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How Top Grocery Retailers are Winning in the Health Food Market

How Top Grocery Retailers are Winning in the Health Food Market

A shift towards healthier eating is good for more than American families, and it’s also good for retailers. There is a fundamental change underway in how individuals nourish their bodies, and some retailers are taking full advantage of this opportunity by revving up sales and boosting their fan base. According to a 2017 study by FMI, 72% of food retailers surveyed view health and wellness as a significant growth opportunity for their brand. And with more than half of adults (53%) buying more natural and organic foods than ever before, food retailers are positioned to be key partners in shoppers’ wellness journey.

In fact, shoppers take note when retailers focus on these priorities:

  • Sustainable practices
  • Shopper and community integration and education
  • Nutrition and ingredient-related facts and transparency
  • Allergy awareness
  • Availability of the healthiest options

Even more, retailers are rewarded with additional visits and loyalty when they’re transparent in their practices, including truth in labeling and local sourcing when possible. The momentum continues to accelerate as healthy food and beverage trends are a focus in nearly every type of retail grocery, including warehouse clubs and convenience stores. Even 69% of convenience retailers, which are not known for having a healthy variety of snacks, note that better-for-you items such as yogurt, nuts and granola bars are up, according to a recent NACS survey. This sets the stage for a major upheaval in the shopping patterns of everyday Americans.

Retailers Rising to the Occasion

While many people think of Amazon’s Whole Foods Market as being the major player in the organic foods retail space, Costco has surprisingly dethroned Whole Foods from the top spot in sales. Retailers such as Costco are big winners with this shift in shopper behavior, as their bulk purchasing power for organic items has been one of the reasons these options are introduced to a wider variety of shoppers. Here are how some retailers are re-envisioning their brand to skew towards a healthier market view.

  • Costco. As far back as 2016, their organic food sales reached $4 billion. And they’ve been able to keep pace with demand while maintaining reasonable prices by investing in a series of organic farms. Plus, they’re supporting the entire farming infrastructure with their investments in local farmers who are interested in obtaining a USDA certification. Not only does Costco offer the big brands that you would expect from an ultra-retailer, but they differentiate themselves by providing a wide variety of goods that includes smaller brands. Their overall focus on sustainability and agriculture advocacy in-store, online and in their magazines reassures shoppers that they are truly committed to more healthful living.
  • Whole Foods Market. Since their purchase by Amazon, Whole Foods has begun to appeal to a new generation of shoppers. Previously geared toward more affluent shoppers, Amazon has shifted the focus at the natural foods store to more affordable options for their organic fares that appeal to a wider variety of shoppers. Whole Foods Market can truly be credited with changing American culture, offering mid-price and high-quality organic foods while going the extra mile to support local farmers and provide a sustainable way of eating.
  • Trader Joe’s. Their private label offerings are a key differentiator, with their frozen foods section providing a wealth of great-tasting and healthy options. The staff at Trader Joe’s is another strong selling point for the brand. Their sales team is both friendly and knowledgeable – not only do they know where the products are, but they can recommend how to cook them, pair them and often where the products are sourced. Inexpensive pricing is merely “icing on the cake,” as the chain focuses on a relatively small number of SKUs based on their size.
  • Sprouts Farmers Market. With the tagline, “Healthy living for less,” Sprouts is well-known for their inexpensive private label brands and their creative use of couponing – something that some organic food chains usually forgo. They appeal to bargain hunters, meat lovers, coffee addicts and everyone in between while staying committed to natural ingredients, low prices and the needs of their core shoppers. The leadership at Sprouts promotes that healthy living is a journey, and they cater specifically to gluten-free and other alternative eating styles.
  • Lucky’s Market. With store count slated to grow by 40% by the end of 2018, Lucky’s is rising in prominence within the American health food store market. Their in-store smoked bacon, fresh, local produce and dedication to antibiotic-free meats are winners with local shoppers. Their store “Sip n’ Stroll” program offers low-cost beer or wine, and provides a more relaxing atmosphere for shoppers. Lucky’s plans to expand in the Florida market next, which may be due in part to the influx of funds from their latest investor, Kroger.

As Americans continue to focus on improving their healthy eating habits, this segment is bound to continue experiencing major growth. The brands that are well-positioned for the future are the ones who tell the story of their sustainability, offer reasonably priced alternatives and who are transparent about the stories around their organic produce. It is clear that these brands are listening to their audiences, and shifting with the trends to ensure that they continue to add value and stay relevant as shopper needs and wants change.