The bulk section may be the most old-fashioned part of your store in appearance, with its barrels and scoops, jars and bins full of homey and nourishing foodstuffs. But it doesn?t have to be behind the times in its product selection and quality, or in its overall appeal to the naturals shopper.
Proprietary consumer research published in the August issue of The Natural Foods Merchandiser showed that if the bulk section were removed from their favorite store, more than 60 percent of naturals shoppers would go elsewhere. That statistic prompted us to take a second look at bulk, a category many retailers take for granted.
They shouldn?t. With gross margins of 50 percent on many items, ?There?s good money in bulk,? says Bart McKnight, a sales associate with Trade Fixtures/New Leaf Designs, a manufacturer in Little Rock, Ark., that builds bins for natural products, candy and coffee.
Consumers like bulk because they can control the quantity they buy without paying for packaging or expensive marketing. They can play with different ingredients, trying a little of something to see whether they like it, and dispensing goods into their own containers to save the hassle of repacking them at home.
But put off by high rates of pilferage on expensive snack items, some retailers are attempting to move away from bulk, reports Robin Robinson, vice president of marketing at nSpired Natural Foods in San Leandro, Calif. ?Shrinkage can be 20 percent to 25 percent on a ready-to-eat item, and it?s expensive stuff.?
Market statistics for bulk items are tough to come by. San Francisco-based SPINS, for example, relies on UPCs to tally sales and thus doesn?t track any bulk items, spokeswoman Amy Jacobsen says. Bulk manufacturers won?t disclose sales, but they?re cheerful about their prospects and hint at some interesting new products coming soon.
Meanwhile, sales of bulk bins themselves are booming.
?We had a huge growth in bulk in natural foods in ?03, compared to ?02,? says McKnight. Trade Fixtures? sales to supermarkets grew a little faster than to independent natural foods stores, but total sales grew about 50 percent year-over-year. ?It was really awesome,? McKnight said. ?We?re on track this year to repeat last year.?
What?s hot in bulk? Anything organic, says Kathy Larson, vice president for corporate social responsibility—and former bulk category buyer—at Frontier Natural Products Co-op in Norway, Iowa. In herbs, the focus is away from medicinals like feverfew and toward culinary herbs, ethnic flavors and spice blends, she says. With organic prices falling, customers are looking for more bulk organic items.
We asked vendors for other ideas to help retailers make the most of their bulk aisles. Here?s what they said:
- Understand customer motivations for buying bulk. Frontier conducted focus groups of bulk customers who told researchers that a good bulk department was an important criterion in store choice. ?We thought the most important value was price, and it wasn?t,? Larson recalls. ?It was freshness.? A foodie who needs a specialty ingredient for a particular recipe will shop very differently from a value-oriented consumer who wants five pounds of rolled oats at the rock-bottom price. Many new organic shoppers go to the bulk section looking to reduce the sticker shock of their transition away from processed foods .
- Seize opportunities to increase margin. Yes, you have to stock the inexpensive, low-margin items like rolled oats. But you have to sell a lot of oats to equal the profit on snacks or chocolates. Make sure your assortment includes more profitable SKUs like organic sweets, interesting nuts and exotic dried fruit.
- Update your offering regularly. Ask your suppliers what?s selling in bulk at wholesale and in other stores. Look at hot sellers in packaged grocery and see if they might be available in bulk. Don?t rely on the perennial carob-covered whatevers to stay popular year after year. ?We?ve been working with a program to help [retailers] update their selection,? says Frontier?s Larson.
- Understand the labor equation. With gravity bins, rotating stock becomes a nonissue because the oldest product is always dispensed first. Trade Fixtures? bins are injection-molded for strength, are easier to clean and maintain than older acrylic bins, and have interchangeable parts so a broken bin can be fixed instead of trashed, McKnight says. A typical 12- to 16-foot set, if product turns over twice a month, will have three to five bins a day that need refilling, although a 350-bin set will take a full-time person to tend. ?Natural foods supermarkets know it?s really not that labor-intensive,? he says. But with those 50 percent margins, ?once they recognize the money that?s involved in it, bulk is a good way to offer something your competitors don?t have.?
- Design an appealing, easy-to-use section that maximizes the SKU count. ?That?s a very common question,? McKnight said. ?How many bins can I get in 12 feet??
- Think different. At the Specialty Coffee Association of America show, Trade Fixtures won a Best New Product award for its ?Gravity Plus? bin that dispenses bulk tea. Numi Tea of Oakland, Calif., offers merchandising options that include bamboo baskets and racks that give customers the feeling of being in an exotic tea bazaar, says Reem Rahim, co-founder and vice president of marketing. The bamboo also protects the tea from heat and light, protecting its flavors. Rahim quotes author Norwood Pratt: ?Tea absorbs yesterday?s weather.?
- Do what you can to reduce shrink without making your shoppers feel like criminals. Larson advises setting a minimum purchase—say, 25 cents—for very lightweight items like seasonings that may not even trip the scale. That way, a customer can pick up two bay leaves for a recipe and still cover the store?s cost for the bag, the twist-tie and the cashier who rings it up. ?We want people to try it, because they will come back and buy more.?
- Use better-designed bins to cut down on pilferage of snack items. We?ve all seen shoppers munching cheerfully on a handful of nuts or chocolates. Defer the impulse to graze by converting to gravity-fed containers, placed high enough to defeat little snackers like the one Robinson watched eating SunDrops by the handful until his mom told him to put them back. ?He took them out of his mouth and put them back in the bin,? Robinson recalls. ?I, of course, proceeded to buy the rest of the bin.?
What?s the difference between sampling and shrink? Control. Measure out a pound or two of spicy pumpkin seeds, account for it, set it up on a stand with a sneeze guard and sampling cups, and merchandise it with prepacked bags of the snack in different sizes. Put up a sign that says, ?Want a sample? Just ask!?
- Appeal to the senses. Remember the scene in the movie Amélie where we discover that ?Amélie likes to plunge her hand into sacks of grain?? Bulk foods appeal to shoppers in their abundance, their colors and shapes, the heft of the product in the bag. Invite shoppers to take a sniff when you open those vacuum bags of dried basil or tamari almonds. ?They come in for it, once you show them why this food is good, why the bulk is fresher,? McKnight says. ?[Tell customers] ?We poured the stuff in there today from a vacuum-sealed bag.??
- Make it easier to shop. ?It?s very important with bulk not to be intimidating,? says Larson. ?It has to be easy to use and inviting.? That means keeping the set clean, having enough supplies and making them easy to find, making sure the bins are well-filled and properly labeled, and ?having somebody around the bulk section to answer questions,? Larson adds. Setting up bulk near produce means someone is always on the floor nearby. A friendly person who can offer a sample or an opinion goes a long way to stimulate purchases while discouraging bad bulk-aisle behavior.
- Put the instructions for use (pull up, slide out, push down) on every single bin unless you truly enjoy sweeping up. Ditto for economizing on the really cheap plastic bags—the ones that split when the pinto beans hit them. Your customers, your stockers and your cleaning crew will thank you.
Natural Foods Merchandiser volume XXV/number 9/p. 24, 26