SUPPLEMENT SAVVY

Wendy Toth

Vitamin and supplement sales depend on what consumers know about the product.

This puts retailers on top of an information pyramid, acting as educators as well as product providers.

To get ahead, they use innovative research approaches to educate themselves on the latest trends in the category, while finding ways to pass that data along to customers. The result, they hope, will be increased interest and sales.

"We hire strong category managers who have extensive experience in both manufacturing and retail, researching and even developing emerging trends," said Chris Depetris, vitamin category manager for Wild Oats Markets, Boulder, Colo.

At Wild Oats, reading Asian and European research and clinical studies, and determining how those developments might apply to the needs of the American consumer often help determine trends, Depetris said. "We also spend lots of time talking with manufacturers and attending seminars to see where and what type of research is being funded."

It's a similar story at Supervalu, Eden Prairie, Minn. The company studies trends in Europe, along with those on the East and West coasts of the U.S., which "typically move gradually to the center of the country," said Craig Espelien, director of store brands and strategic sourcing.

Other Supervalu resources include consumer panels, trade journals, health care trends, vendors, best practices of other retailers regardless of class of trade, feedback from the company's retailer customers, and Internet research.

Access to information via the Internet, coupled with the rising cost of health services and the difficulty of acquiring professional care, has fueled the emergence of a self-care culture, one in which vitamins and supplements play an integral part, according to industry experts.

"The American public is interested in self-health, first for remedial action and then for prevention," said Roy White, vice president, education, of the New York-based Educational Foundation of GMDC, Colorado Springs, Colo. "The theory is that through sign work and consumer education, mass retailers can position their vitamin and supplement shelves as a destination for health needs."

A recent trend spotted by Wild Oats is liquid vitamins and supplements. "I have been watching the development of this trend for a few years because as the American population ages, liquid delivery of supplements is much easier for people who have trouble swallowing pills or need to take lots of pills, or for those who have compromised digestive systems and cannot break down the pills effectively," Depetris said.

This year, the industry has caught up with the trend and Wild Oats was ready to capitalize on it. Recently, a confidential analysis by SPINS, San Francisco, a natural products consulting company, showed the emergence of this trend, and "we are already ahead of the game with numerous examples on our shelves," Depetris said.

The Wild Oats executive cited vendor brochures, internally produced brochures, Healthnotes' electronic information, books, health fairs, and consumer and staff education, as just some of the educational and marketing tools used to promote the vitamin and supplement category.

As a baseline in consumer trends, retailers should monitor key consumer Web sites and publications, including daily newspapers, and monitor sales data in the vitamin and supplement area from Information Resources Inc., Chicago, or ACNielsen, Schaumburg, Ill., said Amy Myers, spokeswoman for Healthnotes, Portland, Ore., which provides updated electronic health information via in-store touchscreen kiosks and Web content. "However, consumer trends can often be seen before sales and mass media recognize them," she said.

For example, a benefit provided by Healthnotes kiosks is the ability to track consumers' use of the machines. That gives retailers the ability to see changes in consumers' interests before they show up in sales, Myers said.

Another recent trend Wild Oats' Depetris identified is fish oils as "brain food" for children. "For years, parents have wanted to have the smartest kid in class. So this need, coupled with the need to get our kids off of Ritalin and other similar pharmaceuticals, led to extending the fish oil research in the direction of brain deficiencies," Depetris said. This research has indicated that some children's learning problems such as Attention Deficit Hyperactivity Disorder could improve with the use of fish oil as a preventative during the growth years.

The next step is establishing consumer awareness of these ongoing category developments, and the Web is quickly becoming an integral part of the process. Healthnotes information is included in the Healthy Ideas section of Stop & Shop Supermarket Co.'s Web site, said Robert Keane, media relations manager for the Quincy, Mass.-based retailer. Safeway, Pleasanton, Calif., also makes use of Healthnotes Web content, according to the vendor.

To boost sales, category managers also need to pay close attention to the latest trends in organizing their vitamin and supplement products, said Bill Moughan, director of sales for Healthnotes.

"For example, high cholesterol and depression are getting an inordinate amount of interest and although there are many supplements currently available to help remedy these conditions, it seems that no category captains are providing them as separate shelf sets," Moughan said.

For consumers who want professional advice before making a purchase, the closest alternative to self-help is a pharmacist. "We know that consumers visit their community pharmacy five times more often than any other health care provider," said Tony Civello, chairman, president and chief executive officer, Kerr Drug, Raleigh, N.C., and chairman of the National Association of Chain Drug Stores, Alexandria, Va., at the recent NACDS Pharmacy & Technology Conference in San Diego.

"Obviously this shows that we are one of the most influential players on a patient's health care team," Civello continued.

Another driver for pharmacists' involvement in the vitamin and supplement category is Medicare Part D, the new prescription drug program that becomes active in January 2006. Medicare Part D plan providers must establish medication therapy management programs for individuals who have multiple chronic diseases and take multiple covered Part D drugs.

