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IdeaXchange

The trends to expect for the skin care market in 2021

Getty Images Woman posing in front of cell phone

Skin care has become an even brighter spot in the beauty retail category since the start of the pandemic. While some segments of beauty have declined—prestige makeup and fragrance being some of the hardest hit—skin care and bath and body have all boomed as consumers look for ways to take care of their skin without making a spa trip.

Just how big was the skin care boom at the start of the pandemic?

Let’s take a look at online search interest for skin care over the last five years, per Google Trends. 

As you can see, online interest in skincare experienced a significant jump in mid-March and then went on to peak in July. Skin care sales in that same time period followed a similar pattern. According to data from NPD, skin care took the largest share of prestige beauty sales March-June. Over that same period, e-commerce sales of skincare products spiked at 93% year-over-year growth. 

Online interest in skin care had ups and downs for the rest of 2020 but remained high moving into 2021. Now that it’s officially a new year, here are some of the trends Netrush expects to see over the next several months. 

Consumers will continue to expand their skin care routines and explore new products

In September, NPD reported that 22% of U.S. women had changed their skin care routine due to the pandemic, with more women using facial skin care products year-over-year. One-third of those women expanded routines to include more products, and the majority of those intend to stick with their new routine when things normalize.

Many consumers are using downtime from the pandemic to explore and research new products. We expect that this trend will continue well into 2021. Products with rapidly growing interest include hydrocolloid patches, salicylic acid serum, face masks and peeling solutions, per data from Google Trends. 

TikTok will become an even bigger discovery platform among Millennials and Gen Z

With over 200 million downloads in the U.S. and 1 billion users worldwide, TikTok is one of the most trendy apps around. You can find just about anything on TikTok, from random videos to beauty DIY tips and tricks. Search skin care, and you’ll enter an endless scroll of users talking about their favorite products and routines. 

After scrolling through about a hundred different skincare videos, there are a few main brands that kept coming up: CeraVe, Cetaphil and The Ordinary. These brands seemed to have gained a strong foothold on the platform, and many of the videos featuring their products have thousands of likes and hundreds of comments. 

Many retailers have recognized TikTok’s influence and potential. In December, Walmart announced that it would be holding a fashion livestream event where viewers would be able to purchase items without having to leave the platform. While December’s livestream event was limited to fashion, more categories could be included in future events. 

Brands and retailers will add more value to consumers digitally

Providing a physical experience through brick and mortar has always been an important part of beauty retail. However, during the pandemic, brands and retailers have had to add value to beauty consumers virtually. 

One company that’s done this particularly well is makeup and beauty lounge Blushington. After being forced to close its brick-and-mortar stores, Blushington innovated new ways to offer personal shopping experiences online. The company did this by offering virtual beauty classes and one-on-one makeup classes.

Larger retailers are also adding value through virtual experiences. Sephora, for instance, now offers shoppers virtual makeup tutorials, virtual skincare consultations and personal shopper services. 

Moving into 2021, brick and mortar will continue to play a big role in the beauty industry, but digital will play a much larger role than it did pre-pandemic. Retail success in 2021 will require brands to meet their customers where they shop, which means putting less emphasis on multichannel strategies and more emphasis on creating an omnichannel experience.

Austin Wright is a content strategist at Netrush, a leading e-commerce solutions provider for premium natural products brands.

Have some big ideas or thoughts to share related to the natural products industry? We’d love to hear and publish your opinions in the newhope.com IdeaXchange. Check out our submission guidelines.

CBD freedom bill introduced in Congress

Getty Images cbd from hemp could become a food additive

The culture moves markets. Regulations move markets. Legislation moves markets.

Thanks to the original legislation, the 2014 farm bill, hemp and its nonintoxicating cannabinoid CBD found a foothold in the market. That legislation opened the door to CBD, and merry hempsters took that inch and ran a mile with it.

The would-be controlling regulator, the U.S. Food and Drug Administration, didn’t know what hit it, and by the time it released its opinion on the matter there were already more than a thousand brands being sold from coast to coast and talked about in daytime and late-night TV shows.

The culture took the legislation and overwhelmed the regulators.

The FDA has never been considered an ally of dietary supplements—after all, “drug” is its middle name. It certainly hasn’t helped that the FDA considers itself the gatekeepers of medicines to America. But the agency has fairly lost the cannabis plant to the culture.

The next farm bill, passed in December 2018, put an additional Congressional imprimatur on the hemp CBD market, clearly allowing for its access outside only the prescribing physician that FDA allowed when it approved a CBD isolate drug in June 2018—certainly looking ahead when it was expected the December 2018 farm bill would expand access to CBD from hemp.

The culture marched on, first in a 2019 frenzy, then in a 2020 downturn—all the while the hemp and CBD industry complained loudly that regulatory certainty from the FDA would ease the market and allow for expanded access in mainstream markets such as food/drug/mass and the big-box retailers.

Nearly two years ago the FDA said it would take three to five years to publish an official rule to define the market. Profoundly miffed at what is seen as regulatory foot-dragging, if not outright inaction, hemp allies have pushed Congress to step in and draw up legislation of its own that will compel the FDA to act.

