Harvey Burman owned a pharmacy in Chester, Pa., for 30 years. So when his son Marty decided to open a store of his own, it made sense to trade on his family?s reputation. ?We?ve always been known as the ?pill people,?? Marty Burman says.
But the younger Burman, who majored in marketing at York College of Pennsylvania, didn?t want to be a pharmacist. So he studied the marketplace and discovered that there were very few health food stores nearby. ?I asked myself, ?What would be a natural extension of our good name in our area?? ? he says. The answer? A ?natural pill? business.
Burman opened Burman?s Natural Foods in 1996 in a 1,000-square-foot storefront in Brookhaven, Pa., an economically depressed, blue-collar area outside of Philadelphia. To bring in the type of customer he wanted, he decided to stock some groceries. ?It served as a draw; get your natural honey here.? But the bulk of his business is devoted to vitamins and supplements not only because of the family reputation, but because it makes good marketing sense.
?I cannot be good at everything—big-box stores are extremely good at the food business. People like tremendous variety with food, and I can?t compete with that or the price,? he says.
Small, independent retailers need to specialize to keep their businesses healthy, Burman believes. It?s one of the messages he?s trying to pass on as the newly elected northeast region vice president for the National Nutritional Foods Association.
It?s also a message that?s been reinforced for him many times since he opened Burman?s Natural Foods. For instance, when a Trader Joe?s opened down the road from his store, Burman realized he had to specialize even further, even though by then his store had expanded to 2,000 square feet and half of that space was devoted to groceries. ?I had to concede conventional natural products because [bigger stores such as Trader Joe?s] have so many more,? he says. ?Organic produce didn?t work either.?
So Burman turned much of his food section into a specialty diet area, featuring a 20-foot section of gluten- and wheat-free foods, and other sections devoted to lactose-free and hypoallergenic foods. The store also carries health and beauty products.
Burman also realized that one of the best ways to draw repeat customers and compete with a nearby GNC and Vitamin Shoppe was to offer private-label products in the vitamins and supplements section. So a year after the store opened, he contracted with Reliance Vitamin Co., of Somerset, N.J., to launch the Burman?s Natural Foods line of vitamins and supplements.
?It?s the only way to survive for a small independent like me—you have to get your name in front of the customer constantly,? Burman says.
The line started with 10 SKUs and has grown to 130. ?It?s the backbone of the store now,? Burman says. Not only does it build customer loyalty, the private label also has a higher profit margin—typically 60 percent per item as opposed to 5 percent to 15 percent for name brands, Burman says. ?And it?s not expensive to do—you can get started for as little as $300 to $400 an order."
The higher profit margin allows him to compete with cut-price supplements stores and online shopping sites without having to perpetually discount stock. Instead, Burman?s offers a membership club, where customers pay a $20 fee and then get 20 percent off everything in the store. The store currently has 600 members. There are also free coupons at checkout stands and on the store?s Web site.
?There?s always a way to save in my store, but if someone comes in and buys off the shelf, they pay retail,? Burman says.
Burman?s also draws in customers via its Web site. Burman pays Living Naturally, a Venice, Fla.-based technology provider, $400 a month to run the site, which he calls a ?break-even deal.? He doesn?t sell much product online, but says the site is nevertheless a ?necessity to have—what really makes it worthwhile is its e-mail function.?
Customers give their e-mail addresses at the store?s checkout stands or online—where they get a 10 percent-off coupon for registering—and Burman?s sends out a monthly newsletter, along with store coupons and seminar updates. There are currently about 2,200 customers on Burman?s e-mail list.
?We send out an e-mail an average of once every two weeks—anything more and people start to think of it as junk mail—and we get a 2 percent to 3 percent response,? Burman says. ?That?s pretty good. We can spend $300 on a newspaper ad and not have a single person come in.?
The Web site?s education aspect is key, Burman believes, because his store is in an area where many people are unfamiliar with the benefits of natural products. Consequently, Burman?s holds seven to nine seminars a year, hosted by manufacturers? reps.
?It establishes us as a place to go to for good answers on nutritional products,? he says. ?We?re education-driven and service-driven.?
The store also takes advantage of other manufacturers? perks. Burman calls every company he does business with and inquires about co-op advertising dollars. ?There?s money out there, but you have to be aggressive,? he says. ?It?s really up to the owners to grab the bull by the horns and ask their reps, ?What is my co-op contract?? You?ve got to make it happen.?
Vicky Uhland is a Denver-based free-lance writer.
Natural Foods Merchandiser volume XXVI/number 2/p. 58