1

Becoming “ State of the Art” in our Industry’s

Current State

Bill Crawford, MS

National Wellness Meeting 2009

Let’s Start With The Big Picture View of Things

2

What’s Up in a Down Time?

Allergy Relief

Weight Loss

Internal Cleansing

Did You Read This?

The Economy – Vitamin Sales

3

The Economy – Herb Sales

Supplement Use in the U.S.

Regular Users of Supplements in the U.S.

56%� 44% every day!

Why not?� 40% - no need for them

� 23% - diet already is balanced

� 27% - too expensive

� 15% - difficult to understand what to take

The Supplement Category

Supplements are a highly-relevant H & W (Health and Wellness) product category, often appearing fairly early on in a consumer’s evolutionary path toward higher levels of H & W.

4

The Body Care Category

Hair and skin care products have a fairly direct connection to H & W, in that they resonate with notions of everyday “taking care” of oneself, a positive self-presentation, and at some level notions of pampering or indulgence (“feeding the soul,” an important aspect of H & W for many).

Let’s Zero In More on Our Industry

Trends in Wellness1. Digestive health — as in all that’s good for your gut: probiotics, prebiotics and synbiotic.

2. Energy boosting — with herbs and ingredients such as rhodiola, ginseng, ashwagandha, caffeine and B vitamins in supplements and energy drinks.

3. Functional foods — a shopping list that includes: pomegranate, mangosteen, açai, acerola, guava, lychee and starfruit. Cupuacu, graviola, yumberry, baobob, miracle berry, breadfruit, jackfruit, coffee cherry, Indian gooseberry, gac, hawthorn and sea-buckthorn.

4. Weight management rather than weight loss — as in eating real foods, exercising and maintaining healthy goals.

5. Parents get sneaky with kids nutrition — look for more solve-it-quick solutions in powders, pills and fortified foods.

6. Healthy snacks, more or less — low-fat, low-sugar, low-calories, more fiber, healthy fats (omega-3s) and functional nutrition.

7. Stevia and sugar alternatives. Also look for palm sugar.

8. Cosmeceuticals, also known as beauty nutrients — think antioxidants, botanicals, enzymes, hyaluronic acid, amino acids, probiotics, CoQ10 and green tea.

9. Healthy planet = healthy you. Consumers are seeing that what’s good for the planet is good for our health.

10.Home cooking, or “dining in.”

5

NATURAL FOODS MERCHANDISER’S ANNUAL

MARKET OVERVIEW

The Universe of Stores

Some of the Specs

6

How Did Sales Do?

2008 Growth

What About Profits?

7

Expansion Plans

LET’S FOCUS IN A BIT ON “YOUR” WORLD

Danger, Danger

8

A Case In Point…..

Are consumers at your store searching out supplements in lieu of purchasing pharmaceuticals because of the recession?

0 5 10 15 20 25 30 35

24.5%

28.4%

19.6%

10.8%

16.7%

Yes

, Ver

y F

requ

ently

Yes

, S

omet

imes

Yes

, But

Not

O

ften

No,

Not

S

eein

g a

Sw

itch

Not

Sur

e

The Importance of Staff

A recent survey of Barnes & Noble employees revealed that, while 18 percent say they read daily, 34 percent admit they hate to read.

June 27, 1998Dr. Michael Murray

ABC News’ 20:20

St. John’s Wort

9

Holes and Dogs

Using data to form a “build to”� Supplements and Body Care

are different from groceries

The Most Valuable Space

Vendors� Distributor - $18M to $12M;

60-90 days

Overstocks

Tying up Money

Tying up Space

Opportunity Cost

Out of Stocks….

What Do People Do If the Item They Want Is Out of Stock?

23% - will not substitute another product

15% - will go to another store

8% - delay or not make a purchase at all

10

Retail 101 – Mind Your Shelves

16.6% of grocery store customers leave without purchasing at least one item on their list because it was out of stock

9% stopped going to a particular store because the out of stocks were so bad

Loss per customer - $ .68

Annual loss per store – 2.1% of total store sales

The Economy Hits Home

0 5 10 15 20 25 30 35

2.2%

7.6%

12.0%

16.3%

33.7%

16.3%

8.7%

3.3%

New

sto

re

Dow

n m

ore

than

20

%

Dow

n 10

% to

<

20%

Dow

n 0%

to

<10

%A

bout

ev

enU

p 0%

to

10%

Up

>10

%

to 2

0%U

p m

ore

than

20% Retail Inventory Levels

Merchandise Choices

All Channel Distribution

Natural Channel Distribution

Exclusive Distribution� Private Label

�Don't Blame Private-Label Gains on the Recession�No-Names Brands Have Been Picking up Momentum for Past Decade Across Demographics

11

Private Label Success

Two Key Factors

Price is NOT one of them!

Brand Equity� Key for the Initial Sale

Quality� Has to Be on Par with the Brand Equity and

the Price

Merchandising Choices

By Brand

By Item

Thoughts

By Brand: Partnership-Oriented

Well Staffed

By Item: Good for Newer Customers

Low Priced Items Will Sell More

At least we hope that is true with the answers

12

We Can Visit Later…..

� Via E-Mail or Phone:� bcrawford@newhope.com

� 918-451-2404

� Columns and Blog� www.naturalfoodsmerchandiser.com

� Future Show Seminars� Natural Marketplace

� Expo East