And that happened this past week when Congress introduced a bill, H.R.841, the Hemp and Hemp-Derived CBD Consumer Protection and Market Stabilization Act of 2021.

What the 2021 bill means

Introduced by Oregon Democrat Kurt Schrader and Virginia Republican Morgan Griffith, with five Republican and 12 Democratic co-sponsors, the bill would simply legalize CBD as well as any and all other ingredients derived from hemp as a dietary ingredient and in dietary supplements, subject to new dietary ingredient (NDI), Good Manufacturing Practices (GMP) and labeling and marketing provisions as with other supplements.

It would maintain hemp’s definition as a cannabis plant with less than 0.3% THC—the euphoria-inducing cannabinoid in the plant, which is solely responsible for the difference between hemp and marijuana.

The NDI aspect is a heavy lift, one that could be counted on to radically shrink the number of brands on the market. But the certainty would be a boon for companies that have the wherewithal to produce quality hemp or spend a high six figures to conduct toxicology testing. And for growers who have done the toxicology work, the riches could be legion.

“It provides the category and all of us that play in that field a legitimate entry point into the mainstream marketplaces that have kept us at bay for years now,” said Josh Hendrix, chief growth officer at Driftless Extracts and Workman’s Relief. “This is a step in the right direction for sure. It's certainly not the final piece of the puzzle but a very important first step for those that are making quality products.

That sentiment is echoed by a longtime supplements trade group, the Council for Responsible Nutrition, which represents large supplements companies that offer guardrails and boundaries circumscribing the “responsible” supplements space.

Julia Gustafson, vice president of government relations for CRN, expressed frustration with the FDA and hopes that this bill would shift the agency’s thinking around hemp and hemp CBD.

“Due to continued FDA inaction,” said Gustafson, “more consumers are at risk every day of unsafe or illegal products that are poorly manufactured, incorrectly labeled or illegally deliver THC or other adulterants. Concurrently, responsible CBD companies that adhere to federal regulations and product and market safe and beneficial CBD dietary supplements are forced to share the shelf with disreputable companies that compromise public safety for profit.”

Will the bill compel the FDA to act?

Concern remains for the bill’s fate, as some members of Congress are seen as preferring to let the FDA take the lead. However, impatience with the FDA’s position has directly led to this Congressional action.

“Reps. Schrader and Griffith have shown true leadership on this issue, and we anticipate support continuing to build as it progresses through Congress,” said Jonathan Miller, General Counsel for the U.S. Hemp Roundtable and spokesperson for a coalition of 19 groups representing hemp and supplements concerns. “The organizations working collectively to establish a trusted marketplace for ingestible hemp-derived ingredients applaud the bipartisan approach on this legislation.”

The coalition, via a press release, lamented the “regulatory uncertainty” that remains about the inclusion of hemp and hemp-derived CBD into ingestible products.

CBD commerce and investment, asserted the coalition, “have resultingly been chilled, impairing job creation and economic opportunity for farmers and small businesses.”

Michael McGuffin, president of the American Herbal Products Association and a coalition partner, provided clarity around the intense desire in the industry for Congress to step in now. He has long maintained that hemp and hemp CBD should simply be treated as any other botanical supplement on the market.

“There remains an absence of substantive progress on FDA’s reported attention to creating a lawful pathway for CBD, and a similar lack of clarification from the agency that simple hemp products, such as tinctures and extracts, should be regulated the same as other herbal supplements,” said McGuffin. “This legislation will fill those gaps, and we see it as important for ensuring that consumers will be able to find hemp and CBD products that are clearly subject to FDA’s enforcement of the robust regulations that apply to all other herbal supplements.”

CRN’s Gustafson hopes this bill will jump-start the FDA’s efforts, focusing its attention on the goal of expanding consumer access to hemp CBD and other cannabinoids and terpenes.

“We call on FDA to constructively engage with the bill sponsors and other stakeholders to address any reservations it may have and to help craft legislation that protects public health while fostering a new category of supplements.”

The U.S. Hemp Roundtable has built a portal where interested parties can contact their Congressional representatives and encourage them to co-sponsor and otherwise support the bill’s passage.

The coalition of 18 groups supporting this bill includes the U.S. Hemp Roundtable, American Herbal Products Association (AHPA), Alliance for Natural Health, Citizens for United Health, Consumer Healthcare Products Association (CHPA), Council for Responsible Nutrition (CRN), Hemp Alliance of Tennessee, Hemp Industries Association (HIA), Midwest Hemp Council, National Cannabis Industry Association (NCIA), National Association of State Departments of Agriculture (NASDA), National Grocers Association, Texas Hemp Coalition, United Natural Products Alliance (UNPA), U.S. Hemp Authority, U.S. Hemp Building Association, Wisconsin Hemp Alliance and We Are For Better Alternatives (WAFBA).

What every food entrepreneur should know before scaling

Sanaia sanaia applesauce

Keisha Smith-Jeremie, CEO and founder of Sanaia, has always thought applesauce was an overlooked category and a potential disrupter.

“The category has not realized they were the original plant-based match,” said Smith-Jeremie, who grew up in the Bahamas and launched Sanaia in 2017 to sell organic applesauce that was a childhood favorite. “They could be dominating this moment in the same way Chobani recognized that yogurt was the protein that could be delivered on a daily basis.”

