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NATURAL-FOOD CHALLENGES FOR CONVENTIONAL RETAILERS SIFTED

CHICAGO -- Deciding where to source and how to merchandise natural products can be a challenge for conventional retailers who want whole-health products or sections in their stores.According to Robert E. Carlson, director of nutrition centers for Valu Merchandisers Co., a subsidiary of Associated Wholesale Grocers, Kansas City, Mo., there are few channels available to them to easily procure these

CHICAGO -- Deciding where to source and how to merchandise natural products can be a challenge for conventional retailers who want whole-health products or sections in their stores.

According to Robert E. Carlson, director of nutrition centers for Valu Merchandisers Co., a subsidiary of Associated Wholesale Grocers, Kansas City, Mo., there are few channels available to them to easily procure these products.

Carlson, who spoke at the Whole Health Solutions Conference here last month, said that natural-food distributors have fewer programs available and less money to spend than conventional distributors. "Depending on location, the possibility of broker 'black holes' exists," Carlson said, referring to the fact that some areas of the country are not served by natural-food distributors.

On the other end, natural-food distributors until recently were not used to working with traditional grocery stores, and have been less ready to be competitive in price, programs and support. That, according to Carlson, appears to be changing, as natural-food suppliers begin to handle more best sellers.

"It's a new industry. The suppliers are learning at the same time the supermarkets are," Carlson said.

The first place to look, he suggested, is to the companies with a national presence. Smaller regional independents are the next possibility, and, finally, specialty food suppliers.

All three types of distributor may pose the same problem for stores, in that they may deliver only once a week. Other potential issues that may strain business relations: distributors don't pay slotting fees; they have less available money overall; they are reluctant to support advertising programs; and some natural-food lines either won't allow a distributor to handle them or won't sell to grocery stores.

If a company decides to forgo a distributor, it may require contacting 400 to 500 suppliers on a regular basis.

Carlson also delved into the question of whether to integrate whole-health products with mainstream products or to build a "store-within-a-store" and use the nonintegrated approach.

Valu Merchandisers opted for the nonintegrated approach, a decision that has served it well. He cited as advantages the fact that people can do one-stop shopping. It's also easier, he said, to price the products at a higher margin percentage, since they would not be competing with conventional products placed directly next to them.

Advantages of integration include less expense for remodeling and that products have a higher visibility to more customers, Carlson said