HEALTH AND WELLNESS has been officially declared cured of the recession. Industry statistics show that the organic industry — the benchmark by which all of whole health is measured — grew nearly 8% in 2010. Organic products outperformed their conventional counterparts in several key categories, putting sales on track to break the $30 billion mark.
A sunny prognosis for the leading category in the segment bodes well for all products and services under the health and wellness umbrella. Foods and beverages marketed as natural, “better for you,” gluten-free, and sustainable continue to take up more room on the shelves of mainstream supermarkets. Many conventional chains are opening smaller, fresh-focused concepts in which natural, organic and sustainable are prominently featured elements.
Sustainability in particular has moved closer to the forefront. Here again, retailers led the way by incorporating best practices and new technologies that lessen their impact on the environment.
This year's Fit List includes retailers of all sizes who exemplify the best efforts of an industry dedicated to providing what consumers demand. Whether it's sourcing more local foods or developing an opening price-point private label that includes nutrition labeling, these 10 operators are potent reminders that whole health is constantly building on its roots. Only those companies that continue to innovate will find themselves fit for the future.
WHY: Deeper commitments to sustainability
Given its sheer size and influence, it's ironic that Wal-Mart Stores lists only three goals in its 2011 Global Responsibility Report: To be supplied 100% by renewable energy, to create zero waste and to sell products that sustain people and the environment.
Though few in number, the tasks are immense in scope. The world's largest retailer must constantly push the industry in the same direction, and involve all links in the supply chain, from manufacturing to merchandising. And that's just what it has been doing this past year. Most recently, it updated its plans to sell more locally raised fruits and vegetables.
“They've promised to double their sales of locally sourced produce by 2015,” said Joel Makower, who tracks Wal-Mart's efforts as executive editor at GreenBiz.com. “That's a billion dollars worth of food sourced from local farmers.”
It's not just about improving sales, however. The chain has committed to educating a million farmers and farm workers in such areas as crop selection and sustainable farming practices, and to increasing the income of the small- and medium-size farmers it sources by up to 15%.
“Our customers get a fresher product. We save money on freight so we can keep our prices low, while slashing carbon emissions,” Ronald G. McCormick, senior director of local and sustainable sourcing at Wal-Mart, wrote in a recent issue of The Atlantic. “And our farmers are thrilled with our new strategy — they are earning more, and they're now coming to us to ask what else the market might want that they can grow.”
The company's activities touch on all areas of its operations, and can be felt in every aisle in its vast stores. Besides produce, Wal-Mart has made progress in other areas. It's sourcing more sustainable seafood, working in Brazil to sell beef from cows that do not contribute to rainforest destruction and globally using only sustainable sources of palm oil for its private-label products.
More than 80% of the chain's waste is already being diverted from landfills, and in some cases is being turned back into resources that can be sold.
“Wal-Mart is walking more than it's talking,” Makower said. “It's actually doing more than it's saying, in part because it's initiated dozens, if not hundreds, of programs.”
— Robert Vosburgh
WHY: Cost-effective ‘Eatsmart AZ’ Twitter account
Tough times demand creative solutions — and that's just what Barbara Ruhs, registered dietitian for Bashas', found with her Twitter account. The social networking service allowed her to communicate with consumers all through the Chandler, Ariz.-based chain's year-long bankruptcy.
When the company successfully emerged from Chapter 11 last year, Ruhs found her Twitter community too important to give up.
“It helps me stay current with people in my profession and provides potential business leads,” she said. “Social media is very effective for potential vendors seeking you out to try a new product you otherwise might never had heard about.”
Ruhs has recruited nearly 3,000 followers since she first created her account in 2009. At the time, Bashas' reorganization plan meant deep cuts companywide, including the marketing budget she relied on to promote the chain's wellness programs. Yet, with customer interest in health growing, her responsibilities were more important than ever.
In the past year, Ruhs has expanded her use of the service. Aside from connecting with people and companies she regularly deals with, she's now followed by local news reporters who help her publicize special health-related events and promotions.
