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Natural Foods Merchandiser

Q & A with Michael Kanter

Q: As big-box stores sell more natural products, some independent retailers feel abandoned by the companies they helped launch. Is this a legitimate concern?

A: I don’t think of it in terms of abandonment, though I’m sure some do. I think of it in terms of manufacturers following where they think the money and the customers are going to go. I don’t know if the intention is abandonment, but that is the effect. I’m not sure manufacturers are being thoughtful about their actions. It seems they sometimes forget that they’ve survived in this business because of those of us who are passionate about the products they carry.

Natural products in big chain retailers isn’t new. What’s new is that the chains are much more successful with these products than they used to be. Years ago, they didn’t have a clue how to sell these products, but they’ve figured it out. People are going to them [for natural products] for a variety of reasons—because it’s convenient, because of pricing or because they have the option of buying a sugared cereal along with their organic Nature’s Path.

Q: What options do independent retailers have to address this issue?

A: As an independent, it does pay to stand up for your rights, as Bob Marley might say, and be a squeaky wheel with manufacturers. Make sure they understand that you’re concerned and they need to take some kind of action that allows you to compete. It may mean not carrying a certain product or line. We need to be radical about our moves, but at the same time be careful. Sometimes we get reactionary when a customer complains about a price [compared to the same product’s price at a big-box retailer], but in reality we can still sell the product. We can’t always match price, but we have to look at what kind of customer service we’re doing, what benefits customers get that they don’t have in other stores, and we have to appeal to their higher consciousness about supporting locally owned independent businesses.

Q: What other actions can manufacturers take? For example, should they offer SKUs to independents that they don’t offer to mass?

A: It’s always nice to have SKUs that aren’t available to the mass market, but they’ve got to be things we might have a chance of selling. It doesn’t help if they just throw an unsuccessful product at us.

Manufacturers can help in other ways too. We need a chance at volume discounts to whatever extent they can help legally and ethically. I understand that volume sometimes trumps other aspects of the business, but we need to be price-competitive. They can also help us out by offering samples for our staff and customers, so the staff is familiar with the products and we can gift customers with samplers to entice them back into our stores.

Manufacturers can also provide advertising support. Through an alignment of these things, manufacturers can communicate through their reps and directly to stores that they’re not abandoning us. They need to be creative about how they’ll help us thrive, and we need to support them.

Q: With growing success in other grocery channels, what will compel manufacturers to offer this level of support?

A: This is a partnership, and we both need to recognize that partnership. There have been products and lines that I felt ignored us, and we have successfully eliminated those products from our shelves. In some cases, our sales have grown as a result, because we’ve put our efforts into promoting other brands. Manufacturers should realize that we do have some power in the situation. Independent retailers are the backbone of the natural products industry. We take risks with new products and can respond more quickly than the chains, which gives manufacturers a lot of advantage in terms of judging product success. They shouldn’t be seduced into thinking that sales volume is the only benchmark of whether a product is successful. Manufacturers can sometimes make more money on our volume than on high-volume, high-discount sales.

Q: From the manufacturer’s perspective, isn’t the goal to make natural products accessible to the largest number of people?

A: You can certainly argue that they have to get their products to as many people as possible. But sometimes manufacturers justify their actions by saying they’re getting more natural and organic food to people, when the real benefit to them is that they’re selling more product and making more money. It’s important to run a business successfully and to make a healthy profit, but our success shouldn’t become a cancerous growth that ends up destroying our industry. It’s about trying to create a better world. No one is screaming for more products per se. They’re screaming for community, which is one thing local, independent stores can provide. Manufacturers need us to give them credibility.

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