Smith-Jeremie, who works full-time as the chief people officer at Tory Burch says being full-time in the C-suite has provided more flexibility to have control over her time to help build a natural food brand that is known for its gourmet flavors like lavender pear, guava, hibiscus and ginger blended into its applesauce.

For the first six months of her business, Smith-Jeremie, who was then working as the global head of human resources at News Corp, spent her weekends cooking and packing, waking up at 4 a.m. to ship everything out. 

“That’s obviously not sustainable or scalable,” says Smith-Jeremie, who built a six-figure business while managing a full-time job.

Smith-Jeremie knew early on she would have to get comfortable with delegating tasks and accelerate her timeline, such as getting a chef and a commercial kitchen, at the now-defunct Hot Bread Kitchen incubator program in Harlem, because of launching while maintaining a full-time job. Having a steady income stream allowed Smith-Jeremie to use her own capital—about $60,000 in the first six months she said and a half million dollars in the first 18 months—for the business, and raised $750,000 through friends and family.

After appearing on ABC’s "Shark Tank" in 2018 (Season 10, Episode 2), she netted a deal with Mark Cuban for $150,000 for 25% stake in her company. It later led to a brief stint on the shelves in 800 Walmart stores.

Here’s Smith-Jeremie’s advice for other entrepreneurs in the natural food business.  

Financial hurdles

Everyone talks about going to “friends and family” for the first round of financing. Can you talk about what that was really like for you?

Keisha Smith-Jeremie: It’s important to acknowledge that entrepreneurs of color don’t always have that. We’re kind of like, ‘Wait, who should I be asking?’ It was really more about my extended professional network that I’ve built over the past 20 years in corporate America as opposed to friends and family. That’s an important distinction because it’s not talked about enough for entrepreneurs of color.

What are the specific things you had to do to overcome that hurdle?

Keisha Smith-Jeremie with Nya Sanai, her goddaughterKSJ: I had to come to the realization that it wasn’t going to be friends and family, even though every article tells you to talk to them. I had to make peace with the fact those doors were closed. I have an extensive network of people that I’ve built credibility.

A mentor of mine once told me, many years ago, if you need money you should ask for advice. If you ask for advice you might get the money. That really clicked with me. So I reached back out to my Morgan Stanley network, where I worked for 13 years, and said, ‘Hey I’ve got this crazy idea to launch this business. I’ve self-funded it; how do you think I should start raising money?’

I did get, 'You should talk to a friend of mine who has sometimes been a seed investor.' It was through my professional network that I was then exposed to other people who had been funders or angel investors, but those people did not exist in my friends and family circle.

What are some of the smartest things you think you did that helped along the way?

KSJ: It was sticking to my guns about who I was doing this for and very clear about my target audience. Very early on, I hired a food consultant because I knew nothing about food production, and she was a deep subject matter expert who helps entrepreneurs with the science side and packaging.

I wanted modern, sleek packaging and she kept pushing me toward the typical kitsch like grandma’s applesauce and said people wouldn’t know flavors like guava. I came out of the first meeting feeling deflated.

So what did you do?

KSJ: I called my best friend and said, ‘She doesn't see it.’ But I realized I had to remember that's not what I hired her to see. I didn't hire her to tell me about my target audience. I hired her for her technical expertise and I need to leverage that.

I knew I needed to have someone for everything technical, who knew all of the certifications, the labels and the packaging sizes. But I also recognized that I needed people on the team who saw the vision. So as soon as I got what I needed to get for the first launch, we went our separate ways. That does affect you as an entrepreneur. You can ingest that for a short period of time but as you’re building a tiny team, everybody has to be energized around the vision.  

The journey to Shark Tank

How did you first start testing your business idea?

KSJ: I had this idea in December 2016 and pitched it some of my friends. Lezli Harvell was part of that core group. She said if you can be ready by June [2017], we can get you in the gift bags at a James Beard event [Iconoclast Dinner Experience]. I said yes, even though I knew I’d have a website and product by then.

I had a six-month window where I had this sprint to get things done. I didn’t have time to second guess and be fearful and focus on being perfect. Everyone rallied around that date and got it done.

Wow, that’s incredible. What was it like to pitch on Shark Tank?

KSJ: Pitching was terrifying. I’d never pitched before and hadn’t thought about it when [executive producer] Mark Burnett reached out to me via email. I thought it was a prank. He said, ‘I found your product online; have you ever thought about being on Shark Tank?”

I knew it was huge, because people apply over and over for years to get on the show. I had to be ready to film in four weeks and I had never watched a full episode of Shark Tank before. I hunkered down and watched every episode. I had a notebook where I wrote down every single question and then made sure I had an answer. I rehearsed over and over until I felt ready.

The Walmart experience

How did you go from Shark Tank into Walmart?

KSJ: Walmart is thanks to Renae Bluitt a Black woman who had a movie recently, “In Her Shoes.” She’s a former PR consultant who has focused her business on amplifying Black women entrepreneurs.

