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Natural Foods Merchandiser

Consumer spending up

U.S. consumers spent more in January than expected, the fourth consecutive month of increases. And consultants say that’s continued good news for the naturals industry.

The 0.5 percent increase in spending followed a 0.3 percent gain in December, Commerce Department figures showed. Incomes rose 0.1 percent, following a 0.3 percent increase in December.

The report also showed stable prices. In a separate report, the Federal Reserve’s preferred price measure, which excludes food and fuel, was unchanged in January from the previous month and was up 1.4 percent from a year earlier. The Personal Consumption Expenditures price index, which includes food and energy prices, rose 0.2 percent in January.

Consultants say the naturals industry is seeing similar results.

Sheldon Baker, senior partner with San Francisco-based marketing consultant Baker Dillon Group, said nutrition industry sales channels, for example, are being affected by the economy, but “within that marketplace the large percentage of the industry is doing well. The nutrition industry has proven to be more resilient than many other market segments and I think will continue to deliver positive growth in our slumping economy.”

Jay Jacobowitz, president and founder of Retail Insights,a professional consulting service for natural products retailers in Brattleboro, Vt., said independent retailers in the natural products industry as a whole have not suffered as much as conventional retailers, averaging about 7 percent growth over last year. Naturals and organics continue to be a lifestyle choice, not a fad, he said.

“These are retailers with a clear set of values and a clear marketing message,” Jacobowitz said. “People are not going wild, but they are feeling a little more confident.”

Baker pointed to continued growth in private label, thanks to cost-conscious consumers. “I see private label brands looking more like name brands. Thus consumers who are cutting spending will continue to gravitate more towards the private label lines.”

Uncertainty about the economy, jobs and healthcare point to continued strong sales in personal care products such as supplements, both Jacobowitz and Baker say.

“People who lost their jobs or lost their health insurance took out multivitamin insurance policies so they wouldn’t get sick or miss work,” Jacobowitz said.

Baker agreed. “People can’t control the government or taxes, but they can control their health. And with unemployment still an issue, I believe many people have turned to supplements and other alternative health measures. No health benefits also mean a look at supplements for those who may have not tried them in the past. That means new and potentially increased sales. As a result, sales should at least be steady over the coming year.”

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