We all have our own methods of cutting back on expenses in lean times. For some this means a few less fancy beers or cocktails each week, while others decide mac ‘n cheese or some cheap, salty dried noodles make for a great recession diet. Oops, I said the R-word. We’ll let the economists bicker about what to dub these tough economic times, but whatever the moniker, rising prices coupled with housing and job woes (see: airlines, carmakers and certain media outlets) tends to make consumers a little tense, especially those with lengthy commutes and sizeable families to feed.
Speaking of feed, the cost of food is suffering all sorts of unfortunate forces, from rocketing fuel prices to troubled supplies. I bet the Buy Local groups are shining in their moment. And well they should be. As health food retailers, you know (or accept on some level) that supplements and natural/organic foods are bit of a luxury for most people, given the higher price points on a good day. When consumers clamor for ways to cut costs, for some reason (at least in America) food loses. Mind you, this is not my philosophy, as I stick to my original idea that I will pay for better quality food that is better for me. I say this as somewhat of a foodie. I cook various ethnic foods, watch Food Network shows and love sampling new foods when traveling. I also work for a health food magazine, so this all is not a stretch.
Now whether it’s foodies or the crossover consumers who felt they had more money and a growing health knowledge to prompt shopping at Whole Foods, Trader Joe’s or the stores owned/run by all our NPM readers, there is an emerging trend of cutting back on organic and other health foods.
If any of you were worried about the bigger chain natural/organic food retailers stepping on your toes, I bet you were non-too-pleased to welcome increased natural and organic food inventories at mainstream powerhouses such as Wal-Mart. But it is these mainstreamers who are benefiting. WalMart is seeing increased business these days. Whole Foods says it has yet to see any significant dip in sales due to consumer reaction to the economy, but investors see it differently, as Whole Foods is hovering near its yearly low point in share price, while WalMart is near its high point. United Natural Foods, a distributor many of you probably use, is also much closer to its yearly low than it yearly high.
But leaving the stock world and its complexities for the financial analysts, there are signs the food market is shifting. Food suits are saying consumers are shifting loyalties towards retailers such as Wal-Mart and Costco. And remember what happened to Starbucks a while back? The Seattle-based enabler of the expensive, multiple-word-named coffee-based caffeine drinks—there is still coffee in those drinks, right? (I’m a tea man.)—decided to close some 600 of its stores nationwide. That’s some sort of sign the foodie world is shifting its allegiance or overall purchasing of high-end foods/drinks. However, Whole Foods’ most recent results show same store sales up 6 percent or so.
What we are more concerned about as are you all, is what is happening at the independent/local small-chain health food stores? Are you seeing a drop in sales of natural and organic foods? Perhaps it’s merely a shift from higher- to lower-price point items? Are farmers markets stealing your produce business? Is a local Wal-Mart (with beefed up organics) causing you problems? Do you think consumers will cut back on natural products in the short-term, but come back when the economy is stronger?
There are a lot of questions about how the weak economy has hurt or might affect the health food retailers, and the effects on the big players (who are often public and get more news coverage) are easier to follow; but we’d like to know what is happening at the independent and smaller level. Also what can you and your fellow indies do to slow any declining sales? Volume discounts? Shuffle your inventory mix?
One benefit you might have is proximity. I know the bigger health food retailers in my area are a decent 20 minute-plus drive, so I tend to stay closer to home when shopping for food…or anything! If this is a prevailing sentiment among health food shoppers, your locations in their communities might be a blessing in these penny-pinching times.