Core standards and principles guide growth for Natural Grocers

Colorado-based Natural Grocers by Vitamin Cottage marked its 60th anniversary last year. Now with more than 100 stores, Natural Grocers is not only seeing robust growth as a publicly traded company but is setting standards for quality in its stores that make the chain a natural and organic leader. We chatted with the daughter of the founders, Heather Isely, executive vice president and corporate secretary, about changes and trends at Natural Grocers and in the industry at large.

Natural Foods Merchandiser: Natural Grocers seems to keep its finger on the pulse of the industry. What consumer and ingredient trends are you seeing?

Heather Isely: Kombucha continues to be a very, very popular product, which of course is continuing to have its own regulatory issues. Fermented foods are huge; there are great new lines of fermented foods coming out, as well as probiotics in general, in terms of supplements, and prebiotics.

Grain-free, vegan foods have been and continue to be very popular. Plant-based proteins—other than soy—are still very popular.

We also see a lot of interest in and demand for grass-fed and pasture-based products including pasture-based eggs and our pasture-based dairy standard. And there’s somewhat of an interest in the biodynamic movement.

There’s been huge growth in savory and meat-based bars. There’s a big trend in paleo. It’s nice to have more variety and not just sweet bars; sometimes it can get really frustrating because a lot of them that have isolated proteins also have a lot of sugar. But that also has been changing a little bit as makers cut back on the sugar and, even in those types of bars, try to get more savory or more protein from nuts and seeds, or raw and sprouted.

NFM: Are you seeing any changes in how people shop?

HI: There are a variety of trends affecting the industry. Shopping with delivery is popular; and being able to order online and then come in and pick up the order has increased.

Couponing is changing. With our customer appreciation program, there’s an ease of use that segments of the population want and appreciate. The coupon offers are there—a customer can accept all of them or pick which ones she wants, and they download. If the customer buys that product and he has the coupon in his account, the coupon will apply to the sale when he puts in a phone number at checkout.

The biggest trend in the industry is the continuing development of businesses and huge number of conventional companies buying natural and organic brands. It’s been going on for a while but it seems to have accelerated lately. There’s always a question within that: Will standards be diluted? I think it’s something that we should all be aware of.

The reason for it is it’s seen as being very lucrative. It’s not necessarily a bad thing, but at the same time, you want to make sure that standards do not become diluted.

NFM: You mentioned grocery delivery growing, but that doesn’t seem to be a strong trend across the industry.

HI: We’re pretty new to grocery delivery. Our delivery customer is an added one, as opposed to a customer who shopped with us already. What that means is that this person, if we didn’t have this delivery service, wouldn’t have shopped with us. So for us, it’s growing our consumer base.

NFM: Your pasture-based dairy standard is less than 2 years old—how is it going? Have you seen any marked shift in dairy sales, or any broader impacts from the policy?

HI: Our dairy sales continue to increase, but we also are growing—so some of that’s wrapped into that. But our dairy sales are good and robust.

Because of our demand, a lot of the pasture-based dairy is in the distributor, so more and more companies are carrying the pasture-based products, whereas before they weren’t even available from the distributors.

I’m really proud of the fact that we’ve expanded the marketplace for the pasture-based products, and that will in turn drive more and more farmers to get involved in pasture-based dairy. That’s exciting to me and I think that has been really important.

NFM: How important is your organic-produce-only policy to your customers, and have you seen anyone else take that step?

HI: We did a survey at the beginning of this year that indicated that the No. 1 reason our customers shop with us is because of our organic produce. That’s a really strong core belief for our shoppers. It’s a constant that I hear—I’m so glad you only sell organic.
 
NFM: How do you think Natural Grocers has changed since 2012, when the retailer went from being a private, family-owned business to a publicly traded company?

HI: Challenges exist in any business that grows at a 20 percent compounded rate. There are challenges with people, technology, construction, the supply chain. For some reason, this was not a great construction year. That’s the most unpredictable, in terms of growth.

We are still majority-owned by the family. There are some changes within the organization and structure, but we have always followed our five founding principles: Nutrition education, highest-quality products, affordable pricing, commitment to our community and commitment to our employees. That hasn’t changed and would not change.