What do you hear when mega-mighty, mass-market grocery retailers march into town, touting their all-new, expanded selection of organic and natural products?
That would be the sound of opportunity knocking, and naturals and organics retailers had better answer, market experts say.
"When mass marketers get into an industry or even a segment of an industry, they expose it," says Marty Baird, marketing consultant, author and president of Nutritional Marketing in Phoenix. "And that means natural and organic products will get on CNN and CNBC. There will be a wave of interest. A good naturals retailer who's done his job should stay proactive and positive so he can not only keep customers, but get some of the new customers who will be drawn to the market."
Jay Jacobowitz, president of Retail Insights in Brattleboro, Vt., agrees: "The small, naturals retailer can't buy the same kind of exposure that someone like Safeway can by putting in, for example, a 1,200-square-foot center for natural and organic foods. You can't buy better advertising or exposure to the industry, because you could not afford the kind of advertising these people can buy."
The trick, says Jacobowitz, is for naturals retailers to avoid panicking just because the big, bad wolf may have sharp, white teeth.
"You're not going to be steamrolled except by your own ineptitude, apathy and lack of direction," he adds. Retail Insights estimates the "wellness industry," which includes food, health care and cosmetics, is worth about $2 trillion in annual sales.
"Do not be afraid," Jacobowitz advises. "Recognize that [mass merchandisers' move into the market] signals the understanding of management that this place holds opportunity. It's your opportunity too."
Look A Little Different
So what can a natural foods retailer do? First, start looking for ways to differentiate yourself from competitors with products and services those competitors don't or won't offer.
While the mega-stores may carry a breadth of products, they might not carry the depth in individual categories that discriminating naturals and organics consumers expect, Baird says. Naturals retailers should try talking to suppliers—everyone from national manufacturers to local growers—to see if those suppliers will limit their distribution or allow a store to carry products on an exclusive basis, Baird adds. "If someone wants an organically, naturally grown, pesticide-free, ripe guava in the city of Phoenix, make sure you're the only one who can provide it for them."
The Bolinas People's Store in Bolinas, Calif., a 27-year-old cooperative food market, has the exclusive angle figured out. It makes a point of selling natural and organic produce primarily grown by local and family-run farms, says Claire Heart, one of the collective members. "We come from a background of wanting natural and organic foods to be it—the only food people eat. So the more organic farming that goes on, the better."
She's not concerned about competition from the big chains because she knows customers would never confuse the products her store carries with those sold by the big guys. Packaging and presentation are part of the key to Bolinas People's Store's success. Although carrying ripe fruit sometimes leads to wasted inventory, Heart says customers come back after they've been able to touch and smell the product and have tried a piece of fruit that is ready to eat.
"I don't see that [the big stores] care for their organic produce—if it's ripe, how it's presented—as much as the smaller retailers do," Heart says. "Their produce sometimes is packaged so that it can be scanned at the check out. You can't smell it or touch it. I see them coming at it from something that customers are asking for and something to sell, as opposed to coming at it from a belief in what organic can offer and how it can sustain the land."
That brings up the retailing experts' second tip: Educate and inform consumers through marketing. Explain why natural and organic products are preferred and how they can be part of a holistic lifestyle, Jacobowitz says. Become the expert, the trusted source that consumers will turn to as their interest in natural and organic products—and in their total health and wellness—grows.
Naturals retailers have always used knowledge to their advantage, which is an obligation many mass marketers have ignored or failed at, Jacobowitz says. "They didn't take into account how this fits into your lifestyle, that natural and organic foods are part of a wellness lifestyle that is a lifelong journey."
When the herb St. John's wort attracted a lot of attention in the mid-1990s, many mainstream retailers said: "Natural is now in. It's no longer just for granola heads wearing Birkenstocks," he recalls. But those mainstream retailers had disappointing first-year sales because they didn't take human nature into account, Jacobowitz says.
"You can't simply have inventory and put up signs without setting the correct expectations," he says. "In the absence of information on how products work and how they're part of the whole wellness lifestyle, the expectations for the new consumers is a druglike effect: 'If I take x for y condition, I'm going to have dramatic relief.' There was no one in the mainstream store managing those expectations, so consumers got disappointing results."
Really Clean And Green
Mollie Stone's Markets, a seven-store specialty retail chain in the San Francisco area, has adopted a pesticide residue testing program in an attempt to set itself apart from Wild Oats, Whole Foods, Andronico's and Trader Joe's, as well as other mainstream mass-market stores. Details of the "Clean Greens" program announced last November still are being hammered out, Mollie Stone's founder Dave Bennett says. But the idea is to offer concerned consumers more choice by stocking organic produce that has been tested for pesticide residues by NutriClean, a division of Scientific Certification Systems, alongside other organic and conventional produce.
Naturals retailers don't have to go high tech or try to compete with the guerilla marketing campaigns mass-market stores are bound to launch, Baird says. There are many small but effective opportunities retailers can employ to build awareness. They include setting up in-store seminars; joining the local chamber of commerce and participating in community events; writing columns about natural and organic products for the local paper or becoming a resource for local radio and TV stations; and self-publishing fliers and a newsletter for customers.
Baird even encourages retailers to wear buttons that say: "Ask me why organic produce is better." Even if only one in 10 customers stops to ask, that's still one customer who might be sold for life.
And the best thing naturals retailers can do? In-store sampling of organic products.
"One of the flaws I see smaller retailers making is thinking that, because the price of produce is so high, giving away even one is too costly for their business," Baird says. "The sad part is that they are looking at the cost vs. the investment. What makes an organic orange better? Looking at it is not enough. You have to taste it. If they had invested the cost of 29 cents to give away the orange, they might have sold $10 in oranges."
Jacobowitz says customers typically say cleanliness and high-quality produce are the most important characteristics they look for in stores. He also says successful retailers have intangibles—the "sense that there is an intelligence that has assembled what you're looking at and what's going on in the store; the people running the place understand the product and can explain it."
Add to that the ability to "engage" the customer the moment he enters the store, whether it's with a nod, a glance and a smile, or even a simple "Hello, welcome."
"It's about being able to interact with that person on a human level," Jacobowitz says.
Once the mega-stores have primed the pump, inflating interest in the category, consumers may naturally turn to traditional naturals retailers for more product offerings, says Cynthia Barstow, an environmental marketing consultant for the natural products industry and author of The Eco-Foods Guide: What's Good for the Earth Is Good for You (New Society Publishers, 2002).
"Once they try an organic vegetable [at a mass-market retailer], they might say, 'This is something I want to try more often. Let me go see where there's more quantity.' It's not that they're immediately going to go to the natural foods retailer who's been around forever. But if they know there are natural products available to them in bigger quantities and more variety in the natural products store, it's only natural that they will head there," she says.
In addition to that variety, what they should find is a retailer who not only understands the naturals and organics marketplace but can also communicate his knowledge in a meaningful way.
"Currently, customers have a level of trust with natural products stores and believe the retailers know what is truly a product that is legitimate," Barstow says. "If [retailers] can hold on to that position in the mind of the market, they'll continue to do well," no matter who they might find themselves competing against.
Connie Guglielmo is a freelance writer, editor and novelist in Los Altos, Calif. She may be reached at [email protected]
Natural Foods Merchandiser volume XXIV/number 5/p. 16, 18