The health food x-factor

In a dismal year for the high street, health food retailing should be in good shape. As long as you are making the most of all digital channels, says Andy Wood.

Andy Wood is Chairman of Go Inspire Insight.

Reports show the health food sector has never had it so good: an increasing interest in fitness fuelled by social media has driven interest in healthy eating and food supplements, while an ageing population and concerns over children’s diets woefully lacking in nutrients also contribute to the trend.

In fact 26.66% of people are unaware as to whether they get the right amount of vitamins and minerals through their diet and may be looking to compensate, according to a report by the Health Food Manufacturers’ Association (HFMA Health of the Nation Survey, 2016).

In a sixth year of consecutive growth, organic sales rose by 6% to a record £2.2bn, driven largely by independent outlets and home deliveries (The Guardian, February 2018). The global dietary supplements market size was valued at $133.1bn in 2016 and is projected to accelerate at a compound annual growth rate (CAGR) of 9.6% from 2016 to 2024.

Almost 30% of all organic sales now take place online or on the high street, with the remaining share using supermarkets (Soil Association 2018 Organic Market Report, February 2018).

Add to this that 46% of Britons reported taking vitamins and minerals on a daily basis and it seems clear that this is a strong segment which is destined to continue its upwards trajectory (Mintel, Vitamin and Supplements Market, September 2016). Specifically, vitamin-based supplements are projected to account for 48% of global share by the end of 2024 (Grand View Research).

Although elsewhere on the high street a number of retailers such as Coast, House of Fraser and Mothercare have been shutting stores, health food customers still seem to be faithful to independent outlets and have not migrated wholesale to e-commerce.

A number of factors are probably at play, but first and foremost is certainly the key advisory role played by in-store staff. Given the critical nature of products that may interact with each other, the availability of knowledgeable staff is a deciding factor for people wanting to purchase health supplements or organic products. So, while price is a strong driver for online and discounter competition, the health food sector consumer sees this as much less of a critical issue.

As a result, while health food retailers face the same pressures as their colleagues when it comes to the rising cost of energy, business rates and Brexit-fuelled inflation, bricks and mortar is still delivering important results. It is critical therefore that health food retailers hold fast and focus on a few simple measures to ensure that the return on their investment in physical stores continues to increase and they do not fall behind online competition.

Never underestimate your staff

As previously mentioned, in-store staff are a critical factor in helping consumers make a purchase. If they are knowledgeable, reassuring and polite, they can turn an enquiry into an actual sale and even drive loyalty by proposing a nutrition plan that is tailored to their life style.

Promote the mix

Although consumers spend a lot of time on digital channels, researching and comparing offers for example, this does not necessarily mean that their customer journey also ends online. In fact, independent retailers are still very strong contenders for consumer purchases in health food and need to ensure that they reflect a mix of traditional and digital channels in their marketing, and continue to promote in-store experiences.

Value multichannel

Studies provide compelling data to show that multi-channel customers are more loyal and spend more than single-channel customers (Harvard Business Review, January 2017) and store-only customers have less ‘churn’ than web-only customers (Verint, The Digital Tipping Point, 2017).

Another overlooked channel is direct mail which is still more effective in eliciting incremental spend from customers than digital channels such as email or mobile, while shoppers spend 25% more when a business uses a mix of direct mail and email marketing (Marketing Profs, Direct mail Vs Email Infographic, 2017).

In the USA for example, fragmentation due to lack of brand awareness and low customer loyalty means that leading health drinks and food supplement manufacturer Living Essentials holds 7% market share. Private label accounts for 10% of the market, but as brands become more aware of the issue and start to create greater awareness through marketing across both traditional and digital channels, the opportunity for those ready to invest in developing a loyal customer base could boom.

Improve your marketing metrics

Far too many businesses are unsure about their marketing metrics. This erodes trust in marketing but, more importantly, highlights the fact that data is not consistently gathered and analysed across channels – in-store, online, mobile, social. Without this intelligence it is impossible to deliver compelling, targeted offers to customers or indeed to truly understand the market.

Avoid blanket promotions

Although most retailers really should know better, the practice of trying to increase revenues through limited period offers and blanket promotions is still popular. Not only are their promotions visible to the competition, but they tend to attract consumers that are only driven by price and prone to switching. They prove expensive to recruit and hold no value over time. In particular, health food consumption is very personal and tailored to the specific needs of the individual (boosting children’s immune systems, helping reduce stress, improving an athlete’s health or taking care of elderly bones and providing folic acid to expectant mothers), so blanket promotions do little to secure a customer and nothing to help grow them or make them more loyal.

Look at the whole picture

Far too few retailers are correctly tracking and integrating data on how customers interact with them across all channels, although the GDPR-compliant tools to do so are readily available. Only with a clear, all-round view of the customer’s behaviour is it possible to truly improve marketing and, as a result, margin.

Summary

The high street is far from dead for health food retailers, but they too need to be careful that they grasp the multichannel nature of today’s consumers and tailor their offer and marketing to real intelligence.

Only by gathering, integrating and analysing behavioural data from across all the customer’s interaction with the brand is it possible to understand the customer journey and their preferences. Even within the store environments there are useful tools that can help retailers understand their market better.

Go Inspire Insight (part of Go Inspire Group, www.goinspire.co.uk) provides a complete approach to data marketing, covering database build, loyalty programmes, analysis, strategy, campaign execution and fulfilment.