“It's really cool that somebody saw your tweet and responds because of it,” she said.
Every morning Ruhs scans her Twitter inbox to see an average of three or four new people signing up to follow her tweets. They could be Bashas' customers, fellow dietitians, manufacturers or organizations. She notes that those who re-tweet, or forward, her posts to others tend to be core wellness consumers, a group she has come to rely on to publicize Bashas' events.
Likewise, if a supplier is holding an interesting consumer promotion, contest or giveaway, she'll re-tweet the information herself.
“That's driving traffic to our stores,” Ruhs said in an earlier interview. “I can't say what the actual return on investment has been for this, but really, there's been no investment.”
Twitter continues to be cost-efficient. Recently Ruhs Tweeted a $1-off coupon for a gluten-free product, rather than pay thousand of dollars in additional printing costs.
— Robert Vosburgh
WHY: Refocusing on health education
With great deliberation, Whole Foods Market has made good on an earlier promise to get back to basics. As of this year, the nation's leading natural food retailer has shed more than a portion of its foodie/gourmet image and replaced it with education, inspiration and participation.
The retailer, which declined interview requests, has spent the past year rolling out a series of initiatives that help restore some of its original reputation as a core wellness destination.
Starting in January 2010, Whole Foods launched Health Starts Here, the first significant action it took since adding a new core value to its mission the prior autumn: “Promoting the health of our stakeholders through healthy eating education.”
The comprehensive outreach program includes partnerships with two diet programs as well as in-store education and other elements. It was quickly followed up with a new nutrition ranking system called the Aggregate Nutrient Density Index, developed by Eat Right America, one of Whole Foods' partners in Health Starts Here. Unlike other ranking programs, the ANDI does not measure fats, carbohydrates or protein. Rather, it scores a food based on micronutrients, such as vitamins and minerals, with special emphasis on phytonutrients, the beneficial substances found in plants. Both Health Starts Here and the ANDI are meant to be complementary.
“It's part of this whole process, not an isolated tool,” Mary Olivar, Whole Foods' Southwest regional healthy eating specialist, said in an interview.
The ANDI has scored about 500 products as of this spring with more items due to be evaluated during the year.
More recently, Whole Foods announced a five-store test of wellness clubs. While many details remain under wraps until the summertime launch, observers foresee the clubs focusing on nutrition education and guidance. Unlike other programs, however, the work will take place in the store itself. Presumably, participants could meet with store personnel or outside experts to get training in nutrition-based shopping and fostering healthy lifestyles.
“Our purpose would be to educate people how to eat better to achieve the highest degree of their health potential,” John Mackey, the chain's co-founder and co-CEO, told investors earlier this year.
— Robert Vosburgh
WHY: The ‘My Essentials’ line of healthful value food
Private label isn't always known for healthful ingredients, particularly if it's a value brand. Price is what drives movement in the tier.
Delhaize America is changing the relationship between value and health with the introduction of My Essentials, a line of pantry staples that is currently rolling out to all of the company's U.S. banners, including Food Lion and Hannaford.
“The My Essentials line is priced to be competitive with value private labels at discounters, while touting healthy attributes, including putting nutritional information on the front of the package,” said Ron Hodge, CEO of Delhaize America, during the retailer's last quarterly conference call.
The introductory products include apple juice, yogurt, American cheese, hot dog rolls and iced tea mix, among others. During the course of the year, customers will see hundreds of My Essentials items throughout the store, covering multiple categories.
The nutrition information Hodge referred to is part of the effort to make My Essentials more than just a value-tier store brand.
“All products under this line will be trans-fat free,” said Matt Paul, a spokesperson for Hannaford. “We are also committed to putting at-a-glance nutrition information — nutrition keys — on the front of packages to give customers a quick snapshot of whether a product meets their health needs.”
