After opening the Healthy Appetites natural foods store in downtown Plymouth, Mass., in 1995, Jeff Hills soon learned the importance of location, location, location. Although his extensive supplements selection quickly earned him a loyal customer base, even they were put off by the lack of nearby parking. "People would tell me that they had come to the store, driven around the block a few times, couldn't find a spot and then had driven to the next closest store, about a half-hour away," Hills says. Still, he was a bit reluctant to move when one frequent customer kept telling him of a great space for lease on the outskirts of town. "At the time, there wasn't much there," Hills says. "But my customer kept saying, 'You're a destination store, and there's nothing there but parking. People need parking.'"

Hills decided in 1999 to move the store, and the gamble paid off. "The week we moved there, sales went up 20 percent and kept climbing," Hills says. Soon after, Home Depot bought the empty lot across the street, followed by a PetSmart and a large wholesaler. Now Hills' store is located next to the biggest shopping destination in the area.

But it's not just the guaranteed parking that keeps customers returning year after year. The store's continued growth, Hills says, is also because of his strategy of capturing a very specific niche. In the last decade, the store has evolved from a general natural foods retailer to one that concentrates heavily on three main areas: supplements, gluten-free foods and body care. "In the New England area, the supermarkets have substantial natural food areas that are as big as my store, if not bigger," Hills says. "They have great volume power. So the major suppliers are cutting or eliminating everyone else's volume discount. They're catering to the big stores. They're not catering to us."

Hills' response to the amped-up presence of organic and natural foods in mainstream stores was to tone it down at Healthy Appetites. By concentrating on supplements and gluten-free food, he says he is able to provide products and product knowledge that the supermarkets don't. His decision to concentrate on gluten-free food was sparked by the inability of his wife, Ilene, who co-owns the store and has celiac disease, to find wheatless food that actually tasted good. "Now we do more with gluten-free and hypoallergenic food than we do with our original core, which was natural and organic," Hills says.

Hills also attributes the growth of his health and beauty department to his wife. "She's always been really careful with her skin. I thought it was kind of crazy," he says. But Hills says his wife's product knowledge has really paid off—and her own glowing skin is a powerful testament to the efficacy of the products the store carries. "She's 41, but she looks like she's 25. Sales in skin care have just skyrocketed."

But supplements remain, by far, the store's biggest draw. Even though they comprise only 20 percent of the store's space, they make up 70 percent of sales. Hills admits he's even considered not carrying any food except for gluten-free products.

"We sell an inordinate amount of supplements for a store this size," Hills says. "That's our specialty." In order to compete with supermarket supplements sections and chain stores like GNC, he buys primarily from brands that don't sell to mass merchandisers. "We don't sell anything that has made the transition to mass market," he says. "As soon as we see that's happening, we drop the brand. We want brands that are loyal to us."

But just as important as his merchandising choices, Hills says, are the relationships he has established with his customers and the great reputation the store has garnered over the last decade. This aspect of his business is another that sets him apart from supermarkets, where supplements sections rarely have staff on hand to answer questions. Hills conducts extensive research on the products he carries, utilizing trade magazines, sales reps, the local library and online medical journals to obtain accurate information that he can pass along to his customers. "We're known for being friendly and informative, and we have a really loyal following because of it," says Hills, who is in the store 65 hours a week. That following is so loyal that in 2004, Healthy Appetites was named "Best Natural Foods Store" by WHDH, the Boston NBC affiliate, based on votes from the public.

This grassroots attention has been a great boon to business. A few years ago, the store ran a successful TV ad campaign. Hills says such a strategy is no longer necessary. "We have so much word of mouth, we don't do TV anymore," he says. "People shop at your store because they trust you. What better proof that you've built trust than to have someone say, 'My friend loves this store, and she said I should come in.' Word has gotten around that we're the place for supplements. You can't buy an ad that's as good as that."

O'rya Hyde-Keller is a Madison, Wis.-based freelancer.

Natural Foods Merchandiser volume XXVII/number 2/p. 38