The natural products industry has enjoyed significant growth due to education and the global spotlight. The signs are everywhere. You can't turn on the TV, listen to the radio or read a blog or newspaper without somebody touting the benefits of organic. Combined with staunch advocacy and awareness for purer/healthier "better-for-you" product alternatives, organic is now the center of national conversations.
What's next is for the natural products industry to take a leadership role in its own growth and development. You've probably heard the phrase, "Lead, follow or get out of the way." Our industry can no longer afford to be pulled into the mainstream.
Traditional consumer package goods (CPG) companies should not have the largest voice in marketing and merchandising natural and organic products. We know the products and our consumers far better, and we should be leading that discussion.
So what will it take for organic growth to explode in 2013? This roadmap will create new/loyal customers and pave the way for accelerated organic growth and success.
Natural retailers and manufacturers need to work together to support each other. Natural manufacturers need to become experts in their categories and help educate retailers on how to best sell, distribute and merchandise those categories.
Together they need to identify strategic solutions to increase foot traffic and shopping basket size. Customers shouldn't be forced to shop multiple retailers to buy natural products. Consumers need to know and believe that the best place to buy these products is at their local natural retailers.
To accomplish this we must eliminate out-of-stocks, improve inefficient distribution and merchandising practices, eliminate inefficient trade spending and, most of all, drive foot traffic into stores. We must develop sustainable solutions that address consumer needs and give them a compelling reason to shop natural retailers.
Provide the right variety of products at lower prices
Retailers need to offer the right assortment that includes some of the top selling items in addition to the niche items that they offer to differentiate themselves in the marketplace. For example, if a shopper wanting to purchase a five dollar box of their favorite cereal (the number one selling cereal item in the market) can’t find it, they may take their shopping list and wallet to another retailer and spend over $200 at the competitive store. This translates into thousands of dollars in lost sales. Most customers never give a retailer a second chance to disappoint them.
Retailers and manufacturers need to work together to reduce costs and drive down the price at shelf. They should also work together to maximize promotional efforts. Promoting complimentary items or cross promoting increases foot traffic while lowering cost. For example, promoting diapers, baby food, wipes, and baby lotions together will reduce costs while sending a message to the consumer that they are the destination retailer for their baby's needs.
Share business intelligence
Retailers and manufacturers must capitalize on the available business intelligence to maximize their efforts. Business intelligence includes any data source both internal and external that can be used to more efficiently and strategically reduce costs and maximize sales. A good first step: understanding sales trends and consumer takeaway to ensure inventory levels capable of supporting promotions at every store within a chain.
Daniel Lohman is the owner of Category Management Solutions (CMS) which provides innovative strategic solutions for natural and organic CPG companies interested in gaining a significant competitive advantage.