GM/HBC

Healthful foods and related products, including nutritional supplements, offer supermarkets a tremendous marketing potential. Consumers are anxious and eager for more information about these products—a fact that presents an enormous opportunity for supermarkets to increase not only incremental dollars from these items, but overall HBC sales as well.

It gets better. When a whole-health marketing philosophy is adopted in HBC, retailers can potentially increase total store sales as well. "There's no doubt that the role of health care will move to the supermarket," says Fergus Clydesdale, department head of food science at the University of Massachusetts, who served on a recent panel that focused on the role products with specific health benefits play in retailing. The panel was sponsored by General Nutrition Cos. (GNC), the largest specialty retailer of nutritional supplements in the U.S. "Polls show that consumers are committed to maintaining a healthy lifestyle and understand the importance of a healthy diet," Clydesdale says.

Baby boomers, in particular, are eager to find ways to address these issues, even if it means changing what they eat or the products they use, especially when it comes to their health needs. "This is a market that's being driven by strong demographic and economic forces," says William Watts, president and CEO of GNC, based in Pittsburgh. "There are more than 70 million aging baby boomers, as well as an enormous increase in concern about health-care costs and the impact of managed care on consumer choice. The result is a market opportunity called nutraceuticals."

Nutraceuticals, estimated to reach $12 billion in sales during the next few years, are nutritional products backed by reasonable scientific evidence supporting specific health benefits. They typically include vitamin and mineral supplements, herbal products, food and beverage products and sports nutrition. The 1994 DSHEA (Dietary Supplement Health & Education Act) has been a big boon to nutraceutical sales.

Those products that meet the FDA's requirements for structure/function claims can use those claims in their marketing programs. "The formula for successful nutraceutical products is simple," says John Troup, GNC's vice president of scientific affairs. "They will be targeted to the mainstream user, will appeal to the needs of consumers, will taste good and be convenient to use, employ patented blends of ingredients and uses and will target health conditions or issues consumers are concerned about, from osteoporosis to cardiovascular health."

A recent report released by the Private Label Manufacturers Association, supports the emphasis on whole health. The report was based on roundtable discussions held among food and drug industry executives, product developers and experts on regulatory policy and was sponsored by PLMA. The findings reaffirm what many in the industry already know, namely that consumers, armed with newly acquired knowledge, have developed a strong interest in self-care. This, in turn, is driving the demand for products featuring health, wellness and performance claims, according to the report.

The report, "Product Claims: The Marketing of Health and Performance Attributes," also concludes that a full third of consumers are taking an active interest in being well-informed on the nutritional or health value of products they purchase. "They believe they know more about what's better for them than ever before and are demanding that marketers respond quickly and regularly to those needs and desires," the report states. The report found that aside from satisfying nourishment needs, products are expected to help provide improved health and longevity, defense against disease and an overall better quality of life.

While they may have a thirst for knowledge, consumers are wary of health claims, particularly those relating to food, according to the report. They are, however, more likely to believe claims made for non-foods products. In other words, they are more likely to believe the efficacy of vitamin A tablets as an antioxidant than they are that organic produce is a healthier choice than traditionally grown vegetables.

Consumers also trust what they read on product labels more than what they read in advertising, notes the report. "Retailers and private label suppliers should be willing to incur repackaging costs that support new health claims," the report states. The document also concludes that the increased interest in nutritional products will necessitate the FDA speeding up its approval process of claims for OTC products.

While there's no denying that medical research has been a boon to the nutritional supplement category, there are a number of demographic factors driving the trend as well. For one, consumers are increasingly responsive to healthful lifestyles. "This is virtually an untapped market," says Harvey Hartman, president of Hartman & New Hope, Bellevue, Wash., a market research firm specializing in the natural product category. "Supermarkets can leverage HBC to emphasize whole health."

Consumer interest in environmental issues and eroding confidence in the safety of mass-market food has helped fuel sales of natural products and supplements, according to a recent study by Packaged Facts, a market research firm in New York. "Many health and natural food shoppers are entering the age when health and nutrition concerns become paramount. As the first of the baby-boom generation turns 50—the group that discovered natural foods—this is a trend that is likely to continue for some time," the company states in its report, "The U.S. Health and Natural Food Store Market."

However, the report also notes that while there is an opportunity for all types of retailers, the health and natural store channel continues to outpace the grocery industry in this area. Is there an opportunity for supermarkets to fill this need? "Without a doubt," says Schuyler Linninger, president of Virtual Health, Portland, Ore., a technology company that promotes nutritional awareness. Linninger, who was a speaker at FMI's annual Supermarket Pharmacy Conference in April, says, "This is a terrific opportunity for food stores to provide a real information service to their shoppers. By helping customers learn about the benefits of nutritional products, supermarkets can increase their share of this growing category."

He points out that nutritional products require an informed consumer. "We know that if consumers feel they can't make an informed choice among nutritional product options, they typically won't buy anything," Linninger says.

One retailer that has recognized the benefits of having staff trained in natural food retailing is Food Emporium, Bronx, N.Y. When the company opened its flagship store in Fort Lee, N.J., last year, there was no question for the retailer that natural would be one of its themes. Choosing to focus on non-foods, Food Emporium designed a 44-foot section, called Simply Natural, to highlight its offerings of natural baby, vitamins and supplements, aromatherapy, skin care, oral care, homeopathic products and 16-feet of natural cosmetics. Assigned to the department are eight full- and part-timers, two of whom are former health food store employees.

In addition to expanded natural product offerings, Food Emporium has also experimented with offering seminars in the Fort Lee location. Its first workshop on natural and organics attracted more than 100 people and featured author Gary Null. The company plans to offer a monthly series on natural products.

Roy White, vice president of education for the General Merchandise Distributors Council, Colorado Springs, points out that supermarkets are already in a position to do well with natural products, they just don't realize it. "The departments involved in whole health are already strong ones for the store—OTC, nutritional supplements and pharmacy, as well as the firm links that it establishes with pillars of the grocery industry, such as produce, bulk foods, organic produce and meal solutions. By merchandising one or all of these different segments under one theme, retailers can offer consumers a solution to wellness."