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Pandemic Potential retail article

How coronavirus could change natural products retailing

Pandemic Potential Part 4: Consumers are flocking to grocery stores for basic supplies and picking up supplements while they are there. But the perceived safety of ordering online could further divide the fortunes of brick-and-mortar from e-commerce.

As a nation of shut-ins turns its lonely eyes to screens, it’s easy to believe that the fate of the independent grocer turns more dire than ever, but in the moment, in the now, the opposite may be true. Call it panic buying, hoarding or simply a more urgent form of nesting, but we’ve all seen Instagram posts of every register open and lines snaking down the aisles. At the same time, restaurants are doing takeout business, if they’re lucky. In short, people are eating at home.

And a trip to a grocery store, especially a natural grocery store, presents an opportunity to buy supplements, particularly supplements that strengthen the immune system. In February, before the COVID-19 pandemic upended American life, sales of “immunity-boosting vitamins, supplements and remedies” were up 30% in natural retail stores. Vitamin C spiked by 17% in natural retail. Sales of allergy and respiratory vitamins, supplements and remedies increased by 33%.

Again, that was February, what feels like a century ago. Grocery mega-chain Kroger has already added supplements to its limited-purchase/no-hoarding list, along with toilet paper and hand sanitizer.

At Natural Grocers, scene to some of those lines up the aisles, the stores are largely keeping up with demand, but the demand for information is hard to meet. “We had to stop taking nutrition consultations because there was a massive surge of people suddenly interested in eating well and getting healthy and boosting their immune response and we’re like, ‘Yeah, we’re busy stocking stores,’” says Alan Lewis, government affairs director for the chain.

Education in the aisles or not, Lewis says most stores like Natural Grocers are prepared for the demand. “The nice thing is we have deep stock and we have 5,000 SKUs. So, it would be hard to buy all the vitamin D3 out of our store.”

Takeaway: Long lines at grocery stores are building demand in supplements for brick-and-mortar retailers, but the winner in the long term could be e-commerce.

At Vitamin Shoppe, workers both online and in-store are operating at full tilt, CEO Sharon Leite said in emailed answers to NBJ questions. The corporate headquarters team is working from home, but the warehouses and stores are in full production mode. “Our Health Enthusiast teams—in stores, distribution and fulfillment centers, e-commerce, customer care, and corporate support—are working especially hard to meet this increased demand,” Leite offered.

The CEO explained that the chain is working with manufacturers to keep the private label brands in stock. While store hours changed, online sales became an increasingly attractive option for consumers already going online with questions about wellness and immunity during the pandemic. “We are driving significantly increased traffic to VitaminShoppe.com from Google searches for terms like: aloe vera gel, black seed oil, silver, oregano oil and protein powder,” Leite said.

For onlookers, that online interest-and-answer dynamic seems to only increase the long-term threat to natural retailers. By NBJ estimates, supplement sales were up 3.9% in the natural and specialty channel in 2019, while they climbed 19% for e-commerce, with personalized nutrition’s 110% growth moving exclusively into online subscriptions.

Len Monheit, CEO at the Trust Transparency Center, predicts “significant market-share channel shift.” People were already going on line for supplements, and basic concerns about leaving the house make it a safety issue. “I think this accelerates that trend,” he says.

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An increasingly e-commerce adjacent channel, practitioners, could also benefit. As people across the healthcare spectrum get more comfortable with “telemedicine” remote consultations via video conferencing, integrative MDs, naturopaths and others could reach a new consumer base, Monheit says. “I think there’s a huge practitioner opportunity.”

That doesn’t mean all is clear on the online front. Chatter has commenced that Amazon may put supplements on its nonessential list, placing it outside the e-commerce behemoth’s definition of “household staples, medical supplies, and other high-demand products.”  Steve Mister, president of Council for Responsible Nutrition, which includes Amazon as a member, says brands may be concerned, but there are no signs Amazon is moving to limit supplement shipments. “Of the members we’ve been in touch with, we have not heard of any of those products being eliminated or backburnered at Amazon,” Mister says.

As the lockdown screws continue to tighten—and the nation runs out of room in the garage for toilet paper—some wonder if lines at the stores will begin to drop as grocery visits become more dash-in/dash-out. RFI Ingredient’s Jeff Wuagneux questions the long-term outlook. “After we come out the other end of this? Man—so many people are going to be used to ordering online. I think this is going to hurt the independents. I think this is going to hurt a lot of retail.”

Lewis isn’t sure. Nobody in the supplement industry is saying that supplements are the only answer, and consumers are unlikely to accept vitamins and herbs as the complete solution either—especially as they do more cooking at home. The biggest wake-up call in history could be ringing across the continents, and people might realize that staying healthy is integral to immunity and that good food and good habits are the biggest part of that. Exercise, sleep and fresh vegetables don’t come in a bottle, but one of them is sold at the grocery store.

“Responsible retailers and responsible commentators are not going to focus on a pharmaceutical or dietary supplement,” Lewis says. “They’ll be talking about maintaining robust health.”

Pandemic Potential Part 4

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