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Ask consumers what their idea of a ?natural? food item is, and chances are they won?t name a product from center store. That may not be the case for much longer, however, as supermarkets and the companies that supply them push the natural envelope beyond massively hyped perishable items.
?Retailers are breaking natural out of quarantined aisles and moving toward full integration of natural product throughout the nonperishable departments,? affirms Peter Gialantzis, VP of purchasing at Boulder, Colo.-based Lucky?s Market, a 13-store independent operator. ?Natural is being seen less and less as a niche segment and more of a fundamental building block of each nonperishable category.?
Adds Gialantzis, ??Natural? is perceived as much more accessible, affordable and less pretentious than organic by many customers,? so the opportunity exists for retailers to boost center store sales ?by focusing on quality of ingredients, local producer stories, health benefits, and value proposition to the customer.?
Since Lucky?s began its rapid expansion in 2013, the grocer?s center store sales have surpassed expectations ? all the more surprising, according to Gialantzis, because under the company?s business model, which evolved from a produce-driven ?farmers? market? concept, ?we would typically expect to see center store sales percentage well below 30 percent of sales, but we have actually exceeded this distribution in each of our stores.?
How has the grocer bucked this trend? ?Simplicity and focus of message [are] key,? explains Gialantzis. ?Our stores have tens of thousands of SKUs for the customers to choose from, [so] we need to keep our merchandising focused and easy to understand. Every end cap, floor display and feature needs to have a very distinct purpose for being in our stores. The customer needs to understand that purpose from 30 feet away at first glance. If they aren?t sold on the value proposition in the first few seconds, the window of opportunity is usually closed. To execute this, we generally keep our displays as big, bold and simple as possible, usually with fewer than three SKUs per display.?
The company?s overall promotional strategy ?is to drive customer count with aggressive perishable promotions and grow basket size with our center store categories,? he says. ?As customers become more and more familiar with the value proposition that we offer with natural, local product, we have seen that basket size grow steadily.? Gialantzis adds that ?great pricing and selection? in center store serve to boost loyalty, creating regular customers who don?t just shop the perimeter.
Natural Versus Organic
Complicating the issue is the fact that ?natural? as a term, unlike ?organic,? has no U.S. legal definition, meaning that its use in labeling can be open to interpretation, although most people assume that a product marketed as ?natural? is minimally processed and contains no artificial ingredients.
??Natural? is not a movement, is not based on any production standards and offers customers no guarantee,? cautions Karen Draper, category manager at Richmond, British Columbia-based Nature?s Path, which produces a range of organic hot and cold cereals, granola, toaster pastries and other products. ?Savvy consumers are questioning products labeled ?natural? as awareness grows that the term is not regulated and has no standards to meet.?
With more definitive regulations on what can and cannot be called ?natural? and ?organic,? notes Blake Waltripp, CEO of Boulder-based Ancient Harvest, a marketer of organic quinoa and ancient grain-based products, ?we will ultimately see clean, minimalistic packages and labels touting the benefits of a product?s ingredients, rather than what the product does not contain. With these shifts, ideally, it will be easier for consumers to understand the value and benefits of products with higher-quality ingredients that likely come at a higher price point than some of their competitors.?
In the meantime, the vagueness surrounding the term ?natural? has caused some food makers to ratchet up their production of organic offerings. ?Given ?organic? is regulated by the USDA while ?natural? is not ? we strive to develop products with more and more organic ingredients,? asserts Amanda Steele, SVP of marketing at Berkeley, Calif.-based Annie?s, which has recently introduced convenient, portable resealable snack packaging, as well as Animal Cookies, Cheddar Crackers, Fruit Snacks and a Microwavable Macaroni & Cheese Cup as part of the Bernie?s Farm line.
?In fact, organic products now represent 86 percent of Annie?s total sales, up one percentage point from last year. And consumer demand for organic is also growing.?
According to Steele, the company has ?seen success in the use of high-impact displays to drive awareness and trial for our different product categories. For example, our shoppable half-pallets are eye-level displays which feature multiple product categories ? Retailers placed these pallets in untraditional store locations which allow the consumer to discover new Annie?s products and shop multiple categories in a single store location.?
Other manufacturers, like Oakmont, Pa.-based NuGo Nutrition, a provider of healthy snacks, nutrition bars and protein bars, have discarded the term ?natural? completely. ?Since the term ?all-natural? is not regulated by the FDA, it has become ubiquitous, less meaningful and often marginalized by retailers,? contends NuGo CEO David Levine. ?We have positioned ourselves to have an abundance of non-GMO offerings. Non-GMO is the really natural term and might have as much clout as organic for certain product segments.?
Despite its imprecision as a term, there are still companies that recognize the strong drawing power exerted by ?natural? on consumers and retailers alike.
?I think the best retailers are vetting the products they place and, even though it?s not codified, applying a definition of what they define as ?natural,?? observes Dan Emmett, CEO of Richmond, Va.-based Health Warrior, which produces chia seeds and extruded bars, the latter of which have been successfully merchandised at checkout. ?The retailers have huge influence over what new brands succeed, and I think they are taking that responsibility seriously.?
??Mass natural? is a trend I see in the near future ? brands that keep it simple and easy to grasp,? says Nicole Cheifetz, trade promotions manager at Fort Lauderdale, Fla.-based LaCroix Beverages Group, which has made effective use of co-branded end caps with similar nutritionals, and a recent on-pack contest/IRC promotion with Special K Pop Chips. ?Items that taste great and are approachable, while maintaining healthy benefits, will win.?
??Natural? is perceived as much more accessible, affordable and less pretentious than organic by many customers.?
?Peter Gialantzis, Lucky?s Market