From The Summer 2004 Issue of Natural Grocery Buyer

Rx for Pharmacies: Go Natural

Victoria Gits

The pharmacy department of a typical supermarket harbors substantial undeveloped potential to sell herbal remedies and natural and organic beauty items to a growing market.

Customers are looking for—but not necessarily finding—the natural products they are buying elsewhere. Studies show that health-conscious consumers are much more likely to shop for natural shampoos, lotions, herbal remedies and other beauty aids at the local Wild Oats or Whole Foods store than at a conventional grocery store.

In fact, in 2003 health food stores sold $2.5 billion of natural personal care and nonfood items, while mass-market outlets sold $539 million, according to The Natural Foods Merchandiser.

Flax flying off the shelves
Beauty products and herbal supplements are coming on strong at Hy-Vee Inc., a 222-store chain based in West Des Moines, Iowa. Ron Pearson, the company’s chairman of the board, notes: “We see that growing all the time. Five or six years ago, it was hard to find suppliers that would even think about [distribution in] a supermarket.” Hy-Vee caters to naturals consumers by carrying as many as 150 organic produce items in most stores. The chain’s pharmacy departments are improving or expanding their selection of natural products and hiring specialists who can talk knowledgeably about nutritional supplements and alternative medicine.

“Our pharmacists know a great deal about the products. More and more [pharmacists] coming out of school are [knowledgeable]. That’s No. 1, and No. 2, we are putting on classes for the pharmacists,” Pearson says.

People today are much more interested in managing their own health care and doing what they can to improve it themselves by using products like flax oil. Pearson observes: “A few years ago, people would search out a specialty store or buy it from a mail-order catalog. We carried a little package of flaxseed in the baking section. People would put it in muffins. It hardly sold.”

Now, popular media remind consumers that the “good fats” in flax can reduce the risk of cardiovascular disease and other ailments. “We’re selling flax cereal, liquid and pills,” Pearson says.

Other studies suggest that customers are looking for natural alternatives in traditional supermarkets—whether in the pharmacy or elsewhere—but the products aren’t available. Fifty-one percent of supermarket shoppers desire “a wide variety of herbal and natural remedies,” but only 29 percent find what they need at their usual store, says the Food Marketing Institute and Prevention magazine’s “Shopping for Health” study.

The integrated approach
NFM found that one of the hottest segments of the industry in 2003 was organic beauty care, which grew 81 percent in 2003, reaching $232 million in sales. In particular, cosmetics and fragrance sales in natural products supermarkets were up nearly 17 percent in the 12 months ending Feb. 21, according to SpinScan. Skin care, hair products, oral care and deodorants all registered double-digit gains, as well.

Marc Rosenthal, director of natural foods for Kehe Foods Distributors Inc. in Romeoville, Ill., says a lot of supermarkets that sell organic grocery items are not yet stocking health and beauty care to the same degree.

“[Traditional supermarkets] have St. Ives and some of the herbal types of products, but they don’t get into organics and they don’t get to a higher end,” Rosenthal says.

Part of the problem is that vendors mistakenly tend to focus on the grocery buyer when selling natural health and beauty products, instead of the general merchandise buyer, who is the appropriate target, Rosenthal says.

He advocates creating a natural-products set in the related conventional aisle for volume, traffic and exposure, rather than stocking a store-within-a-store.

“If someone is looking for a shampoo, are they going to go where the shampoos are, or somewhere off of produce to look for it? Or in reverse, if someone is in the shampoo aisle, they may see the organic product and pick it up,” says Rosenthal, a registered pharmacist.

“Initially, I would build a 4- to 12-foot section in the aisle. I would highlight it with either different color shelving or some kind of point-of-sale signage and info. As the category matures, you could break it apart and put toothpastes back with toothpastes.”

Advertising might consist of an in-store flier, a weekly ad, direct mailer or Checkout Coupons, Rosenthal says. If a consumer buys something from Health Valley or Kashi, out comes a coupon for a free product. “The best way to get it in someone’s hand is to give it for free.”

And don’t aim too far upscale. Rosenthal does not expect women to purchase expensive natural skin-care, masks or makeup products at the local supermarket. But products like natural shampoo or shower gel can catch the eye—and the pocketbook—of many mainstream shoppers.

Victoria Gits is a free-lance business writer and editor in Denver.