Not long ago a mainstream retailer hoping to cash in on the health and wellness trend had to know only one word: Atkins. By the time Atkins Nutritionals filed for Chapter 11 bankruptcy last week, consumers and retailers had long since moved in other directions.
But the fallout left some retailers feeling queasy. How do you build a business around a health and wellness field that is changing so fast? The broad Whole Health business includes natural foods and organics and products geared to diet, fitness and specific health problems. Retailers have a ton of questions about how to proceed in this arena.
A few answers emerged late last month during a panel discussion sponsored by SN at the Institute for International Research's "Shopper Insights in Action" conference in Chicago. The panel, called "Whole Health, Whole Store," followed by about nine months the debut of the quarterly magazine supplement SN Whole Health.
I had the pleasure of moderating the Chicago panel, which included the SN Whole Health editorial team of Bob Vosburgh and Matt Enis. It also included Alec Covington, president and chief executive officer of Tree of Life, a major natural and specialty foods distributor. (An article about the panel will appear in an upcoming issue.)
Alec offered a number of suggestions to help mainstream retailers form a road map on how to proceed. I found his solutions particularly useful because they will endure beyond the next round of fads. Here are four goals he feels supermarkets need to pursue:
1. Win over the mid-level consumer: Supermarkets should aim for "the mid-level consumer" of Whole Health, as opposed to either the core or periphery shopper. This mid-level customer has moved beyond the most elementary stages of health and wellness learning but is not fully committed to the lifestyle. Why should supermarkets target this level? Because, according to Covington, these shoppers are least likely to frequent multiple retail channels if their requirements are met in a single format like supermarkets.
2. Bring Whole Health to the whole store: Supermarkets would do well to think of their stores as wellness solutions rather than merely focusing on specific categories or sections. This broad view will help uncover merchandising gaps that cry out for increased variety and integration with the rest of the store. "You may be doing a great job with organics and functional foods, but still may not be meeting their [consumer] needs in terms of supplements," Covington said as an example.
3. Don't just replicate other channels: The easiest way to build a supermarket Whole Health assortment is to look at how natural food stores merchandise their categories. This would also be the worst approach. The supermarket customer is a different animal than the core natural foods shopper. One of Tree of Life's goals is to find additional data sources to improve understanding of this customer.
4. Adjust supply partner expectations: There's no business like the mainstream food retailing business when it comes to big volumes and awesome efficiencies. Big CPG companies understand those demands, but smaller suppliers on the natural foods and organics side don't always thrive on this major league field. The frequent result is troubled trading partner relationships. Supermarkets need to adjust expectations when working with authentic suppliers.