A few weeks ago I had the opportunity to speak to a group of independent retailers operating stores here in the Northeast. The topic was health and wellness, but all the talk focused on the economy, and how it might impact sales of natural and organic foods.
I wish there was an answer, or some definitive study or statistic. But there's no such thing. In a business where each consumer is as individual as a snowflake, it's tough to come up with even a ballpark estimate, especially in the area of shopper trends.
Retailers have plenty of experience with downturns and recessions. These phenomena are part of the business cycle in which they operate. Throw in health and wellness, however, and it's new territory. Retailers have invested in the category to varying degrees, and this is what concerns them. How appealing are these premium-price items — responsible for driving an impressive amount of growth — now that shoppers are growing more budget-conscious?
There are two schools of thought on the subject. One class believes consumers have been exposed to the category long enough for them to have developed a certain amount of loyalty. This might be truer in some categories, like dairy, baby food and produce. Shoppers will cherry-pick their way through wellness, purchasing those items they deem must-haves, and compromising on the rest. The advice here is that retailers should cut back on wellness products that don't pass whatever sales and volume threshold that's necessary for success. They should keep the basics, however, particularly those gateway categories like produce and dairy. As demand grows, restore the categories that were cut earlier.
The other class thinks that health and wellness is more important now than ever before, and consumers are eager to maintain good health at a time when having a job is critical and health insurance even more so. The message that eating nutritious food brings better overall health isn't lost on these shoppers. In this scenario, people will be even more conscientious of their diets, and will buy accordingly. Here the retailer must redouble merchandising efforts to ensure everyone knows they're still a full-service supermarket with plenty of wellness alternatives. The goal is to build business in key categories while competitors withdraw.
As with everything else in this world, the truth likely lies somewhere in between. Most mainstream retailers offer plenty of alternatives. Don't forget the organic private-label products, or items that are not organic, but still hormone-, GMO- or pesticide-free. Budget-minded consumers might see these as acceptable options until the economy improves. No matter what happens, retailers can reassure people they don't have to abandon their improved diets.
If there's one premise that everyone seems to agree on, it's that consumers tend to stay closer to home when the going gets tough. They travel less, they drive less and they skip the restaurants. For supermarkets, this is the equivalent of a captive audience. Retailers need to remind customers that, though times are difficult, they can keep their health goals.