From The January/February 2003 Issue of Natural Grocery Buyer

Retailer Success

Lund Food's careful plan for two-chain natural and organic program pays off

Connie Guglielmo

When Bea James steps into the kitchen, she's usually cooking up more than just healthy snacks.

That's because James is not just another instructor teaching cooking classes at one of Lund Food Holdings Inc.'s grocery stores in and around Minneapolis and St. Paul, Minn. As whole health manager of the Living Wise program for eight Lunds and 12 Byerly's grocery stores, James helped craft the stores' business recipe for selling consumers on natural and organic products and health-oriented services.

Teaching cooking classes and creating recipes using natural and organic products, says the former baker, is just for fun.

In the three and a half years since she was hired to help launch a natural and organic program for Lund Food, Lunds and Byerly's stores have gone from stocking some 3,500 SKUs of natural and organic products to 12,000 SKUs. Sales of those products vary from 2 percent to 5 percent of a store's overall revenue, depending on the location. The goal, James says, is for natural products to account for 5 percent to 6 percent of sales across the board within the next few years.

Given that natural and organic products are the fastest expanding segment of the grocery business, it's only a matter of time before Lunds and Byerly's stores meet that sales goal, James says. By the Organic Trade Association's estimates, the natural and organic foods segment has grown at a rate of nearly 23 percent each year for the past decade.

Her confidence in the Living Wise program stems in large part from the approach Lund Food took to natural and organic products.

"When the company decided they wanted to make a commitment to natural and organic foods, they sought someone who understands the category and lives the lifestyle," James says. "I started talking to them about what it means to make that commitment—that it's not about just selling the top 10 products in the category and getting the most sales out of your square footage.

"The consumer who is interested in this food is not just interested in top-selling items," she says. "It's a way of life, and you have to understand the roots of the movement."

After much debate, James and her team decided to integrate natural and organic products alongside regular grocery items on the store shelves. "We felt integrating was the best way to go because it allows each individual store to expand or shrink their offerings as they need to."

In addition to that product integration, Lund Food also created Living Wise lifestyles centers at seven stores. In the centers, customers find an elaborate selection of vitamins, herbs, homeopathic products, body care product, and books and magazines. Each of the centers is staffed by a Living Wise specialist; someone, says James, who lives a natural and organic lifestyle and understands natural healing and the use of supplements and can therefore reliably help guide customers to the right products.

The expanding natural and organic foods selection and the Living Wise centers are part of a plan to better serve the target consumers of natural and organic foods, including the LOHAS consumer.

LOHAS, which is shorthand for Lifestyles of Health and Sustainability, is a market segment defined as those who are interested in supporting companies that make sustainable products and who share LOHAS consumers' economic, environmental and social values, including supporting fair trade, worker rights, children's welfare and healthy living. Research released this fall by the Natural Marketing Institute and Natural Business Communications estimates there are 63 million U.S. adults who fit the LOHAS profile.

"They have a holistic view of the world. The LOHAS consumer believes in the interconnectedness of the mind, body, spirit and values for achieving their full human potential," James says. "Our customer base crosses over into people who are interested in that LOHAS lifestyle, as well as those people who are just looking for healthy choices for their families. The loyalty behind the category on the part of the consumer is one of the great selling points for any retailer to get into natural and organic foods."

As part of its effort to appeal to the broad range of consumers interested in making healthy choices, Lund Food also formed a partnership in 1999 with Fairview Health Services, a local wellness provider. Fairview's nutritionists work with each of the stores to help serve customers. At one grocery store, Fairview set up a wellness center where consumers can get chiropractic care, acupuncture treatment, or take a yoga or Pilates class.

What distinguishes Lund Food's Living Wise program from other grocer's natural and organic programs, James says, is that the company understands that not all of the products it stocks will "fly off the shelf."

"You have to be able to take the time to choose products by category that encompass the entire needs of the natural foods consumers," she says. "Take baking. There are not a lot of products in the baking natural and organic category that fly off the shelves. Some people are looking for very special products—gluten-free, rice flour, buckwheat flour. You can easily lose customers to a natural foods store if you don't carry that one item they need to finish their weekly grocery shopping."

But beyond the desire to provide the full spectrum of products desired by the natural and organic consumer is the need, by a retailer, to make sure its category management is equally successful.

"What we are trying to create is a program that has the fundamental core values developed over the years in the natural foods industry—to choose products based on healthy living and principles," James says, "and yet still manage to stay aware that we need to make sure these products are working to help the company at the bottom line."

Connie Guglielmo is a freelance editor and writer in Los Altos, Calif. Reach her at acmewriter@aol.com.