NATURAL BORN CATEGORY KILLERS

Conventional operators who think natural food supermarkets won't make serious inroads into their business may be doing nothing more than whistling past the graveyard.

n get fine clothing in a lot of department stores, but that hasn't put specialty stores out of business," said Peter Roy, president and chief operating officer of Whole Foods Market, the natural foods operator based in Austin, Texas.

Roy said natural food stores cater to a particular population niche that will find them appealing regardless of what traditional supermarkets do. Although many supermarkets carry most of the same items as natural food stores -- excluding herbs and personal care products -- "our edge is carrying a broader, deeper selection than most supermarkets and having deeply committed employees," Roy said. "Most of our team members use the products themselves, which makes for a pleasing environment for consumers committed to natural foods, who appreciate our commitment." Roy estimates that natural food stores appeal to 5% to 10% of the population, with a growth factor of about 12% a year since 1987. Whole Foods operates 35 stores in eight states, including those under the Whole Foods, Bread & Circus, Mrs. Gooch's and Wellspring Grocery banners.

Mark Ordan, president and chief executive officer of Rockville, Md.-based Fresh Fields, which operates 14 stores in various markets, said specialists have a solid niche.

"The narrow part of the market that natural food stores like Fresh Fields serve can provide ample opportunities," he said. "All we can do is offer a combination of selection and price in the areas we specialize in that are competitive with the general market." He said he isn't particularly concerned with what supermarkets are doing. "My preoccupation is improving our own operations, and I don't think as much about what the competition is doing as I do trying to do what we do better."