Keisha Smith-Jeremie on Shark TankShe tasted my product and asked, “Have you ever thought about being in Walmart?” Of course I had. She knew the diversity supplier person and put me in touch. We were both going to be at Essence Fest at the same time. She told me to bring some extra product and got us together in the same place at the same time. We essential stalked this poor guy, going over and over to his booth. We eventually got a meeting; he put us in touch with the decision makers and then the buyers. We flew out to meet them at Walmart’s headquarters in Bentonville, Arkansas, and got on the shelves.

Can you walk us through your Walmart experience a bit more?

KSJ: I don’t want to say Walmart might be a cautionary tale, because they were so supportive of getting us on the shelves, but being so tiny and new, I wasn’t ready for the capital outlay that you need to create velocity in Walmart. So I made the decision after a couple of months to pull back, right before COVID.  

My plan was to focus on online by Amazon. Then COVID hit and our co-packer manufacturer ran into financial difficulties, so we ended up being out of production for almost all of 2020. We’re in a build-back mode at this point. We’ve got a new co-packer and planning a relaunch in April on Amazon, but Walmart was a really important lesson for me as a CEO, about understanding the cost of an opportunity, not just the potential of an opportunity.

What do you know now that you wished you would have known then?

KSJ: It was an underestimation. I think they probably thought we knew more than we did. Now when I look back in retrospect, I’m like, ‘Oh my God. I can’t believe they didn’t ask me if I had enough money to do samples.’

They put us in 800 stores and it costs $5,000 per store, that you have to pay Walmart, to do a store sampling. Even if you only sample 30% of 800 stores at $5,000 a pop, that’s $600,000 for 120 stores. If you don’t have that kind of money sitting there, you can’t even optimize the opportunity.

We tried to do it through digital marketing and in-store and with coupons. I imagine Walmart probably assumed we had an extensive capital budget for marketing. In retrospect, I probably should have asked Walmart if I could talk to one of its new brands so I can understand what it took for them to be successful. I wish I would have asked Walmart about its smallest test case, which I think is about 300 stores. 

My advice to other entrepreneurs: Don’t be afraid to negotiate the yes, and not always in a way to get more but to get less so it’s something that’s really manageable.

How long were you on the shelves at Walmart?

KSJ: We got on shelves in July 2019 and I made the decision not to replenish in December, but we were on shelves until about April 2020. We ended up selling out thanks to COVID. We’ve basically been out of production since April 2020.

Frankly, if I didn’t have my day job, the company would have gone under because it’s the only reason I’ve been able to sustain a bit of a team as we tried to find a new co-packer to get us back into production and give us a fighting chance to show back up. We’ve basically been existing without revenue for all of 2020.

Where things stand

Where are you now?

KSJ: I feel positive because every time the Shark Tank episode re-airs we get a deluge of interest, especially from food service. So it hurts my heart but I promise we’re coming back.

I’m excited about 2021 because I think about the value proposition of why I started this business. People love applesauce. They just have forgotten that they love it but as soon as they taste it, they can’t believe how much they haven’t been eating it. People want less dairy and more plant-based without gluten. And they want more snacks that they crave that they can feel good about.

Where do things stand with your production?

KSJ: We’ve got a new co-packer in Colorado that’s woman-owned. Every co-packer in the country during COVID was in lockdown mode and not accepting anything new because they were trying to deal with the business they had or going under.

I don’t think a lot of entrepreneurs understand the dynamic of working with a co-packer. When you’re small, you are costing them money until you really start making money, because you’re taking up production space. So it’s always a dance with a co-packer when you’re tiny, even though you’re the one paying, they turn down more business than they take on.

That’s in ordinary times. You add COVID into it, and you’re really trying to convince a co-packer that this is going to be worth their time. I spent the entire summer scouring the country for not only a co-packer that wasn’t gone, but one that did apples.

16 brands named On Trend winners at KeHE's summer show

As with most events these days, KeHE distributors' annual summer show took place online this month. But that didn't stop the Certified B Corporation from honoring its suppliers.

Via video, KeHE announced the winners of its On Trend awards in 16 categories. Judges sorted through 150 applications to determine which brands best fit the criteria of innovation; purpose-driven attributes; clean, new and functional ingredients; and overall salability, including packaging and price point.

Click through our gallery to see which companies won which awards.

[email protected]: Chobani hints at 2021 IPO | Sustained demand for comfort foods

Chobani Chobani yogurts

Chobani eyes 2021 initial public offering

Chobani executives hope the company's public listing of shares—the date of which is yet undetermined, but will likely occur later this year—could value the company at up to $10 billion. Sixteen-year-old company Chobani effectively brought Greek yogurt into the mainstream when it first launched, but recently the company has expanded into fast-growing segments including oatmilk, creamer and refrigerated coffees. The Wall Street Journal has the scoop.

Hershey tracked COVID-19 trends after seeing s’mores demand rise as cases grew, CEO says

Hershey's proprietary research reveals a surprising COVID-19-driven comfort food tendency: making s'mores! According to the company, chocolate sales were 40% to 50% higher in areas with an increased number of COVID-19 cases. CEO Michele Buck stated that seasonal traditions, and the candy that often accompanies them, have been a key driver of sales this past year as consumers clutch to a semblance of normalcy during holidays. CNBC reports.

