Consumers looking to stretch their dollars are bulking up on bulk foods—or perhaps trying them for the first time.
"Most retailers' bulk sales are up 5 percent to 10 percent over a year ago," says Scott Johnson, president of Little Rock, Ark.-based Trade Fixtures, which supplies bulk-food equipment to retailers. "Bulk's the third-most important section, right behind deli and produce."
Organic oats, organic short-grain brown rice, organic almonds, organic quinoa and organic red lentils are top sellers at Debra's Natural Gourmet in Concord, Mass. "Top values are always going to be foods like lentils, rice and beans," says Owner Debra Stark. "You can feed a small army with a few cups of cooked lentils. They fill you up and not out."
Spices are hot, too, and it's no wonder—bulk bay leaves are 26 times less expensive than their jarred counterpart, says Jim Clemons, executive director of the Bulk is Green Council in Little Rock, Ark.
U.S. consumers save 30 percent to 60 percent buying most foods and spices in bulk, according to a 2007 study by U.K.-based Waste and Resources Action Programme. The profit margins are higher as well. "Retailers should be making a 45 percent to 50 percent margin on bulk foods. That's higher than their average margin," says Clint Landis, chief marketing officer for Frontier Natural Product Co-op, based in Norway, Iowa.
On the downside, some retailers find the gain is offset by the cost of maintaining a clean bulk section. "Profit margins are about the same because there's more labor in bulk," Stark says. "We do price to try and cover those extra expenses, but the end result is that it's a wash."
Cleanliness is bulk's greatest challenge. Customers spill and bins get clouded with food residue. Retailers must carefully seal stored inventory to keep critters at bay. It's a lot of work, but many natural foods retailers are committed to bulk to reduce waste and keep customers happy. "When there are growth areas—especially in a down economy—you have to jump on it. Bulk's one of them," says Landis, who reports that Frontier's bulk sales increased 7 percent in the past year and tracked a 12 percent increase in the first few months of 2009. "A lot of people who are dedicated to this industry want to cook from scratch," says Shannon Hoffman, owner of GreenAcres Market in Kansas City, M.O. She adds, "having a bulk department is very helpful when you have a deli for leveraging your ability to use your resources in house."
Debra's Natural Gourmet recently tripled its bulk assortment and moved it near the front door. "Bulk foods—real foods—are what our industry was built on," says Stark. "We believe that just about everyone can afford to buy a pound of lentils, oats or whole sesame seeds."
Kelly Pate Dwyer is a Denver, Colo.-based freelance writer.