Simplicity is a key element of the brand's packaging. Nutrition keys on the front of the package will show calories, fat, sodium and sugar. Additionally, if a food earns a ranking for its nutritional qualities under the company's far-reaching Guiding Stars nutrition rating system, the Guiding Stars mark will appear on the package as well.
“All products that receive Guiding Stars will be clearly marked for customers to see on the front of the package,” said Paul.
My Essentials was created from three sources. A number of products that were previously sold as Food Lion or Hannaford brands will be converted, others are being transferred from the discontinued Smart Options label and more yet are new introductions. All of them, however, are pantry staples and kitchen basics — all the more reason why nutrition labeling is important, Paul said.
— Robert Vosburgh
WHY: Development of a hybrid wellness format
From the outside, store #1363 in Atlanta looks like any other Publix Super Market — there's the familiar green sign, the inverted P and B and the well-appointed exterior. The unit is about 10,000 square feet larger than a typical Publix, but the difference isn't extreme enough to cause comment.
The surprises are inside, led by the higher profile that executives have given the retailer's own GreenWise line of natural, organic and sustainable food and nonfood products. From produce and fresh chicken to cat litter and household cleaning, the private label has a strong presence in just about every aisle.
“Customers continue to look for a variety of all-natural and organic products and services while seeking traditional items on their shopping list,” said Brenda Reid, the retailer's media and community relations manager, in a statement.
The shopping environment is also more service-oriented and includes premium stations devoted to meals, cheese and other perishables. But the focus on natural/organic and sustainable is what actually differentiates this store from others in the Lakeland, Fla.-based chain, where it's being referred to as a “hybrid” model.
The fusion aspect comes from the combining of a regular Publix supermarket with the most successful elements of the GreenWise specialty supermarkets the company has opened. There are three GreenWise stores, all in Florida, though they haven't turned out to be the growth vehicles executives thought they'd be when the first unit was opened back in 2007. Instead, they've become a testing ground of sorts for merchandising and products — the best of which are now going into the hybrid stores.
“Our customers have requested additional products throughout the market and all-natural and organic products have been increasing in demand and supply for a number of years,” Reid told a local Patch blog. “We have stores that may have some of the components, but not all of them in one location.”
As natural/organic chains like Sprouts Farmers Market and Sunflower Farmers Market join Whole Foods Market in filling in the niche for core wellness consumers, Publix is demonstrating a creative solution for traditional retailers to offer natural, organic and sustainable products to their customers without having to commit an entire store to the cause.
— Robert Vosburgh
WHY: Outreach programs for Hispanic shoppers
As one of the leading grocers in Texas, H.E. Butt Grocery Co. understands not only how to market to Hispanic shoppers, but how to serve their unique health needs as well.
It all starts with knowing the customer. H-E-B understands, for instance, that many Hispanics purchase food through the federal Women, Infants and Children program. When the U.S. Department of Agriculture announced changes to the program in late 2009, the company took the opportunity to make its own changes. Last year, it released a new bilingual WIC brochure highlighting products that are covered, pointing to private-label options wherever possible.
The company also overhauled its checkout system to help customers who buy produce, which is sold by the pound, stay within weekly limits, which are designated in dollar amounts.
“As soon as they swipe their card through the cashier station, the computer will arrange all of the produce from highest amount first to the last, so that they can delete what they don't want before they pay,” said Rosalinda Benner, nutrition specialist with H-E-B.
Such initiatives can go a long way toward addressing diabetes, which one in 10 Hispanics suffer from, and obesity, which afflicts one in four, according to the Centers for Disease Control and Prevention.
The company doesn't limit efforts to the stores' four walls, either. Benner, who speaks Spanish, frequently holds cooking classes for young mothers, teaching them how to make more healthful versions of traditional dishes, like lard-less beans and tamales with whole-grain rice. H-E-B also hosts a yearly health and wellness expo in San Antonio that focuses on the different members of the family, including moms, and their role in living healthy lives.
Not one to forget about its many Hispanic employees, last year the retailer launched a series of healthy cooking videos on the company intranet. These and other related programs will then upload to the company's website this year.
