain a full line of natural and organic foods, supplies and supplements, and there's not a lot more space to put in a natural household or clothing store," Ward says. "But we do want to make that available to customers and this is an excellent way to do it."

Distinguish Yourself
Natural products retailers should always be looking for ways to distinguish themselves from generic competition, says retail consultant Marty Baird. The trick, he says, is making sure that the line extension makes good demographic sense and encourages return visits, and that the Next New Thing doesn't require such a huge investment that the retailer can never make it profitable.

"Function has to lead to form," Baird says.

Ward carefully considered her customers before making the leap with Lands Downunder. The Healthy Grocer serves a cluster of five small towns east of Harrisburg, Pa. Her customers are well-educated, high-income individuals who likely would be interested in wool and mohair sweaters that retail for as high as $250, or in the company's less pricey hats, scarves and socks.

Lands Downunder made the venture less risky by providing a selection of items that could be impulse purchases, but would also allow customers to get a sense of the look and feel of the organic wool clothing imported from New Zealand.

"The idea seems to be great because we can stock a few of the smaller items and we're not extending ourselves too much in terms of inventory, but they'll be eye-catching," Ward says. "We have to purchase very little from the company to actually move the product. It's a very good idea on the part of Lands Downunder. I'd like to see this from a lot of other businesses."

Ward says she and the store owner are constantly reshaping The Healthy Grocer's layout and highlighting different areas of the store to reflect customer demands. "They are the ones who are going to bring in new customers," Ward says. "A lot of people come in because they heard about us from someone else."

The strategy is working for the 6,000-square-foot store. Ward says though the region has been affected by the slumping economy, business is up at The Healthy Grocer.

How Can You Help?
"I think when a retailer is looking at a line extension, it's not just a product or a service," says Baird, president of Nutritional Marketing in Phoenix, Ariz. "It's something that makes it easier on the customer in their day-to-day life."

Say a store decides to try tuxedo rental because it has a high-end client base. The concept likely won't work because most well-to-do men already own a tux. A better gamble might be to offer a custom, high-end picnic basket filled with specialty foods and beverages. "It's easy and it absolutely fits with today's world—people will pay for convenience," Baird says.

"The more closely the line extension follows what your customer base wants and is buying on a regular basis, the easier it is to be successful," he says.

When Kathy A. Jones and Harvey Wehde purchased Alpine Natural Foods in Frisco, Colo., in 1998, they quickly rebuilt the deli that had been removed. Jones, who had been foodservice director for a larger natural foods co-op in Iowa, considered it a must-have for a resort town just off the major route to Colorado's ski areas.

"Anyone will come in for a deli," she says.

Soon, customers were asking for big platters of the foods sold in the deli case and before long, the store was catering parties and weddings. Jones and Wehde have since carved out Alpine Catering, which accounts for 24 percent to 26 percent of their company's overall revenues.

The catering company is busier in summer than in winter, which helps even out Alpine Natural Foods' revenue stream.

In addition to stabilizing the bottom line, the deli and catering operations help introduce new products and deal with produce that is visually past its prime. "It can be incorporated into items served in the deli and there is much less waste in the produce department," Jones says.

Jones recently started stocking Lotus Foods' Forbidden Black Rice and Bhutanese Red Rice. Using them in the deli helps direct customers to the new products on the store shelves. "We've incorporated them in the deli for people to try and then they'll buy it out of the store," Jones says. "It happens often."

Hitting The Goals
Jones' strategy achieves a key goal of line extension: Get your regular customers to spend a bit more with each trip to the store. "If they're in there spending $50 a week, finding a way to get them to spend $20 more is much easier than getting a new customer to spend $20," Baird says. "If it's just for new people, it's not going to work."

Still, there are niches to be carved from a stable market whose members are constantly changing.

In the years Amy Shrader owned The Appalachian Country Store in Pearsburg, Va., she could never figure out why her community didn't do a better job of marketing to the 20,000 travelers passing through on the Appalachian Trail each year. She closed the store when her husband Donnie needed knee-replacement surgery and since then has been working on a business plan for a chain of natural foods stores along the 550-mile stretch of the trail within Virginia. The stores would be within three or four days walk of each other and each would have a hostel attached. "After a few days, everyone wants a shower," Shrader says.

The stores would be stocked with a good selection of lightweight, high-nutrition foods, some of which might be house branded. Bonus services might include a place to do laundry, and Internet access.

She figures the grocery side of the business will account for 50 percent to 60 percent of revenues, drawing both from experienced hikers who know what they need to sustain them on their long journey, and from neophytes who aren't so sure.

"I would like to develop some hiking foods that are healthier than Snickers bars and ramen noodles—products made with weight and space in mind, that have protein and better nutrition, and taste good, for Pete's sake," Shrader says. "Some of the things they eat on the trail, they're basically eating for function."

Shrader hopes to have her first store open when the hiking season begins in March.

Natural Foods Merchandiser volume XXIV/number 1/p. 18, 22

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