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Natural Foods Merchandiser

How natural stores can play the price game and survive

How natural stores can play the price game and survive
If a shopper sees that your natural store carry the brands they love at a competitive price, they will assume that all of your items are priced competitively.

Whole Foods recently announced a national campaign to lower prices to be more competitive. They're trying to move away from the stereotype of “Whole Paycheck”.

There's no way that smaller independent retailers can compete effectively playing the pricing game. Larger retailers have a lot more buying power and they also have the ability to deep discount specific items. This also means retailers and brands need to be more creative in their promotion strategies so that they products don't look and feel the same at every store.

To further complicate things, Wal-Mart has launched a pricing strategy whereby if they find an item that you purchased from them at a lower advertised price from any retailer in the market, they will automatically refund you the difference, even after the sale. This level of price competitiveness is unparalleled. It is no longer the shopper’s responsibility to price shop; Walmart does everything for you.

This means that when natural retailers promote an item, the advertised price must be competitive. But this will dramatically change the way natural retailers promote in their weekly circulars. Natural manufacturers should work closely with natural retailers to help them stay current with market pricing.

The good news is that this only affects advertised items. Remember that Walmart cannot compete on price against an item they don't sell. This gives natural retailers an opportunity to be creative when it comes to their selection and internal promotion strategies.

So how do retailers compete effectively given the changing landscape?

As I've talked about in many of my articles, natural retailers need a strong competitive set. This means that natural retailers must also carry some of the top-selling items in their marketplace. This is important because shopper perception is key to winning their loyalty. If a shopper sees that you carry the brands they love at a competitive price, they will assume that all of your items are priced competitively - especially on loss leaders (items that are priced at parity every day -- typically staples like milk, etc.). The competitive set is also what keeps customers coming in and keeps them coming back week after week.

The competitive set invites the consumer to shop your store. Once in your store you can impress the consumer with your incredible customer service and the amazing selection you have on items not available anywhere in the market.

Shoppers want what they want. That's a true statement and it should be at the heart of every assortment, merchandising, and promotion decision you make. Shoppers don't always know what's available. Here's where the smaller independent natural retailer can educate shoppers on new and better solutions - the items that the larger retailers can't and don't stock.

How does this strategy work? Plant-based products are a huge trend in natural. This is a trend that convention retailers will try to adopt in the near future, but they are typically several months and perhaps even years behind natural on adopting trends. Natural retailers should still sell a wide assortment of products like Cliff Bar and Kind to be competitive. Savvy retailers should also sell progressive brands like GoMacro to take advantage of the plant-based trend. Natural shoppers will try new and innovative brands like GoMacro when given a choice. This is how you stand out from the competition. This is how you compete effectively in any channel and in any economy.

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