McDonald's starts testing McPlant burger in Europe

The McPlant, a pea protein-based burger produced by Beyond Meat and sold at select McDonald's locations, is now on menus in both Denmark and Sweden. Notably, the product is not suitable for strict vegans because it is cooked alongside McDonald's regular beef burgers. The popular fast-food chain is one of the last to offer a plant-based option on its menu, and there is no indication as to when the McPlant might land stateside. Get the skinny at The Spoon

Beyond bees, neoconics damage ecosystems—and a push for policy change is coming

The hugely harmful effects neonicotinoids have on pollinators have been well documented for years, but they are still the most popular insecticides in the world. Neonicotinoids attack the nerve cells of pollinators so effectively that some publications have warned their use will lead to an "insect apocalypse." After four years under an administration that accelerated this harm by ignoring scientific reports, experts are hopeful that the U.S. will be able to catch up to the European countries that no longer have the option of using neonicotinoids in their operations. Learn more at Civil Eats.

What makes duckweed the fastest-growing plant in the world?

There's a lot farmers could learn from the tiny aquatic plant species colloquially known as duckweed. Emerging research shows that duckweed essentially rids itself of everything that doesn't contribute to its primary purpose of growth; only 13% of its genes are limited by the time of day, as opposed to other plants whose genes rely heavily on whether it is light or dark outside. The simplicity of duckweed could allow future scientists to pinpoint the cause of this and eventually translate it to more important food crops. Modern Farmer delves into the details.

Liftoff Accelerator event to focus on new brands' e-commerce potential

Findaway Adventures liftoff accelerator promo

A new kind of incubator for a new age is the thinking behind a targeted accelerator event that will combine a "Shark Tank"-style live pitch slam event with an on-the-spot investment offer and an assisted launch on Amazon for early stage brands.

Organized by the impact investment group Findaway Adventures and Netrush, an Amazon retailer focusing on natural products brands, Liftoff Accelerator happens live March 24. Selected brands could receive investments of $50,000 to $500,000 and a Netrush-supported launch on the Amazon.

Prior to that, on Wednesdays through March 10, a bootcamp-style Nail Your Strategy Course is being offered online. Find out more about the event and classes here

We asked Findaway Adventures Managing Partner Robert Craven and Netrush CEO Brian Gonsalves about the Liftoff events and how accelerators need to meet the moment in a new way.

What makes your event different from other pitch slam events and incubators?

Brian Gonsalves: Things are moving fast in commerce (you can now forget about the "e" in front of commerce). We're coming to the event ready to invest. If we like what we see and hear, we're in. 

Robert Craven: We plan to make this Liftoff Accelerator Pitch Slam open to anyone that wants to watch. Much like the show "Shark Tank," people will get to see how investors think about supporting young companies, witness advice given from Findaway and advisory sherpas, watch deal negotiations and agreements and ultimately be able to give feedback in real time to brands and investors. This will be a very unique experience and, we think, valuable for the brands.

Does the incubator model need to change?

RC: Incubators can be very helpful in many situations. I think the key to a good incubator is its focus. The Liftoff Accelerator is focused on giving very young companies a very specific leg up. Our theory is that startups should focus on the path of least resistance to facilitate growth; focus on direct-to-consumer and Amazon sales first to learn about the consumer, gain critical online reviews for the product and probably most importantly establish a baseline of monthly cash flow. This pitch slam will support this theory and truly ignite young brands on their journey.

BG: Everything that was not oriented to digital needs to change. The results of strategy and execution now come in digital format: data. The data can tell us what's working, not working and why. Faster adjustments mean doing more with less, and that fits well with impact-minded entrepreneurs who will do whatever it takes to achieve their mission sooner.

You're catering to brands at a very early stage. What was the thinking that went into that strategy?

BG: Startup brands are by nature nimble and responsive. The marketing director, shipping manager, strategist and investor are likely the same individual and fast is important when you're spending capital to get a foothold in a crowded market.

RC: Findaway Adventures exists to improve the world by providing more opportunity for young, "change-the-world" companies and their founders. By helping brands bake social impact into their mission, messaging and products, we feel like we can make a real difference through our model. Everything we do, including the Liftoff Accelerator and our Findaway Club, are designed to support our mission.

Why is the Amazon component so important?

BG: It's a big, crowded, vibrant city of products. You can build a curious and hopefully loyal following if you focus on your block, then your neighborhood and work outward from there. 

RC: The pandemic has accelerated the consumer’s comfort level with e-commerce, and Amazon is the undisputed leader in that field. A young company gains so much by focusing first on consumer-centric platforms like Amazon and direct-to-consumer. Data shows that no matter where a consumer is shopping, they rely heavily on Amazon reviews to help them make their decision. We have also noticed that the biggest challenge for a young brand is focus and the Liftoff Accelerator is meant to facilitate that. We get excited about helping a brand move into new channels on top of the solid foundation and consistent cash flow that a focus on Amazon establishes. 

COVID-19 vaccinations to have limited effect on shopping behavior, says survey

Kroger Kroger covid shopper at register

Even as more Americans receive COVID-19 vaccinations, most U.S. consumers won’t be swayed to change their shopping habits or eschew coronavirus safety precautions, according to a new survey from Shopkick.

