Natural Foods Merchandiser

Real Foods Success Is a Laughing Matter

In July 1975, Laughing Water, then a graduate student at the University of California at Berkeley, attended a three-week yoga retreat at the Feathered Pipe Ranch in Helena, Mont. In exchange for tuition, Water cooked for the group, and when the retreat was over the ranch?s director, India Supera, asked him to become the staff chef. When Supera decided the town needed a health food store, Water signed on as manager. By October, Real Food was in business, Water and Supera were a couple, and on Labor Day the following year, their daughter was born.

Fast-forward 29 years. The marriage is out of business, but the store and the daughter are thriving. Real Food, so named all those years ago to be provocative but simple enough to make sense to the ?hardheaded? locals, started with one employee and an investment of $2,000. The store (now known as Real Food Market & Deli) currently employs 74 people and clears $5 million a year.

Since the store?s debut, residents of Helena have become increasingly concerned about health risks in the environment and food supply. And Real Food has been a consistent source of high-quality foods, locally grown whenever possible. In fact, in May 2004, Real Food became the first Montana retailer to be certified under the national organic standards. According to Water, a lifelong healthful eater (a lacto-ovo vegetarian) and yoga devotee (5,000 days straight of practice), organic certification provides a level of assurance for his customers.

For Water, the health food business was a peripheral path, not a mapped destination. He graduated from The Massachusetts Institute of Technology and was pursuing a doctorate before fate led him to Helena. ?I hadn?t envisioned being a retailer in a little place in Montana. It was like an asteroid passed over and changed everything,? Water says. (As for the name, he offers his friend?s explanation: ?Laughing Water? is either someone who is Native American—he?s not—or someone who has lived in Berkeley.)

The store started slow and without a plan, but evolved in keeping with Water?s personal philosophy and reluctance to do anything without first giving it careful deliberation. He remembers the early days of business as low key. ?I used to bring my meditation cushion to work,? he says. ?We had many $50 days.? It took 13 years and a move to a larger location before sales hit the $200,000 mark in 1988. But Water?s retail strategy has always stayed true to his mission to sell the best products available.

For instance, Real Food didn?t sell coffee until 2000. It was then that Water was convinced medical research had disproved his concern that coffee was a significant health risk. He has steadfastly resisted entreaties to sell any alcohol, including organic wine or beer, and even now bemoans the quality of many foods. ?It irks me that so many products with white flour and white sugar have infiltrated the natural foods industry.?

But along the way, Water has made compromises in order for business to flourish. By necessity he adopted a management plan, as the staff grew from single digits to as many as 84. (?But that was too many part-timers,? he says.) He fine-tuned the way the store is run; as staff increased, he instituted weekly management meetings and brought in consultants to streamline the deli operation and produce section. The hardest part of expansion, he says, is not the capital, store design or getting products on the shelves, but finding and supporting employees. ?I am committed to maintaining a positive work environment and encouraging a sense of teamwork,? he says, which includes investment in employee education and practicing communication techniques to resolve conflicts.

With each relocation—done for practical reasons like more retail space and better parking—he?s faced more challenges to the bottom line. In fall 1998, after the store had made yet another move and was in the midst of losing $15,000 a month, Water gave serious contemplation to who his customers were and how best to serve them. ?I realized a customer is worth a lot, and an educated customer [is] worth even more,? he says.

The year before, he had developed a synergistic plan to educate, engage and encourage customers to shop by giving away tapes on antiaging. ?Since we sell many antiaging products mentioned, I asked customers to take an easy quiz to show that they had listened to the tape. If they passed, they got 25 percent off that day,? he says.

To stem the money loss, he upped the ante, offering a free copy of Andrew Weil, M.D.?s 8 Weeks to Optimum Health with a $50 purchase. To reach more customers, he also decided to insert the store newsletter in the local paper. The newsletter focus dovetailed with the store promotion, covering leaders in the wellness movement, including Weil.

Then, since some of the health-enhancing products in the book were not in Real Food?s inventory, Water teamed up with local stores selling back-supporting beds and fresh flowers.

His investment was considerable. ?We gave away 1,300 copies of the book, which in a city of 30,000 is good penetration, and we spent about $15,000 to do that,? says Water. But the return was evident from the get-go: ?Our business went up 10 percent, and pretty much has stayed at that level.?

And Water is committed to his customers in other ways. ?We have annual customer appreciation days,? he says, which include plenty of samples, special sales and door prizes. Not every event is as elaborate as the grand opening of the new location. To celebrate the store?s latest relocation in 2003, Water went all out. He says, ?We had a blow-up dragon for the kids and an organic pig roast in the parking lot.?

Real Food Market & Deli
1096 Helena Ave., Helena, Mont. 59601, 406.443.5150

President and general manager: Laughing Water
Established: Oct. 1, 1975
Retail space: 10,000 square feet; 14,000 square feet total
Employees: 74
Best-selling department: Dry grocery
Sales by department: Dry grocery, approximately 22 percent; bulk, 7.5 percent; deli, 11.5 percent; cheese, 2.5 percent; produce, 11.5 percent; refrigerated, 6 percent; frozen, 3.5 percent; vitamins/supplements, 16 percent; body care, 5 percent; meat/seafood, 8 percent; bulk herbs, mercantile, pet foods, cleaners and publications make up the rest of sales
Annual sales: $5 million

Natural Foods Merchandiser volume XXV/number 12/p. 58

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