When a 135,000-square-foot Wegmans store moved in across the street from one Dean’s Natural Food Market location and Trader Joe’s took up residence half a mile from the other, the Ocean, New Jersey–based independent retailer may have been tempted to slash prices in hopes of keeping a competitive edge.
But founder Dean Nelson did nothing of the sort. In addition to the full-time nutritionist Nelson had on staff to conduct free consultations in his store aisles, he invited a local raw foods chef to host evening cooking classes and launched a newspaper ad campaign urging people to “Be Mindful,” “Help a Stranger Today” and “Say Something Nice.”
The longtime natural products retailer even rented out the local movie theater to screen and, thus, expose more people to habit-changing health documentaries such as Food, Inc. and Forks Over Knives.
“Can I compete on price? Probably not,” Nelson says. Yet, his stores’ sales continue to grow—despite the heavy competition. How? Because they are much more than just food outposts. “We’re not only about selling organic apples,” Nelson says. “Our mission is a lot bigger than that. We’re about creating total mental and physical wellness.”
Dean’s Natural Food Market is not alone. At a time when grocery competition is cutthroat and consumers are looking beyond traditional medical channels for solutions to the nation’s mounting health care crisis, many retailers—from natural products Goliaths such as Whole Foods Market to independents like Dean’s—are working hard to evolve from simply being places to “buy stuff” to become holistic hubs of wellness.
Natural and conventional stores compete on wellness
Not surprisingly, Whole Foods is pushing particularly hard in this direction—and raising the bar for what it means to be a retail-based health resource. In May, the mega-chain began rolling out Wellness Clubs, which offer members in-store nutrition and cooking classes, supper clubs, lifestyle evaluations by registered dietitians, and 10 percent discounts on the store’s healthiest food items—all for a one-time fee of $195 and a monthly membership of $45 (fees vary by location).
Yet, the move to become more than just a store is taking place well beyond the natural channel. Midwest supermarket chain Hy-Vee recently launched a six-week diet program called Fast, Fit, Food. Through the program, staff RDs not only offer advice and classes, but also plan, collect and bag five days’ worth of calorie-appropriate meals for participants each week. Meanwhile, Target stores and Giant Eagle supermarkets recently joined the roughly 1,500 retail outlets nationwide to offer in-store health clinics, where consumers can pop in unannounced to have a nurse practitioner test blood pressure, glucose levels or cholesterol, or peek into a sore ear or throat.
All in all, the Food Marketing Institute reports that 72.4 percent of grocery stores now offer some sort of “health and nutrition” education, while 38 percent provide cooking classes (many of which focus on healthy eating or recipes tailored to specific health conditions such as diabetes).
Not surprisingly, the grocery store is proving to be a particularly effective place for people to learn about and take steps to improve their health and wellness. “Consumers today are advocating for their own health more than ever before, but the abundance of information out there can be overwhelming,” says Cathy Polley, vice president of health and wellness at FMI. “Retailers are discovering that they are well-positioned to help consumers navigate the solutions.”
Winning the wellness race
Of course, as Jay Jacobowitz, president of the Brattleboro, Vt.–based consulting firm Retail Insights, notes, the concept of “store as wellness center” is nothing new for most natural products retailers. “The best independents have employed licensed practitioners and offered educational events since day one,” he says.
What has changed, however, is the natural products playing field. Sales of natural and organic products have been growing more robustly within the conventional channel over the last few years, and this channel is expected to soon eclipse natural retailers as the number-one purveyor of these products. In fact, according to data from Natural Foods Merchandiser’s 2011 Market Overview, natural and specialty retailers—which include independents and chains such as Whole Foods Market and GNC—generated $36 billion in natural and organic product sales last year, with sales expanding 7 percent. In comparison, conventional retailers—including chains such as Safeway and Kroger—rang up $29.2 billion in natural and organic product sales for 7.6 percent growth.
In some regions of the country, the natural products sections within mass-market stores dwarf what is offered in mom-and-pop natural foods shops. And with gas prices expected to stay high, many predict that shoppers will consolidate their driving even more, seeking out destinations where they can shop for dinner fixings, get a bone-density screening, take a healthy cooking class and glean diet advice all in one place.
How natural stores can compete
What does this mean for independent natural products stores on a budget? It’s time to get creative and, in some cases, go back to those holistic roots.
“Due to the economy and the competition, this is going to be a tough market going forward,” says Michael Kanter, chief visionary officer of Cambridge Naturals in Cambridge, Mass. In an effort to better compete, Cambridge Naturals recently conducted a thorough study of its grocery offerings to make sure that what it carries sells well now and into the future. It also hired two licensed acupuncturists and scaled up its wellness services, including adding nutrition consultations. “I don’t think you can survive at this point just being a natural foods store that sells products,” Kanter says. “You need a greater mission that you’re communicating to people.”
1. Invest in star practitioners
Step into Pharmaca Integrative Pharmacy in Boulder, Colo., and you might find a licensed herbalist, naturopathic doctor, certified nutritionist and aesthetician—each clad in a white coat and milling the aisles, ready to answer questions. Behind the counter stands a pharmacist, there to fill prescriptions but also to advise customers about supplements they should consider taking to counteract drug-induced nutrient depletion or avoid due to potentially harmful interactions.
If Pharmaca customers prefer to look up specific health conditions and potential remedies on their own, they can use the Aisle7 Healthnotes kiosk at the center of the store. But for when they have questions on dosages or brands, a practitioner is standing by.
