Even thriving natural products retailers have cause for concern when competition comes to town. Given its stated plans to open hundreds of new stores over the next several years (many of them in smaller, secondary markets), Whole Foods Market is likely to become a new competitor for many established natural products retailers.
Of course, the best defense is a good offense. So rather than waving the white flag, use the following tips to make positive, profitable changes before the giant natural products chain opens a new store in your area.
Experts tips to compete with Whole Foods
Retailer: Mark Fergusson, chief vegetarian officer, Down to Earth All Vegetarian Organic & Natural food store chain based in Honolulu
Before Whole Foods came to our neighborhood, we held rebranding meetings. It wasn’t enough of a differentiator just to be organic and natural. We’re a vegetarian company, but we weren’t communicating that to customers, so we changed our name from Down to Earth Natural Foods to Down to Earth All Vegetarian Organic & Natural. We also revamped our logo to feature Hawaii’s geography and produce to reinforce that we’re a local company.
Update your store.
We hadn’t remodeled our store in 10 years. With a budget of $1.2 million, we implemented new decor that had positive, vegetarian messaging, and we widened store aisles. Because the vegetarian chilled and frozen categories had grown significantly, we went from eight to 18 frozen doors. We also doubled our produce selection.
Capitalize on publicity.
The interest in Whole Foods coming to town generated many media interviews for us. We highlighted how we are different, focusing on our vegetarian and local products. In reality, Whole Foods’ arrival increased the interest in natural and organic products and, thus, expanded the size of the total naturals market in our area.
Independent business specialist: Jeff Milchen, cofounder of the American Independent Business Alliance in Bozeman, Mont.
Create personal relationships with local producers.
Most independent grocers source from local farmers, ranchers and other producers, but chain competitors are increasingly seeking out these suppliers as well. Building strong personal relationships with local vendors will help ensure you don’t become their second priority. Meet face-to-face at least once and visit their farms or facilities.
Support other local businesses.
Although your store can gain much from promoting the “buy local” message, customers will rightfully scrutinize your internal operations. So be sure you’re walking the talk on all fronts. For example, are you using a local bank or credit union? Connecting with other independent businesses can spark ideas on how to deliver customers to one another.
Build strength in numbers.
Seek interested citizens and fellow business owners to initiate a “buy independent/buy local” campaign. Or, better yet, form a full-fledged Independent Business Alliance to build a collective brand, engage in public education and form a unified voice for your interests in the local media and government. The American Independent Business Alliance (amiba.net) is a great resource for helping you get started.
Retail consultant: Jim Hertel, Managing partner of Chicago-based retail consulting firm Willard Bishop
Get to know shoppers.
Greet customers by name. When a new item that you know they would like arrives, call or email to let them know. Offer to drop a sample by their house, or hold one at the checkout counter with their name on it. Basically, make shopping at your store more personalized than it could be at Whole Foods or other large grocery stores.
Participate in local organizations.
If your shoppers care about a local food bank, environmental club or something else along these lines, support it. Host meetings for the group, and cater the food yourself (building a following for your signature deli and bakery items). Offer attendees a 10 percent discount on meeting nights.
Make pricing competitive.
Whole Foods carries a pricey reputation, so you already have a built-in perception advantage. But don’t spoil that lead, especially on high-velocity, broadly purchased items—also called “known value items”—that shoppers know the price of. Instead, “blend” your gross margins by trimming the margin on some KVIs to be competitive, but then taking a little more margin on less frequently purchased or unique products to reach an overall margin goal.