As the post-pandemic recovery continues, Health Food Business brings you an update on the current trading conditions being felt by both retailers and suppliers.
When the Covid-19 pandemic hit, Health Food Business brought readers a monthly update as the crisis progressed. From the early days of the pandemic as stores battled with how best to trade, through to the lifting of restrictions and back into lockdown, for more than a year, we heard from retailers and suppliers across the UK and Ireland about their experiences.
As the pandemic eased, so too did our monthly reports, but as we look ahead free of restrictions – albeit despite cases still being high – and look to the spring trading period with all its exciting NPD, it seemed the ideal time to catch up with industry to see how recovery is going, where footfall currently stands, and what needs both retailers and suppliers have as we move forwards.
From a general retail perspective, the British Retail Consortium (BRC) reported that, covering the five weeks from February 27 to April 2, on a total basis, sales increased by 3.1 per cent in March, against an increase of 13.9 per cent in March 2021. This is worse than the three month average growth of 6.9 per cent and the 12-month average growth of 10.3, per cent. On a three-year basis, total retail sales grew 5.4 per cent during March compared with the same month in 2019.
Furthermore, UK retail sales decreased 0.4 per cent on a like-for-like basis from March 2021, when they had increased 20.3 per cent. This was worse than the three-month average growth of 3.2 per cent and the 12-month average growth of 6.5 per cent.
Helen Dickinson OBE, BRC Chief Executive, commented: “As consumer confidence continued to sink, March saw sales slow, and while spend remained above last year, this likely reflects higher prices. Beauty and fashion items were popular last month, as consumers took to their town and city centres for some retail therapy in the run up to Mother’s Day. While it is promising to see experiential shopping back in fashion, much in-store retail has not recovered to its pre-pandemic level.
“The rising cost-of-living and the ongoing war in Ukraine has shaken consumer confidence, with expectations of people’s personal finances over the next 12 months reaching depths not seen since the 2008 financial crisis. Furthermore, households are yet to feel the full impact of the recent rise in energy prices and national insurance changes. There is also potential for further supply chain disruption, with China putting key manufacturing and port cities into lockdown. Ultimately, consumers face an enormous challenge this year, and this is likely to be reflected in retail spend in the future.”
Don Williams, Retail Partner at KPMG, added: “Sales growth in March rose at the slowest rate so far this year, suggesting clouds on the horizon as household budgets come under pressure from rising costs, an increasing tax burden and competition from holidays. There is concern on what this could mean for consumer confidence and the impact on discretionary spend. Additionally, retailers are facing their own battle with rising costs and inflation and are walking a tightrope between absorbing rising costs themselves or passing these on to consumers, when competition for share of a shrinking wallet is increasingly fierce.
“The best retailers will continue to balance attention on areas that can yield cost and efficiency gains with a clear understanding of their customer and what they want to buy and how. The primary concern now is whether consumers will choose to reduce their physical and virtual shopping to counteract rising household bills and reduced household income.”
On the shop floor
Retailers saw many different challenges when the pandemic hit, but certain challenges remain, even despite restrictions being lifted. In terms of where trade is now, Melanie Beard, Co-owner of Best Health Food Shop and Deputy Chair of the National Association of Health Stores, commented: “Trade is erratic and definitely down in all stores. We are between 10-40 per cent down on sales compared to this time in 2021, and down much more on 2020 – height of pandemic time. Footfall is still lower than it was, even pre Covid. Trading patterns are not what they were pre Covid, and things are definitely not returning to ‘normal’.”
Meanwhile, Tressa Timms, from Fairhaven Wholefoods, in Letchworth, Hertfordshire, added: “Seeing the store vibrant again with the heart of the business being the customers, is wonderful. During the height of the pandemic, the store was initially closed to the public for a period, with only click and collect or home delivery being offered, so the impulse buy was non-existent and new products were hidden from customers’ view. Now that the store is fully open, we are seeing an upturn in business with a return to pre-pandemic rates.
“Whilst takings overall have recovered, there has been a yo-yo pattern of week-on-week sales, we feel reflecting the rise in Covid infections, as well as customers’ ability to travel again and holiday freely, meaning footfall is currently unpredictable. And with less people working from home, this may also explain the change in shopping routines.”
Emma Jenkins and Kylie Fitzpatrick set up Organically U in the town of Redcar just prior to the pandemic, and have found real unpredictability in terms of trade. Emma commented: “Trade at the moment is better for us now in terms of footfall and passing trade, we are seeing more and more people out and about in town and they seem more confident and relaxed when browsing and shopping – it’s not a case of dashing in and grabbing the necessities as during the height of the pandemic! Although we have found that we were doing a lot more home deliveries previously, this has balanced out, with the majority of these customers now physically returning to store.”
Kylie went on: “Trade is slowly but surely returning to normal and we are feeling more positive about what we can offer in store once again, just small things like sampling different foods and products and having demonstration days with our suppliers.”
