NEW POSITION

CHAPIN CLARK

As supermarkets continue to do a booming business in high-margin vitamins and nutritional supplements, the category's in-store profile increasingly reflects its importance to the bottom line.

Some chains are rolling out nutrition centers that combine vitamins with natural food in what they hope customers perceive as a one-stop "healthy lifestyle" shop. Others are moving their natural-supplement displays to the pharmacy, where they believe an endorsement from the pharmacist -- at least by association -- will enhance legitimacy and drive sales.

Gone, however, are the days when a 3-foot section of multivitamins and children's chewables, tucked away in a health and beauty care aisle, was considered sufficient.

Supermarket sales of vitamins hit $641.5 million for the 52 weeks ended March 29, an increase of 20.1% from the prior year, according to Information Resources Inc., Chicago. Mineral supplements, a subset in which IRI includes herbal products, generated $227.4 million in supermarket sales, a 45.4% leap from the comparable year-ago period.

Smith's Food & Drug Centers, Salt Lake City, is one retailer that is helping to fuel this tremendous growth. Last month the company's Southwest division opened five remodeled Smitty's Marketplace stores in the Phoenix area, each with a 2,500- to 3,000-square-foot nutrition department called Natural Choices.

The departments are located "up front, right across from produce," said Jim Kaufhold, vice president and director of Smitty's, and feature bulk, packaged and refrigerated foods; natural beauty aids and a reading section, in addition to vitamins and supplements. Smith's calls the new department "a complete health food store."

Natural Choices is slated for all new and remodeled Smitty's stores, Kaufhold said. (The department will be between 7,500 and 8,000 square feet in new stores.) The company plans to have 13 up and running by the end of 1998 and seven more next year.

"To me, it completes the food-shopper's experience," Kaufhold said. "It's one more thing to differentiate yourself from just a drug store.

"It's real important to us. We're real pleased with the sales results we're getting per square foot."

About 40% of the Natural Choices department's sales come from vitamins and supplements, he said, but Smitty's is looking to increase that share to more than 50%. The chain is promoting Natural Choices via a monthly four-page mailer and radio advertisements.

J.B. Pratt, chief executive officer of Pratt Discount Foods, Shawnee, Okla., said he began selling vitamins and supplements in earnest about eight years ago, displaying them in an isolated department. Since then, however, he has become convinced of the importance of pharmacy in educating customers and increasing sales.

"This is the best way, I think, for mainstream supermarkets to go," he said. "I'm not saying we can't learn anything from the natural-foods industry, but we're not dealing per se with health-food customers. There's a need to be conservative."

Linking vitamins and supplements with the pharmacy is one way to ensure the current craze for them becomes more than a fad, Pratt said.

"We're going to have to maintain credibility and reduce our liability risk. Without information, this isn't going to work. There's got to be a lot of information and a lot of literature.

"Quite simply," he added, "people get sick and they do need synthetic drugs from time to time."

Moving nutraceuticals close to the pharmacy "has been a real boost for both sales and gross profits, mostly because people have questions," he said, although he could not give a percentage increase. "We now have physicians who refer people to our pharmacy for herbs and supplements."

For instance, Pratt said, a man came to one of his stores with a doctor's "prescription" for St. John's Wort, an herb believed to alleviate mild depression. When the customer found that the pills he was to take were derived from a plant, he resisted. But the pharmacist told him about the history of St. John's Wort as a remedy and how it is supposed to work, persuading him to comply. Two weeks later, Pratt said, the man was back for his refill, convinced of the herb's efficacy.

Cheryl Bottger, wellness services manager at Portland, Ore.-based Nature's Fresh Northwest, agreed that the pharmacy is the best place to merchandise vitamins and supplements.

"If you have an in-store pharmacy, that's the ideal place, because people are going to come to the pharmacy with questions," she said. "The repeat sale and the value-added sale come through education, but it's a challenge to the pharmacist, because he has to educate himself first."

Indeed, several chains have made vitamin and herbal training a priority for their pharmacists. For example, as SN reported earlier this year, Pathmark Stores, Woodbridge, N.J., has required each of its pharmacists to complete 12 hours' worth of continuing-education credits in vitamins and herbal supplements.

Kaufhold of Smitty's contended the retailer "absolutely did not" give up anything by moving vitamins and supplements from the pharmacy to the Natural Choices department in its remodeled stores.

"We look at it to be more preventive, promoting a healthy lifestyle, than focusing on sickness," he said. "You get more customer service, more one-on-one, with a sales clerk than with a pharmacist behind the counter."

Kaufhold said Smitty's has hired some of its Natural Choices clerks away from General Nutrition Centers and similar specialty stores. "They are very knowledgeable about nutrition -- health nuts, if you will -- but I wouldn't necessarily say they're specially trained."

Educating staff and consumers is at the top of Austin, Texas-based Whole Foods Market's agenda. A leading natural-food supermarket chain with 85 units, it is involved in a yearlong effort to remerchandise its nutritional supplement sections by structure/function claim -- that is, by the structure or function of the body a supplement is supposed to affect.

"It's trying to get away from the confusion that exists at the consumer level," said Steve Ramirez, marketing manager at Amrion, Boulder, Colo., which is owned by Whole Foods and is the retailer's private-label supplement supplier. "We're trying to help educate the consumer and simplify the shopping experience."

The remerchandising campaign began with the opening of Whole Foods' Boulder store in late February, Ramirez said. Overhead signs -- "Bone and Joint Health," "Brain Function," "Women's Health," "Cardio Health" -- highlight the new breakdowns.

"We think this is the most user-friendly approach," Ramirez said. "There are thousands of competing stockkeeping units. When people walk in the store, they don't want to see 2,000 products from brand X next to 2,000 products from brand Y."

Labels on Whole Foods-brand vitamins and supplements will list not only active but inactive ingredients, plus the quantity of each active ingredient, per Food and Drug Administration requirements that take effect in March of next year.

Sales staff are being schooled by an on-line educational program and an in-house trainer who travels to stores nationwide, Ramirez said. "Each Whole Foods team member will be able to access the most up-to-date information on specific products and regulatory issues."

Other retailers, while not as progressive as Whole Foods in how they merchandise dietary supplements, are following its lead.

"Some folks, like H-E-B, are moving ahead on merchandising by ingredient, which is a good first step," said Greg Eastburn, vice president of sales and marketing at Amrion.

Eastburn said supermarkets have become established in the consumer's mind as a good source for basic low-price, single-ingredient supplements -- alphabet vitamins, for example -- but are losing out on more profitable, multi-ingredient formulations.

"It's gone beyond just 'I need vitamin E' to 'I have a history of heart disease in my family.' A lot of drug chains have made huge moves toward attracting that customer," he said.

"Supermarkets need to take a hard look at the SKUs they carry today; there's an overproliferation of single-ingredient products. There's a heck of a market out there and they need to do something different."