Despite competition with e-tailers and conventional discount grocers, natural retailers are poised to open up more shops this year.
During a seminar at Natural Products Association MarketPlace in Las Vegas, I was privileged to discuss some retail trends with an outstanding group of retailers from around the country. We used the Natural Foods Merchandiser's 2012 Market Overview as the basis of our discussion and brought in material from other publications, as well.
My notes, along with the audio of the session will be made available in a couple of weeks. If you enjoy the insights presented here, you may want to catch the full presentation when it is released.
One of the first things that we talked about was competition to natural products stores from online merchants (or e-tailers). It seems that every time that I am talking to retailers, especially in these current challenging economic times, the subject of competing with e-tailers comes up.
E-tailers have put up impressive growth numbers. From 2007 through 2009, their sales were growing at over 20 percent a year, including 29.1 percent in 2008.
Wow! Two points need to be looked at along with these stats.
- Recent growth has been markedly lower: 14 percent last year and 14.8 percent this year. Strong numbers still, but much more modest.
- Their overall sales volume is not more than 3 percent of sales of the natural products industry. It's been at this level for the past three years. Granted, the percentage of sales that e-tailers get from supplements will be higher than the 3 percent they have of overall volume. But it's good news for brick and mortar stores that the volume is holding steady and not growing.
Natural retail is growing
Another data point from the NFM Market Overview that stood out to me is that 12.1 percent of store owners plan to open new stores this year.
Independent natural products stores are run by business people with limited funds and limited ability to attract investors and take out loans. However, in spite of that (and in the midst of competition and economic challenges) more than one out of every 10 store owners is planning to open a new store.Talk about believing in what you sell and who you sell it to!
How do conventional grocers feel about this?
Twenty-four percent of them, including 40.7 percent of chain stores, view organic and natural food stores as "competitive threats." We've been focusing on who we compete with, but have we thought about how they think of us?
We do a lot right—selling quality product, with great staffs, while offering exceptional customer service—and quite a fewer "big boys" see us as their competition. They notice and respect what we do. That is quite a compliment!
There are certainly challenges facing natural products retailers. (See my last blog post.) In spite of challenges, there is some good news. There are many optimistic retailers holding their own against stores that are both online and down-the-street.
If you weren't able to join us for at NPA MarketPlace this week, be sure to make plans now to join us at Natural Products Expo Eastin Baltimore in September!