“If you’re going to become a destination for health and wellness, you have to staff accordingly,” says Pharmaca CEO Mark Panzer. “Our practitioners are the stars of the show.”
Eleven years after opening its first European-style apothecary in the United States, Pharmaca has grown to 24 stores. But even as the number of stores has expanded, the retailer has kept its floor space relatively small (3,800 to 7,800 square feet) so it can “save on real-estate costs” and invest heavily in licensed staff, Panzer says.
To sweeten the pot for professionals who’ve completed many years of schooling to earn their credentials, Pharmaca allows its practitioners to hand out cards and use the store as a vehicle to promote their after-hours private practices. (They cannot, by law, diagnose or treat within the store aisles.)
“When customers develop faith in a practitioner, they become much more loyal to the store,” Panzer says. “The long-term payback is well worth it.”
Debra Stark agrees. Fifteen years ago, the proprietor of Debra’s Natural Gourmet in Concord, Mass., approached Grace Pintabona, a customer and soon-to-retire registered nurse, with an odd question: Would she want to work in the store? Stark clearly couldn’t pay Pintabona what she made at her hospital job, but the retailer could offer her a friendly setting and a room where she could do private consultations for a fee. Pintabona obliged. Today, she is a cornerstone of the 3,300-square-foot store’s success, helping customers make sense of test results, guiding them toward supplements and dietary solutions when she believes drugs aren’t yet necessary, and writing a well-read monthly newsletter column. Pintabona has also built up a healthy private practice on the side, charging $60 per hour (less than what many would pay at the doctor’s office).
“I come with a background in anatomy and physiology and a degree of implied trust,” Pintabona says. “I think this gives the store a little more credibility in the area of health and wellness.”
2. Think outside your box
Industry consultants agree that educational programming is a critical way for natural products retailers to set themselves apart from their conventional counterparts. But what if you’re tight on space?
Stark meets this challenge by opening her home to customers, offering monthly cooking class/dinner parties for a $59 fee. She works with ingredients that people tend to shy away from (kelp noodles and pumpkinseed oil, anyone?) and then, at meal’s end, hands out recipes for each item served. “This creates a sense of closeness to the business, and when participants walk away, they are no longer afraid to try new ingredients,” Stark says. “They usually come into the store later and buy all of them.”
Stark also publishes healthy recipes in her store’s monthly newsletter, which has been around for 22 years. Her son, Adam Stark, writes a health and wellness article for each newsletter. “He’s created quite a following,” Stark says. “Local doctors send people to him.”
To cultivate a sense of community around his Jersey Shore stores, Nelson has gone big. He recently shelled out thousands of dollars to screen Food, Inc. and Forks Over Knives at a local theater and present an educational talk by his staff nutritionist beforehand. To cover his costs, Nelson charged each customer $10. In return, every attendee received a $10 gift certificate for the store and a popcorn goodie bag stuffed with items his vendors provided for free. “We did four nights of Food Inc., and we filled every seat every night,” Nelson says, noting that the screenings solidified the store’s role as a wellness hub and consciousness raiser. “It was exciting as hell.”
Stores with small budgets and limited space can use technology to do big things to broaden their wellness offerings. This includes sending digital newsletters, hiring part-time RDs to answer questions in online forums or on Facebook pages, and offering up staff to provide commentary to local media.“We employ a community-outreach specialist who has established herself as the go-to person for a local daily TV program,” says Scott Duennes, executive director of Nature’s Bin in Lakewood, Ohio. The retailer also hosts in-store lectures on celiac disease, raw foods, organic gardening, canning and more.
3. Know who you are
Oftentimes, the first step in transitioning from a store into more of a wellness center is simply looking at what you already have going for you and expanding upon it.
“Focus on what you do best and what your customers are asking for,” Jacobowitz says. If you have a lot of young moms coming in, host guest speakers to discuss childhood nutrition or postpartum hormonal changes. If your clientele is older, offer talks on dealing with bone loss. And if a staff member has a degree in nutrition, massage or acupuncture, ask that person if he or she would be interested in offering a free lecture or private consultations. Debra’s Natural Gourmet hosts a knitting group helmed by its accountant, poetry readings led by the store manager and consults with a homeopath who comes in on Saturdays once a month.
“We don’t want to be just a retail store—that’s no fun,” Stark says. “We want to be this wonderful, engaging, interactive community place where people exchange information and get excited not only about food but also about health and nutrition.” As Stark has learned, being more than just a store can pay off handsomely. Debra’s Natural Gourmet averages sales of $1,700 per square foot annually—four times the industry average—and is experiencing double-digit growth, Stark says.
Nelson recommends retailers also try to look beyond the bottom line and reach out to the community for selfless reasons. His store provides free after-school snacks to the local Boys & Girls Club and free healthy food to a local cancer-care facility for women. In the end, it appears, such altruism comes back around.
“When Wegmans opened eight years ago, our sales dropped 40 percent, and I was scared out of my mind,” Nelson says. “But then we realized we just needed to be that much more grateful for the customers coming in. To a degree, we have taken the emphasis off our own needs and recognized our responsibility to become a role model in the community. We don’t make a ton of money. Our bottom line could be better.”
But, he adds, “We are still here”—and still helping make the local community that much healthier every single day.
Photos by Amy Deputy