At the Retail Futurecasting session at the 14th Annual NBJ Summit in Dana Point, Calif., last week, a panel of retail executives were asked to point out the biggest current challenge in the natural products retail space. Barry Perzow, founder and chairman of Boulder, Colo.-based Pharmaca Integrative Pharmacy, was quick to answer. “I don’t think I’ve ever seen more confusion, controversy and lack of education as more consumers are embracing natural medicine,” he said.
With the growing need for consumer education, Perzow said Pharmaca is placing major emphasis on education within its 23 stores. “We run a Healthy Living lecture series for which we get 50 to 200 people [at each talk]," he explained. "I can tell from the questions that [attendees] ask that they are confused, and these are core consumers who know a lot.”
In order to better educate customers, conventional retail giant Sam’s Club tries to increase access to pharmacists, according to Jason Reiser, vice president of health and family care. “We try and change the perception that the customer is 'bothering' the pharmacist; we are always trying to get the patient closer,“ Reiser said.
QC and adaptation needed
Along with consumer confusion, supplement quality control is another issue challenging the industry, Reiser said. “Quality is what should be keeping suppliers and manufacturers up at night: It’s not if something [negative] is going to happen but when it’s going to happen. [Currently], omegas are so well received, but what’s going to happen when someone sources tainted fish?”
Jeff Wright, founder of Wright Nutrients, a natural products store in New Port Richey, Fla., said the biggest challenge facing the nutrition industry is lack of adaptation. “The industry is not adapting as quickly as it should—consumers are more impatient than ever before," he said. "They are looking for instant gratification and learning from the Internet that if a retailer can't give them what the want, they will go somewhere else.”
Online versus in-store
The panelists predicted that online sales of natural products will increase over the next 10 years. “Consumers love being able to take their time," Reiser said. "Consider eyeglasses: Consumers go up to a wall of products and make a decision. How much nicer is it to put a picture of yourself up online and 'try on' different glasses at home? I think we will see this more with nutritionals."
Despite concerns that online retailers might steal the show from brick-and-mortar stores, Greg Horn, president of Specialty Nutrition Group, a Boca Raton, Fla.-based nutririon products branding firm, and former CEO of supplements chain GNC, is confident that in-store shopping will continue to dominate. “I remember when drugstore.com launched and we thought it would take over," he said. "Well, it has 12 percent of total sales. [Takeover] is not going to happen. Drugstore.com is a great tool for pre-research, but people like to compare products in person and to talk to someone, so I don’t think this is going to change.”
Reiser agreed: “At the end of the day, people want to be told what to take through real interaction, not via Facebook or Twitter. They go to the Estée Lauder counter and ask ‘what do I need?’ The supplements industry can do this.”
Brands must tell a story
According to Perzow, the brands and stores that will survive are those that align themselves with evolving customer needs. He pointed to brands doing it now. “WishGarden Herbs is making herbs taste better and giving them names that people can link with what their needs are," he said. "Barlean's is making fish oils with names like Pina Colada Swirl—they’re ahead of the trend of nutrition products becoming more like foods but retaining a nutritional value,” he said.
Perzow added that quality research will also continue to be important, but figuring out ways to communicate the research will be key. “The better we can tell a story, like the way New Chapter does with its farms in Costa Rica, the better products sell.”