Backtalk

Who's Afraid Of The Mass Market?

The natural products neighborhood is changing, and keeping up with the folks next door isn't what it used to be—especially when they're the publicly traded giants Wal-Mart, Rite Aid and Safeway. Such stores are positioning themselves for a local piece of what two mainstream trade organizations predict will be a $105.1 billion spending bonanza on health-enhancing foods next year, accompanied by $42 billion more on general merchandise and health and beauty products.* What's a retailer to do? Mass merchandisers have greater distribution channels, offer lower prices, and in some cases are even mimicking the natural products industry take on wellness and personal attention. But not everyone is on the run.

"The mass market isn't hurting us, but it's driving us to be more competitive. We are a combined pharmacy and natural products retailer, so we're dealing with both chain pharmacies and grocery stores.

"Our niche is customer service and the time we spend educating our employees. Mass market stores don't give that kind of time to people and most of their employees don't have a knowledge base. Some of our items cost a dollar more, but that's made up for with the service we provide.

"I'm more fearful of the Internet and mail order because there's such a price difference. Some people just use us to verify information they find on the Internet and then they buy the product online.

"The mass market brings awareness of natural products—it's increasing demand for them."

Jon Fiume
Vice President
Retail Operations, Natural Products,
Ritzman Natural Health Pharmacy
Wadsworth, Ohio

"The mass market isn't affecting us much in Madison. There are only a few local grocery stores and a Whole Foods nearby. We've been experiencing really good growth—we're opening a new store across the street that's three times larger. It has bigger aisles, more shelf space and we can get volume discounts now. We're also working with other co-ops to buy directly from manufacturers. That's directly lowering prices.

"Our biggest strengths are our unique products and good customer service. Although larger stores are going that route, I think people still get lost in the big stores and don't get their questions answered.

"I know some of our members shop across town at Whole Foods, but there's enough to share and the competition helps promote natural products. It does nothing but help us."

Michael Lavitschke
Marketing Manager,
Willy Street Co-op
Madison, Wis.

"Wal-Mart is just down the street; there's a Fred Meyers in town, and the local grocery stores are now carrying dietary supplements. This definitely takes away business. We don't even try to compete with Wal-Mart on prices—we just can't. We do carry products that they don't, but as more natural products go mass market, I don't know how long that will last.

"Our pharmacists are becoming more aware of peoples' educational needs. People need advice. We hope to beat out Wal-Mart by offering more one-on-one contact with customers. We're also expanding to accommodate more natural products and health and beauty supplies.

"I know mass market stores are not going to go away. Some people tell me, 'I can get this for less down the street,' but most people appreciate customer service and they eventually come back. I think we can hold our own."

Laura Davidson
Manager,
Cascade Natural Health Pharmacy
White City, Ore.

"Our stores are only six months old, so hopefully, we'll be affecting the mass market. Stores like Rite Aid, Walgreens, Wal-Mart and Sam's Club cherry pick—they mainly offer low-priced vitamin C, vitamin E, glucosamine and mass market formulas. We have more than 10,000 items and we provide service. Our employees are well informed and passionate about natural products.

"Buying natural products is a very personal thing and people want to make informed decisions. We're all former supermarket guys so we know that variety, service and information work. I think we're pretty well set."

Dave Mueller
Executive Vice President of Marketing,
Vitamin City
Williamsville, N.Y.

* Source: Food Marketing Institute, Washington, D.C., and General Merchandise Distributors Council, Colorado Springs, Colo.