“People learn so much better visually,” said Benner. “If they see a really simple recipe and they know it's three or four ingredients and it's really healthy, they think, ‘I can do that.’ Being able to see it in Spanish and in English makes a big difference, too.”
— Jeff Wells
WHY: Combining CSA, local food and home delivery
Green B.E.A.N. is growing faster than some of the produce it delivers. What began as a simple organic produce delivery service for the greater Indianapolis area today services an area that stretches south to Louisville, Ky., north to Fort Wayne, Ind., and east to the Ohio cities of Dayton, Cincinnati and Columbus.
Green B.E.A.N. (Biodynamic Education Agriculture Nutrition) was founded in 2007 by the husband-and-wife team of Matt Ewer and Elizabeth Blessing. Their idea was to connect organic farmers and local artisans directly to consumers. Ewer, who was not available for comment, told the Indianapolis Business Journal that people are ready for such a fusion of services.
“We felt like there was a market potential in the Midwest that was untapped,” Ewer said. “Looking back a few years later, we were right on the mark with that.”
Customers enroll and select a bin size and set a delivery schedule depending on their needs. The majority of the produce is certified organic, though Green B.E.A.N. also sources from farmers who use sustainable farming practices without certification. To differentiate the methods, all produce is labeled either OG (certified organic), SG (sustainably grown) or CL (conventional).
Besides the bin, each order can be customized with more than 400 additional products. The company offers selections from local dairies, as well as meats, bread and other grocery vendors. The service now has 40 suppliers and makes some 3,500 deliveries a week. Annual sales top $5 million, Ewer said.
Beyond being a simple delivery service, Green B.E.A.N. has undertaken other initiatives. It operates Tiny Footprint Distribution, which delivers locally made food to retail stores; Farm to Kitchen Foods, which has its own product line; and Cool School Lunch, a program launched last year to help schools order fruits and vegetables.
Just last month, the company dug deeper into the business by growing its own produce. The 60-acre Feel Good Farm will grow tomatoes, okra, broccoli and other crops, Ewer told the Journal.
“We saw that there was kind of an agricultural gap as far as the products go,” he said. “We're taking a very structured approach to the farm, and we're looking to supplement our market.”
— Robert Vosburgh
WHY: Creating its own local food club
For two summers, Dorothy Lane Market stores were the pick-up spot for a popular third-party CSA program. The Dayton, Ohio, chain, already a destination for local foods, saw firsthand eager customers arriving to retrieve their weekly baskets of fresh produce.
When financial trouble caused the CSA to fold last year, the retailer stepped in. It was a natural move, since the three-store independent has long enjoyed close relationships with a number of local suppliers. Now they're eligible to participate in DLM's Local Food Club, introduced in time for the 2011 growing season.
“Everything in the baskets is going to be sold in the store as well,” said Ron Williams, who developed the program as produce manager for Dorothy Lane's Washington Square store. “So they get to sell more to us.”
Customers who enroll pay up front for an 8- or 16-week season, and items vary by the week. The basket might include strawberries in June and early apples in September.
The consumer advantage to joining is value. A small weekly box costs $15 but contains at least $18 in fresh produce, while the larger $25 box holds at least $30 worth of items.
What's more, subscribers can choose to include additional items from the in-store bakery, or the floral, meat and dairy departments. Wine and beer can also be included.
DLM defines “local” as anything produced within a 250-mile radius of Dayton, according to Williams. However, it doesn't impose the rule on shoppers. An ancillary program introduced at about the same time as the food club allows shoppers to define local on their own terms. All products are highlighted with a special “DLM Honestly Local” logo. Beyond that, however, the retailer has created shelf signs that list the city closest to where the food originated.
“Local means different things to different people,” Williams said in an earlier interview. “To some, it means [anything within] 250 miles; others, 50 miles.”