Less than half (48%) of people already immunized against COVID reported feeling more comfortable shopping in-store and taking part in other indoor activities, rewards app provider Shopkick said Monday in releasing the study, which polled more than 21,000 consumers from Jan. 20 to 24. Similarly, only 18% of those vaccinated and 15% of those planning to get a vaccine indicated they would shop in stores or engage in indoor activities more frequently.

Underlying the low percentages is the fact that many consumers don’t want to get a COVID-19 vaccine, Shopkick noted. Among respondents, 8% received a COVID vaccination, 48% said they were planning to do so and 44% reported they don’t plan get vaccinated against the virus.

“With evolving news regarding the vaccine, it is becoming increasingly clear to the retail industry that a return to pre-COVID shopping behaviors and expectations is, at best, still far off,” according to Dave Fisch, general manager at Redwood City, California-based Shopkick.

Meanwhile, 96% of respondents who have been vaccinated against COVID-19 and 97% of those planning to do so said they would continue to take personal safety measures when shopping in stores. Those precautions include wearing protective face coverings (93%), using disinfectants (87%), shopping when it’s less busy (66%), paying with debit or credit cards instead of exchanging cash (66%), using self-checkout (58%) and wearing protective gloves (21%). 

WalmartCOVID_shot_closeup-Walmart_pharmacy.png

Of those polled by Shopkick, 44% said they don't plan to get a COVID vaccination.

On the flip side, consumers also expect retailers to uphold their COVID-19 health and safety practices, even if most Americans receive a vaccine, Shopkick found. In that event, 79% of those surveyed expect retailers to continue enforcing health and safety restrictions. That includes requiring protective face coverings for shoppers and employees (89%), offering disinfectants to shoppers (86%), enforcing social distancing (80%), keeping plexiglass barriers at checkout (74%) and limiting the number of shoppers in the store (62%).

Importantly, 62% of consumers said enforcement of such guidelines would influence where they choose to shop, Shopkick said. 

The study revealed generational differences in attitudes about the coronavirus vaccine. Millennials represented the largest segment of people not confident in the vaccine (35% of those polled) and not planning to get vaccinated (51%), Shopkick found. Younger and older consumers exhibited more confidence in COVID vaccination, with 71% of Generation Z and 75% of Baby Boomer shoppers reporting they felt some level of confidence. 

“These latest findings prove that retailers must remain diligent and dedicated to maintaining health and safety standards in-store and continue to find ways to meet shoppers in whatever ways make them feel most comfortable,” Fisch added.

One shopping avenue that many shoppers have found comfortable amid the pandemic is buy-online-pickup-in-store (BOPIS). As consumers try various options for buying essential items, 55% of those surveyed said they were now using BOPIS to some degree, including sometimes (35%), often (11%) or very often (9%). 

Also reassuring in-store shoppers is an improved level of in-stock items as consumer stockpiling rates have declined, according to Shopkick. Among respondents, 49% said they were stocking up on essential items, down from 61% in the November 2020 study. Forty-one percent reported that essential items out-of-stock or low-in-stock a month ago are now in-stock, compared with 36% who said items remained out-of-stock and 23% who hadn’t noticed a difference. 

supermarket news logoThis piece originally appeared on Supermarket News, a New Hope Network sister website. Visit the site for more grocery trends and insights.

Diversity and inclusion in the natural products industry

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The rallying cry heard throughout the summer of 2020 forced the Unites States to face its racial inequity of the past and present. As the Black Lives Matter protests quelled, the country looked for a way forward, committed to finding ways to repair the damage that Americans had been content to ignore.

The civil unrest against systemic racism in the U.S. was a wake-up call not only for individuals but corporations as well, prompting a reexamining of how these truths exhibit themselves within workplaces.

What transpired was a flurry of companies taking public stances against racism and making commitments to work toward racial equity, with varying degrees of promises, initiatives and accountability efforts.

As an industry that is used to being ahead of the curve, natural products industry efforts to take a closer look at the underrepresentation of people of color and women in the workplace were already underway when this racial reckoning came to the fore. In 2019, New Hope Network partnered with the J.E.D.I Collaborative—an OSC² natural products industry collaborative whose name stands for Justice, Equity, Diversity and Inclusion—to conduct a benchmarking survey to assess the level of diversity and inclusion within the natural products industry.

The objective was to obtain a view into the demographic makeup of the industry today so we know where it stands, can set benchmark goals and measure progress as an industry.

How'd we measure up? Not exactly a passing grade.

What we found was that, as an industry, we have a lot of work to do.

So let's get started.

What is justice, diversity, equity and inclusion?

When discussing diversity and inclusion in the natural products industry, many use the acronym DEI, which stands for diversity, equity and inclusion. First, let's define these terms.

Diversity is all the differences between us based on which we experience advantages or encounter barriers to opportunities. Diversity isn’t just about racial differences.

Equity is allocating resources to ensure everyone has access to the same opportunities. Equity recognizes that advantages and barriers—the "isms"—exist. Equity work addresses racism, sexism, heterosexism and more.

Inclusion is fostering a sense of belonging by centering, valuing and amplifying the voices, perspectives and styles of those who experience more barriers based on their identities.

