From The March 2002 Issue of Natural Grocery Buyer

"Well for Life" Focus of Raley's Naturals Strategy

Market research key for picking new locations

Joseph P. Lewandowski

Raley's Markets management recognized early that customer demand for natural foods was growing, so more than 20 years ago they started setting aside floor space for natural, organic and health-oriented products.

Today the West Sacramento, Calif.-based chain is working to expand its offerings as natural products continue to gain popularity.

"We've had a long-term commitment to natural foods and products," says Anne Edey, the company's director of natural foods and wellness. "The category is growing, and it is one area that has shown growth consistently over the last several years. It does very well. It's highly profitable."

Raley's operates in northern California, Nevada and New Mexico. Its 142 stores operate under the Raley's, Bel Air and Nob Hill Foods banners.

The company maintains highly visible natural foods departments in 132 of its stores. Raley's devotes about 1,200 square feet to the departments, which are placed near the front of its 60,000-square-foot stores and adjacent to the produce sections. The departments are set off with simulated wood flooring and green shelves, and a natural foods logo is prominently displayed throughout the section. Products include supplements; homeopathic remedies; beverages; body care products; energy bars; vitamins; bulk foods; and fresh, frozen and canned foods.

"The department gives a focus in the store to the healthy products," Edey says. "Customers know exactly where to go. They don't have to shop the whole store to get a loaf of fresh bread."

In new stores and in those being remodeled, the department is called the "Well for Life" center and is part of an integrated marketing/merchandising program dedicated to promoting natural and health-related products to customers. The sections include over-the-counter medicines and a pharmacy. An events center, essentially a large meeting room, is adjacent to the department and is used for lectures, cooking classes, community meetings and special presentations to customers.

"The rooms are places for providing information on lifestyle enhancement and activities," Edey explains.

Before opening a Well For Life department in new stores, Raley's closely evaluates community demographics. Highly educated baby boomers with above-average incomes comprise the primary market for naturals. If that demographic segment doesn't exist, the company won't put in the department.

Each Well For Life department is assigned a manager who is charged with developing merchandising programs and for ordering directly from distributors. Managers order specialized products suited to their stores. For example, Edey says, stores located near health clubs often stock more supplements, whereas stores in neighborhoods with a large population of senior citizens carry items catering to that age group. Consequently, each department takes on a slightly different personality.

"We definitely want the managers to be involved in their own communities and to relate to their own customer base. That's extremely important in this business."

But Edey and the corporate category manager together keep a close eye on each store. The category manager has overall responsibility for maintaining the product mix.

"We constantly revise the mix. We manage the category carefully and adjust the sections to match what our customers want," Edey says.

Through the years, Raley's has hired managers and assistants who are particularly interested in natural products. Now the company is developing a formal training program for all employees to ensure that they can speak knowledgeably to customers about products in the Well for Life centers.

"Information is the key to success for a natural products department. Customers expect us to know," Edey says.

Marketing and advertising for the natural products section is blended with the regular store promotions. Raley's dedicates about one-third of a page of its weekly newspaper advertising to the Well for Life sections. Raley's includes product coupons in that advertising as well as in general coupon books the company distributes several times each year.

Raley's also publishes a monthly newsletter dedicated to health and natural products and distributes it in the store. Articles in a recent issue include how to get more fiber in your diet, explanations of herbal remedies and over-the-counter drugs, a Q&A column, and recipes.

Edey sees nothing that might slow down sales growth in the specialized department. Baby boomers will continue to lead the customer base. News about natural products is reaching all segments of the population, and prices are dropping as more growers and manufacturers commit to producing naturals and organic products.

Edey's only complaint is that the space dedicated to the section is too small—and she regularly tells her boss about it.

"We have a great position in the store, and it's very well shopped. But with 1,000 or 1,200 square feet, it's just not enough space."

Raley's Markets
Based in West Sacramento, Calif.
$3 billion in total revenue
142 stores in Northern California, Nevada and New Mexico
Store names: Raley's, Bel Air, Nob Hill Foods
Each department takes on its own personality based on community demographics

Joseph P. Lewandowski is a free-lance writer based in Fort Collins, Colo. He can be reached at mcski@frii.com.