Produce was the first department to receive the new signs, though dry grocery, dairy and meat will also offer qualifying products. Williams said that locally produced items from these sections might include canned tomatoes, honey, wine and beer.
— Robert Vosburgh
WHY: Zero waste at two stores in Southern California
From spoiled produce to discarded boxes, waste is an inevitable part of doing business in the supermarket industry. Albertsons, however, has figured out how to divert nearly all of it.
The project centers on two stores in Santa Barbara, Calif., that are part of the Supervalu-operated banner. Both earned “zero waste” recognition from the Environmental Protection Agency late last year — a first for the supermarket industry. Each store recycles, reuses or composts more than 95% of its total waste.
It's a tough job, and it began more than three years ago in, fittingly, the most unglamorous of ways. On more than 50 different occasions over the course of several months, sustainability director Rick Crandall and team members sorted through the stores' dumpsters and compactors — so-called “dumpster dives” — dividing what they found into 35 different categories. Laying everything out in this way allowed Crandall to classify what employees and customers were throwing away on a regular basis.
“If you don't know what's in there, how are you going to get rid of it?” said Crandall in a recent interview with Supermarket News.
From there, it became a matter of figuring out where to send everything. A robust recycling program provided one outlet, accounting for 55% of waste reduction over the three-year period. To dispose of inedible perishables like meat scraps and spoiled produce, Albertsons partnered with the city of Santa Barbara to establish a composting program. The retailer currently sends all of its compost from the two stores to the program's facilities, and together with 120 other citywide participants is expected to contribute 4 million pounds of compost this year. To make sure none of its leftover edibles go to waste, Albertsons set up a program called “Fresh Rescue” that donates 150,000 pounds of food annually to local food banks.
All told, the two Santa Barbara stores annually divert more than 2 million pounds of waste each year, including 808,000 pounds of cardboard, 27,500 pounds of plastic and 2,700 pounds of paper.
“It takes leadership, commitment and a clear vision to achieve those results,” said Viccy Salazar, materials management and stewardship lead with the EPA's Seattle office, which reviewed the stores' results.
— Jeff Wells
WHY: Finding eco-friendly alternatives to plastic
There's a lot of plastic in the food industry, and MOM's Organic Market has a serious problem with that. In 2005, it became one of the first retailers in the country to eliminate plastic bags from its stores. A few years later, it got rid of bottled water.
Now the Rockville, Md.-based chain wants to finish the job by eliminating plastic completely from its stores.
Since it announced its “Plastic Surgery” initiative last year, MOM's has switched all bulk and produce bags over to biodegradable cellophane. It also replaced everyday items like drinking cups, coffee stirrers, utensils and even nametags with biodegradable alternatives.
These switches don't come cheap. Scott Nash, founder and CEO of MOM's, noted that the produce bags alone account for $70,000 in added expenses for the six-store company. Add to that the trials of finding the right suppliers in a nascent biodegradable products industry, and the sheer scope of MOM's mission becomes clear.
“It's not completely painless, but we think it's the right thing to do,” said Nash.
The next step is convincing manufacturers to come on board. Many of the small and local companies that MOM's works with have shown enthusiasm for the transition. Others, particularly larger manufacturers, are hesitant. A local bread company agreed to try out the biodegradable packaging MOM's specified, but said the bags didn't retain moisture as well as their usual plastic ones.
“It's early technology,” said Nash. “It takes a bit of work.”
Such difficulties won't deter Nash, whose environment-first philosophy has taken the business from his mom's garage to $50 million in yearly sales. The battle against plastic is a necessary step in the evolution of MOM's, he noted. So far, it's garnered significant publicity and received rave reviews from loyal customers.
And it appears all the attention is starting to pay off, as evidenced by what happened when a Whole Foods Market recently opened a mile away from one of MOM's stores.
“We were expecting to take a bit of a hit, but we took no hit at all,” said Nash. “It's stuff like this that adds to our defenses. It shores up loyalty amongst our customers and amongst our employees.”
— Jeff Wells