Another term some groups—such as the J.E.D.I Collaborative—use is justice, which means dismantling barriers to resources and opportunities in society so that all individuals and communities can live a full and dignified life.

The last term to know is BIPOC, which stands for black, indigenous and people of color.

Another good way to think about diversity and inclusion is with a phrase coined by diversity advocate Verna Myers: "Diversity is being invited to the party. Inclusion is being asked to dance."

Justice, equity, diversity and inclusion metrics

In the first Natural and Organic Industry Benchmarking Survey conducted in December 2019 by J.E.D.I Collaborative and New Hope Network, industry members were asked to share the makeup of their company leadership, board of directors, CEOs and founders.

Approximately 220 industry leaders completed the survey, providing a view into approximately 1,000 leaders, 725 board members, 220 CEOs and 210 founders.

What was discovered was that industry leadership teams and boards lack diversity and are predominately made up of white men.

One jarring takeaway from the survey is that black and Latinx membership on industry boards is only 2%, while black and Latinx representation on leadership teams is 2% and 6%, respectively.  

The findings showed that smaller companies are more diverse than larger ones. Companies with fewer than 10 employees have more women and people of color in leadership positions.

We can do better.


More diversity and inclusion takeaways


Why inclusion matters

As long-time conveners of the natural and organic industry, we at New Hope Network believe the industry has a responsibility to ensure that its better-for-you products reach everyone. Collectively, we must ensure that everyone—regardless of gender, race, ethnicity, orientation, disability or background—feels they have a place in the natural and organic products industry and can lead us toward becoming a more innovative force for good in the world.

Diversity isn't just a checkbox—it's an opportunity toward that goal.

The makeup of America is quickly changing, and as an industry, we are missing a growing opportunity.

The U.S. is becoming increasingly diverse and it is imperative that manufacturers and retailers serve the changing population. We could be smarter and more understanding to better serve our audience. Unconscious bias—the underlying attitudes and stereotypes that people unconsciously attribute to another person or group of people—may emerge by not being a diverse community.

Today's natural and organic consumers are predominantly white (73%), while the U.S. population is moving toward a white minority within the next 25 years. The percentage of non-Hispanic white people in the U.S. population has reached an all-time low and is expected to fall below 50% sometime around the year 2043.

Becoming a more diverse community will allow us to be able to serve the people who could benefit most from health-promoting food and products and contributes to the long-term costs that all of society pays when we support an unjust food and agricultural system.

How diversity and inclusion drive business value

Natural products industry growth is slowing despite a projection that it will reach $250 billion in 2021, according to Nutrition Business Journal. Fostering diversity and inclusion as part of company ethos can help find new growth.

diversity financial impact factoid

It goes beyond doing the right thing. A diversity of thought, driven by unique perspectives from diverse talent, has been proven to increase the bottom line. Companies with organizational diversity yield 21% higher financial performance and 27% higher likelihood of long-term value creation, per McKinsey and Company's 2018 "Delivering Through Diversity" report.

And companies that opt out of workplace diversity pay the penalty. McKinsey—which has been conducting research on diversity and financial performance since 2014—found that companies in the bottom quartile for both gender and ethnic/cultural diversity were 29% less likely to achieve above-average profitability than were all other companies in the data set.

Hiring employees from diverse backgrounds helps companies better innovate and compete as U.S. demographics and consumer habits change. Shoppers have become more aware of the brands behind the products they purchase and continue to care about brands that uphold their values. (Notably, values-based consumer behavior has held steady despite a pandemic, according to ongoing tracking by New Hope Network NEXT Data and Insights.)

For example, Bloomberg found that Gen Z consumers—which has a spending power of more than $140 billion—want corporations to take a stand on issues, with 42% saying they’d pay more for a product if they knew the company promoted racial justice initiatives.


Learn why diversity and inclusion matter


Next steps for diversity and inclusion efforts

The events of 2020 provided the pain point many organizations needed to shift from talk to action.

And while the J.E.D.I benchmarking survey focused on gender diversity and race representation in the natural products industry, the ultimate goal for companies should be to have diversity in perspective from employees of many walks of life.

Diversity in the workplace is broad and can include race, color, ethnicity, nationality, religion, socioeconomic status, veteran status, education, marital status, language, age, gender, gender expression, gender identity, sexual orientation, mental or physical ability, genetic information and learning styles.

In addition to measuring diversity metrics of employees, inclusion in the workplace matters just as much. Inclusion is involvement and empowerment, in which the inherent worth and dignity of all people are recognized.

When companies are ready to take action, nonprofit organizations such as Women on Boards Project and J.E.D.I Collaborative are there to help companies take steps to embed racial justice, equity, diversity and inclusion into the fabric of their organizations.

Another place to start: The Harvard Business Review offers a four-step diversity and inclusion strategy to help companies move toward greater and better representation for black leaders specifically (but says the framework can be adapted for other marginalized groups).

A good first step? Making a J.E.D.I commitment.


Learn how

 

Discover BIPOC-owned brands in Natural Products Expo Virtual.

Join the JEDI conversation in Natural Products Expo Virtual.