Pharmacists may furnish medication therapy management programs, although they could also be provided directly by plan sponsors, such as insurance companies. It is up to the plan sponsors to decide who will administer the programs, but they must be developed in consultation with practicing pharmacists, according to NACDS. The programs could include a range of services, one of which is monitoring drug interactions with vitamins and supplements, as well as identifying beneficial vitamins and supplements.

Heart disease, for example, is reversible through major changes in diet and lifestyle, said Dr. Dean Ornish, in a presentation at the NACDS Pharmacy & Technology Conference called "The Power of Lifestyle Change." "Diet, stress management, exercise, support groups, vitamins and supplements, and medication can all have a positive impact on heart disease," Ornish said.

Ornish also identified omega-3 fatty acids as having proven ability to reduce cardiac death and certain cancers, while selenium can reduce the potential for lung cancer, prostate cancer and colon cancer. "If a pharmacy company came out with a drug that did this, everyone would be prescribing it," he said.

The Web site of Walgreens, Deerfield, Ill., "allows customers to enter in a list of vitamins and supplements that they are taking with prescription medications and that becomes a part of their complete profile in our pharmacy system," said Debra Garza, director of government and community relations for the retailer. This resource provides an easy way for pharmacists to track drug interactions, vitamin and supplement recommendations, and provide health counseling.

"Involving pharmacists in vitamin and supplement consultation is a wonderful way to brand pharmacy, differentiate yourself and build customer trust," said Jim Wisner, president of Wisner Marketing Group, Libertyville, Ill.

This kind of involvement entails training and continuing education for pharmacy and store staff.

With each new product introduction, Wild Oats' vendors are required to send the stores detailed kits that contain original research and research summaries on many of their products or the active ingredients contained in them, Depetris said.

"We are the only retailer in the channel to have dedicated educational summits for our staff members twice a year for several days where we provide intensive training sessions led by industry specialists," Depetris said.

Mass media can also have a big influence on customers' choices in the vitamin and supplement category, something that needs to be quickly embraced or maneuvered around, depending on the public reaction.

"News stories can have a huge impact, as can people like Oprah and other entertainment icons," Supervalu's Espelien said. He cited the Atkins craze and its impact on pasta and carbohydrate sales followed by the rather quick downturn in high-protein diets. "So the news can cut both ways," he explained.

Most of the media attention is negative and hurts sales, Depetris said. However, some stories like one by "60 Minutes" in November 2004 on Hoodia, a plant from the Kalahari Desert with appetite-suppressive qualities, provided Wild Oats with a sales opportunity, he said.

"But most importantly, articles about supplements in publications like Women's World and Women's Day and The National Enquirer actually drive traffic into our stores," Depetris said.

Discounters Out in Front

BELLEVUE, Wash. -- Discount stores are the most common source of vitamins and minerals, as well as herbal and specialty supplements for consumers, according to a spring 2005 study conducted by the Hartman Group here.

The study broke consumers into three groups: "core," defined as consumers most likely to use alternative health care practitioners and products; "mid-level," those who use multiple sources for health care including medical practitioners and alternative sources; and "periphery," those who use medical health care providers as their primary source of health and wellness information.

All three segments preferred discount stores, including supercenters and other stores operated by chains like Wal-Mart Stores and Kmart -- as a common source of vitamins and minerals (core 34%, mid-level 35%, periphery, 33%) as well as herbal and specialty supplements (core 30%, mid-level 24%, periphery 38%).

"Our research shows that grocery stores have lost share in the vitamins and minerals and herbal/specialty supplements category in the past five years and the situation is unlikely to change unless they find a strong and distinct positioning in the supplement category," said Laurie Demeritt, president and chief operating officer, the Hartman Group.

Grocery stores were chosen fourth by consumers as both a source of vitamins and minerals (core 30%, mid-level 25%, periphery 16%) and of herbal and specialty supplements (core 34%, mid-level 24%, periphery 38%). In the vitamin and mineral category, grocery lagged behind supercenters/discount stores, vitamin specialty stores and drug stores. In the herbal and specialty supplements category, grocery was behind supercenters/discount stores, natural food stores and vitamin specialty stores.

The reason that grocery stores are losing to discount retailers and natural food stores overall is because they cannot compete directly with either, Demeritt said.

Consumers who are comfortable and knowledgeable about supplements are no longer seeking information, so they look to buy their products at the cheapest possible price; therefore, they head to the discount retailers. Consumers who are new to the category and actively seeking information about supplements, or who are seeking what they perceive to be the highest-quality brands, shop at natural food stores, she explained.

"Grocery is providing neither the lowest prices nor the added value of information [in the form of employees and in-store materials] and therefore, do not have a strong point of differentiation. Drug stores are seeing the same decline in the category for the same reason," Demeritt said.