- Natural products industry sales grew 7.4% across all retail channels in 2016, reaching $141 billion in sales, according to Natural Foods Merchandiser’s latest Market Overview report. In contrast, independent stores and natural grocery chains recorded more modest 4.3% sales growth rate.
- While grocery wars and declining commodity prices cut into big grocery’s already razor-thin margins, they may have helped small independent retailers. Natural Foods Merchandiser reports that 69% of natural products stores saw their sales increase last year. Competition also was held at bay with 72% of the stores surveyed saying they didn’t have new competitors open their doors nearby in the past year.
- Conventional grocers are the biggest sellers for natural products, capturing 44% share of all natural products sold last year, compared with 39% sold through natural products stores.
It may go against conventional wisdom, but well-managed and strongly positioned independent grocers can coexist with big retail. While large, often publicly held chains may have scale and strong financial backing, independent grocers are often more agile, enabling them to move quickly to address emerging trends and shifting consumer preferences.
In what has so far been a tumultuous year for grocery, some big and not-so-big players have struggled. Kroger’s historic streak of same-store sales gains ended. Whole Foods’ challenges, which ultimately led to the chain’s sale to Amazon, are well-documented. Several retailers — including Central Grocers, Fairway Markets and Marsh Supermarkets — fell victim to Chapter 11 bankruptcy. More mergers and acquisitions could be on the horizon.
In contrast, Natural Food Merchandiser reports nearly three-quarters of natural products stores saw their sales increase last year. It seems small independents actually are benefiting from the increased competition and price wars large chains are embroiled in. So while the big chains battle it out for market share and shopper retention, independent grocers have had an opportunity to demonstrate what makes them unique.
Success for independent grocers in the natural channel often requires being ingrained in the community. Unencumbered by corporate bureaucracy and policies, these stores often have tight-knit relationships with their customers. Natural grocers are also able to provide unique local products that many of their large competitors don't have, and offer services that resonate with customers and don't have to be rigorously tested or benchmarked for profitability.
Independent grocers are akin to the TV bar “Cheers” — a place where everybody knows your name. Perhaps not literally, but they know what works for their neighborhood shoppers, be it yoga classes, juice bars, bulk goods, ethnic offerings, locally-supplied prepared foods or charitable support. It’s local. It’s community. And it seems to still be working — at least for now.