Natural Foods Merchandiser

NFM Market Overview methodology

The 2016 edition of Natural Foods Merchandiser’s Market Overview represents the 36th year the magazine has presented statistics on store operations and the state of the natural products industry. From $1.9 billion in 1980 to $52 billion in 2015, sales in the natural products retail channels have come a long way.

Just as the numbers vary each year, so does the methodology for collecting, compiling, analyzing and presenting the data. This issue marks the 18th year NFM has collaborated with Nutrition Business Journal, a New Hope Network sister publication and Penton property, to produce the data.

The inclusion of NBJ allows for a more complete and robust perspective of the natural products retail industry. The sales contributions of natural and organic foods, dietary supplements and other natural products through such diverse channels as food, drug and mass retailers; multilevel marketing; health care practitioners; mail order; and the Internet are also included in the $131 billion natural products industry figure depicted by the main market pie chart.

The primary vehicle for collecting data for the Market Overview is NFM’s annual store survey. This survey was distributed to a representative segment of the natural products retail industry, including, but not limited to, natural products stores, health food stores and supplements stores. They were asked 50 questions pertaining to store operations. Respondents from 340 stores or chains reported the results of their calendar year 2015 operations.

Most of the operations data pertain to independent and small-chain retailers divided into three categories by sales mix and eight subcategories by size. This data subset represents 10,293 independent and chain stores.

The $52.2 billion natural products retail channel is broken down into product category and region, and includes eight store categories plus the biggest chains—Whole Foods Market ($15 billion in sales), GNC ($1.7 billion in sales at store-owned and franchise locations), Vitamin World (owned by NBTY; $204 million in sales), Vitamin Shoppe ($1 billion in sales), Natural Grocers by Vitamin Cottage ($647 million)—and other specialty retailers (specialty/gourmet shops, personal care stores, health clubs, co-ops, herb shops, mall stands, etc., totaling $1.3 billion).

Although most of the operating statistics are averaged or aggregated from the responses, estimating total product sales for the entire industry is challenging. Total product category sales and organic sales figures were derived from statistical analysis of survey results in each of the eight natural products retailer categories. Accurate and complete sales breakdowns were reported by 340 survey respondents. Aggregate sales figures and the percentage of organic were then compiled in each product category; the resulting proportions were applied to the total sales in each category.

For product breakdowns and organic sales information, data from large-chain respondents were incorporated into their appropriate store category. To complete industry sales subtotals from smaller natural product retailers, product sales in all of these store categories were added up. Organic figures were also compared and reconciled against findings from the Organic Trade Association’s 2015 Organic Industry Survey data, also compiled by New Hope Natural Media in the first quarter of 2016.

Data on mass-market sales and other sales channels are derived from several sources. Consumer-level data is compiled from U.S. government sources, The Hartman Group, The Natural Marketing Institute, SPINS/ACNielsen, Roper Starch, HealthFocus International and others. Retail sales and growth are also compared with scanned sales data from SPINS, SymphonyIRI Group and ACNielsen, as well as results of surveys published by other trade publications and individual company data. For supplements, mass-market retail sales data from IRI were predominantly used, augmented with estimates for club and convenience stores not tracked by retail scanner data services, derived from NBJ interviews and manufacturer surveys.Data from the nonretail channels were derived mainly from annual NBJ surveys of multilevel marketing companies, mail order firms, Internet sales and health practitioner sales.

Not all of the results of the NFM Market Overview survey of 2015 performance and sales are directly comparable with 2014 results printed in the June 2015 issue of NFM, as certain adjustments have been made.


Store type definitions:

Natural products stores. These stores have less than 40 percent of their revenue from supplement sales. They are typically the largest stores in the market and offer a wide array of products from supplements and body care to groceries, to cold and frozen, to produce. Many stores in this category also have large pet product sections and household sections. Foodservice (bakery and deli departments) are common, as well.

Health food stores. These stores have between 40 percent and 80 percent of their revenue coming from supplement sales. Normally they are smaller than natural products stores; and while they have grocery, cold and frozen sections, in addition to supplements and body care, the sections are probably smaller. If they have produce, it is more likely a modest offering.

Supplement stores. As this title indicates, these stores focus on supplements, with at least 80 percent of their sales coming from supplements. Their dominant product offering is supplements, usually with some body care and possibly a small grocery (drinks and snacks) offering. They are also the smallest stores in terms of retail space.

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