Natural Grocers' Q1 sales, profit increase again

How it happened On July 25 Natural Grocers opened at 18 per share above its initial price of 15 It sold 71 million shares and is currently trading between 17 and 20 In the nine months ended June 30 the company had recorded net sales of nearly 250 million with samestore sales climbing 11 over the previous ninemonth period With more than 40 quarters of consecutive samestore sales growth NGVC is positioned to deliver consistent results on a quarterly basisWhy it matters Whole Foods i

Natural Grocers by Vitamin Cottage reported on Thursday double-digit increases in net sales, comparable store sales and profit.

"We are please with our strong start to fiscal 2021. We continue to see positive operating trends as we effectively navigate the challenges of the COVID pandemic and the related government mandates," Co-president Kemper Isely said during Thursday's conference call. "In the first quarter, we saw continued momentum across our business, consistent with our expectations. Customers continued to practice social distancing and follow pandemic safety guidelines."

Although store traffic decreased an average of 7.1% per day compared to a year ago, average transaction size grew 21.4% compared to Q1 2020. Consumers are still cooking at eating at home, as they have since March when it became clear that COVID-19 was spreading throughout the country. The virus had not yet been discovered in the United States when Natural Grocers' first quarter of fiscal 2020 ended.

Consumers continued to spend more per visit and shop less frequently through January, Chief Financial Officer Todd Dissinger said during the call.

"We saw positive results from many of our key initiatives," Isely said, crediting the company's loyalty program, meal deals and private label products for this quarter's growth.

During the first quarter, the loyalty program Npower accounted for 69% of the company's net sales, he said. At the end of the quarter, 1.3 million consumers had enrolled in the program, which allows the company to send refined marketing campaigns via email to specific customers.

Natural Grocers' meal deals offer simple recipes and shopping lists that will feed a family of four for less than $16. "These recipes feature Natural Grocers-branded products, which provide great deals to our customers," Isely said.

The company continues to grow its private-label offerings,  as well. It added two categories, with 11 SKUs, during the quarter. Private-label sales grew 23.5% and accounted for 7.5% of net sales, the co-president reported.

Dissinger pointed out that sales of dietary supplements increased 9.3% over Q1 a year ago.

However, online delivery sales accounted for only "a low, single-digit sales penetration rate," similar to previous quarters, he said.

For the quarter ending Dec. 31, Natural Grocers reported:

  • Net sales increased 15.2% or $35 million to $265.0 million.
  • Daily average comparable store sales increased 12.7%.
  • Net income increased 94.4% to $3.6 million, with diluted earnings per share of $0.16. In fiscal 2020, net income was $1.9 million and diluted EPS was $0.08.
  • Operating income increased 82.7% to $5.2 million.
  • Gross profit margin was 27.6%, compared to 26.3% a year earlier.
  • Adjusted EBITDA increased 25.5% to $13.2 million.

In addition, the company opened one new store, resulting in a 3.2% new store growth rate for the 12-month period that ended Dec. 31.

While the pandemic might be increasing sales, it also increases some costs. Unlike some grocery chains, Natural Grocers continues to pay bonuses to distribution center and store employees, on top of the $1 per hour permanent wage increase they received last spring. Those changes cost the company $3.5 million in the first quarter of 2021.

Labor-related expenses pushed store expenses up 7.3% to $60.3 million or 22.8% of sales, Dissinger said.

In fiscal 2021, Natural Grocers plans to open five or six new stores and relocate three to five stores, Dissinger said. He also predicted that comparable store sales will average between a 2% decrease and a 2 percent increase as the company laps 2020's shopping surge.

The company also announced it will pay a cash dividend of $0.07 per share of common stock. The dividend will be paid on March 17 to all stockholders of record at the close of business on March 1.

Texas accelerator M/O focuses on boosting BIPOC-owned CPGs

M/O logo

In this series, New Hope Network covers the ins and outs of accelerators and incubators across the United States that provide mentorship, funds and resources to help grow natural businesses. SKU and Naturally Austin are partnering to offer M/O and accelerate diverse CPG founders. Michelle Breyer, SKU's COO, explains what the new program is all about.

What: M/O, a two-pronged initiative that immerses fellows in financial empowerment education and then pairs them with seasoned business leaders to provide insight, advice, connections and access to capital.  
When: The Naturally Austin Fellowship runs March through May. The second phase, a customized SKU track exclusively for Central Texas BIPOC-owned CPG companies, runs June 1 to July 27, 2021.

When are M/O applications open, and when is the application deadline? 

M/O applications are now closed.

What types of companies does M/O assist? 

M/O wants to assist CPG startups that are at least 51% BIPOC-owned.

What’s your mission in doing this work? 

It is vitally important that we have more diversity within the CPG industry. There are a number of BIPOC-owned businesses creating innovative products who may need additional business and market education, social capital development, as well as directed access to capital. We want to close the gap that currently exists to help level the playing field.

What top attributes is M/O looking for in applicants? 

M/O is looking for looking for passionate, committed founders with products that bring something unique to the industry. We would like to see some traction in the market, whether that’s selling at a farmers market or online.

What is one game-changing piece of advice you have for entrepreneurs? 

Know your numbers; know your market. This is vitally important, whether you’re looking at your channel strategy or reaching out to investors.