Natural Foods Merchandiser

Thriving Between Whole Foods and a Hard Place

When Bill Peirce bought Leffler's Health Food in 1980 he was buying tradition.

Today, Boulder, Colo.'s first natural products store competes head-to-head with the modern giants—Whole Foods Market, three Wild Oats locations and the Safeway with that chain's largest natural foods section in the country—and a branch of the Colorado-based Vitamin Cottage chain.

Peirce says it takes competitive pricing and a lot of hard work and experience to keep Leffler's Vitamin Shoppe from being muscled out of the market.

In 1972, Peirce started in the natural products industry at a GNC in Florida, having already amassed management experience in other industries. He recognized that business was good, both financially and morally, and decided that instead of putting in more than 50 hours a week for GNC, he would open his own store.

In '74, he moved to Colorado Springs, Colo., and soon opened his first store. Since then, he has owned as many as seven stores at any one time, with locations from Colorado Springs to Boulder. Now Peirce owns two stores, Leffler's, which got its start in the 1960s, and A-1 Nutrition in Colorado Springs.

He's also doing what he loves best—working with customers as he manages both locations.

When Peirce bought Leffler's, there was one other health food store in Boulder and Leffler's Health Food carried mostly food. But soon the original Alfalfa's Market opened (Wild Oats has since acquired the chain). The competition has only gotten stiffer, which is not entirely surprising considering that eating healthfully is a top priority for much of Boulder's active population.

"About seven or eight years ago, the handwriting was on the wall," Peirce says. "Boulder's always been the most competitive market that I knew of in the country, and I understood that other larger chains were coming in. So I shrunk the store size, increased the vitamin inventory because I knew I could compete there, but I wasn't going to compete with people who were bringing in several semis of food a week." With this new focus on supplements, the store was renamed Leffler's Nutrition Center.

But the competition just kept getting fiercer. "Four years ago, Whole Foods and Vitamin Cottage moved in. Before they moved in, I had counted roughly 20 competitors within two miles of [my] store," Peirce says.

Another 10 competitors opened in the area that same year. "Some have gone since, but at a certain time it became moot. Are there 29 or 32? It just didn't matter. So we evolved into this vitamin shop." Thus, Leffler's Vitamin Shoppe was born.

Still, how does a store that has but two forms of advertising—a newsletter containing two pages of coupons that's mailed to 5,000 households and coupon in the shopping center's mailer—stay in business? The location is good—a popular strip center with a large local hardware store as its anchor—but that is sometimes a negative as well because parking can be difficult. It also helps that Leffler's has a long tradition in a community that values locally owned and operated stores.

But in the era of Wal-Mart, loyalty goes only so far when dollars are in question. Peirce's hard work and experience definitely pay off in the price wars.

"[The store has] held up very well. While we lost volume, it's still decent, and we're still competitive," Peirce says. "We usually beat everybody in prices." A recent survey conducted by The Locally Owned Retailer found that in a comparison with Whole Foods and Vitamin Cottage, Leffler's had the best prices on 13 of 14 items.

Keeping this edge is labor-intensive. Peirce scouts for the best deals available from more than 100 distribution sources, working regularly with three main distributors, six small ones and about 30 even smaller distributors. This method evolved partly from necessity and partly by accident. "I had a long-standing program with one company on a product grouping I was buying for 25 percent off," Peirce says. "Then they said, 'We can't do 25 percent anymore; we have to do 23 percent because the manufacturer isn't giving us that good a deal.'"

Peirce shopped around and discovered that competing distributors were offering the line for an even deeper 30 percent to 35 percent off. So he became a dedicated bargain hound, scouring sales and promotions for the best deals.

Peirce has two levels of pricing in the store. First, there is what he calls the "discount" price, which is offered on 90 percent of the items in the store and is called to customers' attention by both retail and Leffler's prices being marked on them. The next level is the "Leffler's special"—deep discounts possible because of his bargain hunting.

Peirce points out the prices on the Nature's Way products—some of which are 50 percent off—and says that during a promotion, he bought heavily on the line. But he knows that when competing it's best to compete only in those areas where one can do best. "For the most part, if I can't get a discount that I can pass on, I'll let one of the big boys deal with that product," he says. He will, however, make exceptions for customer requests.

And in today's tight marketplace, it's possible to get the deep discounts that Leffler's needs to stay viable. As manufacturers jockey for market share, they know they have to work hard to give the best price to retailers to stay on top of an increasingly popular consumer segment and promote their products. Overall, everyone's working harder.

Although it's obvious that Peirce works hard to find the best price for his customers, he says there is yet another factor to his success. "It's not necessarily because I buy better," he says. "I'm also willing to take a smaller margin to keep competitive."

But more than all this, Peirce knows what the secret ingredient is. "It's fun. If it wasn't, I wouldn't do it," he says. "I like working with people, and I like working with inventory, too. It's a challenge."

It's a challenge that is paying off in the form of success—even under what would seem to be incredibly difficult odds.

Leffler's Vitamin Shoppe
The Village Shopping Center
2525 Arapahoe
Boulder, CO 80302
Owner: Bill Peirce
Employees: 4 (including Peirce)
Store Size: Just under 1,400 sq. ft.
Top Sellers: Ginkgo, Co-Q10, Thisilyn (a milk thistle extract), Lutein and Bilberry (combo and separate), garlic and Emer'gen-C.
Current Location: Since 1980

Bryce Edmonds is a Boulder, Colo.-based freelance writer.

Natural Foods Merchandiser volume XXIII/number 8/p. 54

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