NATURAL SOLUTIONS

MATTHEW W. EVANS

KANSAS CITY, Mo. -- In mid-America, the land of meat and potatoes, whole health has taken root through Valu Merchandisers here.

VMC, the nonfood subsidiary of Associated Wholesale Grocers, Kansas City, Kan., first began rolling out its whole-health scheme, called Natural Solutions, to its retailers last year. Since then, retail and wholesale executives agree, the program has exceeded expectations. "Natural Solutions already accounts for 1% to 2% of our total store distribution and we expect that to increase," said Bob Carlson, director, nutrition centers for VMC.

The format attempts to integrate vitamins, supplements, information and natural health and beauty care with grains, organic foods, frozen and dairy, positioning departments adjacent to the pharmacy.

Carlson summed up the demand that has allowed the concept to take hold. In terms of living a healthy lifestyle, he said, "People everywhere -- nationwide -- are changing, becoming more aware. There's too much information to be ignored."

"This category was huge where I came from in Virginia," said Keith McEnaney, nonfood operations director for VMC retailer McKeever Enterprises, Independence, Mo. "The Midwest is a couple of years behind the East and West Coasts." Yet, McEnaney acknowledged that a market for healthy products has emerged here. The retailer chose to adopt the concept, he said, because "we were getting a lot of requests for natural foods. The usual 10 to 12 feet of natural foods just wasn't enough."

McKeever owns and operates five Price Chopper Foods, two of which feature the Natural Solutions department, which, McEnaney said, "Is working and will continue to work. We've seen continued growth in this store and are well ahead of our projections."

Of the 860 stores serviced by VMC, 13 have a version of the department, three more are expected to be complete by the end of this year and 25 are planned for the year 2000. Carlson added that $300 to $400 increases in total store sales have been observed in stores with a Natural Solutions section.

Information, as Carlson said, is a key component of the department. Each Natural solutions has a HealthNotes computer terminal, supplied by HealthNotes, Portland, Ore., to help educate shoppers on nutritional supplements. In a number of suburban Kansas City stores, the department's informational content is bolstered by book cases and spinning racks containing flyers and brochures. Retailers can opt for various Natural Solutions configurations but they "have to be aware of providing information access," said Carlson. "They may be able to eliminate the lesser performing categories but you have to provide the information/education factor."

A store-within-a-store is the ideal format, Carlson continued. "It's impactful. It draws on the synergies of the pharmacy and it's a central location for information." Said Dick Swain, executive vice president for special projects at VMC, "It's important to have the pharmacy and Natural Solutions adjacent, and it's important to have the pharmacist involved."

Perhaps the model Natural Solutions store is Price Chopper No. 600, a 78,000-sq.-ft. store located on 135th Street in Overland Park, Kan. It is one of the five operated by McKeever, with a 2,000-sq.-ft. natural department. (The other McKeever Natural Solutions is also 2,000-sq.-ft. but is not adjacent to the pharmacy.) Built in 1996, the store was fitted with a Natural Solutions in June.

Shoppers access the department from the rear perimeter aisle, walking under a large hanging arch banner displaying the name of the department. It can also be accessed from the pharmacy, which shares a wall with the department. A pharmacy window looks over a desk and chair in the department where customers can sit and read store copies of books and magazines on health-related topics. Situated nearby are the HealthNotes terminal and an L-shaped bookcase containing about 100 books and magazines. A faux-wood floor and suspended ceiling offset the department.

Separating the department from the center store is a 40-foot gondola containing about 1,600 stockkeeping units of vitamin brands including Schiff, TwinLab, Natrol, Nature's Way herbals and homeopathic remedies including Boericke & Tafel. The vitamin/supplement sections are currently merchandised by brand. However, VMC plans to go back and re-merchandise stores by structure-function, according to Carlson.

Signs advertising "Special Orders Available" are perched atop shelves throughout the department. Said Swain, "Special orders are a way of life in this business." McEnaney uses special orders to gauge the department's success. "We get a lot of those. From the number of add-ons on a single item selection basis, we can tell we've had a lot of activity." The VMC private label Best Choice is not merchandised in Natural Solutions. It is, however, merchandised in the synthetic vitamin sections of VMC retailers, positioned close to the pharmacy counter.

The Price Chopper is situated along a seven-mile stretch of 135th Street, a rural highway, shared by area competitors Hy-Vee, Wal-Mart and two Hen House Markets, another VMC retailer with a Natural Solutions format.

A quick price check at the stores along this corridor showed that Wal-Mart was the low price leader on some of the same items found in the grocery stores. For example, Kwai 90-count garlic tablets retailed for $6.87 at Wal-Mart but at Price Chopper, the same pack -- discounted 50 cents -- was $8.99. At Hy-Vee, the same pack was $8.99 and at Hen House, it was 50 cents off from $8.69.

Wholesale executives agreed that continued growth and viability of Natural Solutions depends upon retailer commitment. "It's critical to get the retailer to buy into this," Swain said. "They need to be on the cutting edge and whole health is on the cutting edge." Said Carlson, "We can provide all the physical equipment but this doesn't guarantee success. Manager commitment from the top down is the key."