However, Kylie also revealed: “After a lovely, busy Christmas, trade in January/February this year took a huge nosedive (the biggest we have ever experienced in over 10 years working in retail) and as a result, we were stuck in a vicious cycle of having very little stock but not enough cashflow to replenish it, and so the customers who did come in either left empty handed or with a fraction of what they’d normally buy. “It was soul destroying and we took it very personally having to let our customers and suppliers down – we were in a very bad place and had lost our drive and we honestly thought the only solution was to close. Seeing so many other fellow independent businesses close around us every week hit us very hard too as we were scared and convinced this was to be our fate. After a particularly quiet day, I took to social media and just said exactly what was happening and how dire our situation was, and how important it was to support local etc., and from then everything has just been a little bit crazy! We received hundreds and hundreds of messages and phone calls and the support from our community and even further afield was just overwhelming – it definitely gave us a shock and the boost we desperately needed, both mentally and financially. So, currently we are feeling very positive and have lots of new ideas and plans to take our beloved little business forward.”
If we look to the Irish perspective, Health Stores Ireland has conducted a spring trading survey, Spring Tides, among its members. The organisation’s Administrator, Alan McGrath, highlighted that the survey was circulated while anecdotal information from retailers and suppliers was that the trend in sales and footfall was downwards.
The survey revealed that some 15.63 per cent reported footfall or average daily customer numbers are generally increasing, while 56.25 say that it is decreasing and 18.75 per cent are finding it stable. It was also pointed out that the survey was designed mid-February but not circulated until late March, so the issue of weather had dissipated. No doubt it has been an issue in relation to footfall though, it was added. “The trend in customer spends became more positive as surveys were being completed at the later end of the term. While notable, this may or may not indicate some upward trend or it may be incidental,” he added.
Some people have commented, off survey, that comparing results to pandemic trading may skew things – but if comparing to prepandemic (2019), with VAT at 13.5 per cent, may be included in this year’s food supplement turnover returns.
One of the factors that had to cease during the pandemic was in-store activity, and in its place, simply being able to cater to the rise in demand while controlling customer numbers. And this is something we are seeing a return to.
“Being able to offer food tasting and sampling of products has once again allowed us to support local businesses, as well as introduce an idea that had been planned but postponed due to the pandemic and that is ‘Make Our Space Your Space’, where we invite other businesses to use our space to promote their services or products. We have also been able to share product samples with our customers and get their feedback on potential new products – a wonderful way to include our customers in the new product cycle,” Tressa reported.
It’s not been quite the same picture at Best Health Food Shop, with Melanie commenting: “We have taken the decision to cancel all of our in-person events that we usually do with Dr Marilyn Glenville. We postponed them in March 2020 and had hoped to carry over all those that had purchased a ticket to this year, however, we had to make a decision in January about this as we had to confirm venues etc., so we made the hard decision to cancel as we felt that it was still not the right time. However, we did offer all those that had a ticket to instead attend two online webinar events instead and most took this option. We will definitely rebook these in person events for 2023!
“We have not yet resumed other in-store activities such as taste testers, in-store demos or even our clinic, as we just feel that it is still not the right time. Perhaps in a month or so, but with a staff member off sick every other day at the moment, it would not be responsible of us to do things like this in our opinion. But we do really miss them and are hoping that we can
start reintroducing them soon!”
We also know that shopping habits have changed, with some categories winning over others. So, what are consumers seeking to buy from health stores at the moment?
“It is hard to say as sales are erratic and there seems to be no real obvious trends. I would say that immune support is still popular, supplements, herbs and local honey. Apart from that, we are just seeing our usual top sellers continue to do well, such as refills,” Melanie advised. “We have temporarily stopped selling organic fruit and veg as we definitely saw a huge drop in demand for this as people were tightening their belts financially.” Emma went on: “Our liquid refills have always remained a top seller and recently, we have seen an increase in people wanting to know more about it and how it works etc., which is so encouraging as it means our local community is really taking its responsibility seriously to reduce plastic waste and consumption.
Natural, locally made household cleaning products are also doing very well – our toilet bombs are absolutely flying off the shelves! There has also been increased demand for CBD oil, mushroom blends, ashwagandha and menopause supplements.”
And Tressa added: “Plant-based milks continue to be a real favourite, as well as dairyfree yogurts. Immune system boosting products have been understandably extremely popular in terms of foodstuffs as well as supplements, probiotics and sauerkraut, with more customers understanding the importance of feeding good gut microbiota. Our own brand wholefoods have maintained their popularity and there has been a marked change in the number of younger customers interested in vegetarian and vegan foods. Keto snack bars together with healthy option snacks have risen in sales too.”
And looking ahead, after what has been both a tough and tiring time for health food stores, how positive are retailers feeling? “There have been so many challenges faced by independent health stores over the last two years, not least from the change in customer shopping trends affected by the pandemic and availability of internet shopping and home delivery, that it is difficult to see how in-person shopping will ever return to pre-pandemic levels,” Tressa commented.
“So, the question is, how do independent businesses attract the customer back into the store? Being a health store, our strength lies in the wealth of knowledge held by our staff and the ability to listen to a customer and offer them specific and tailored suggestions. Ultimately, people will always want to eat healthily and there is no substitute for human contact and
being able to choose what you buy!”
Melanie added: “We try to stay positive but it is getting harder and harder to do! We are struggling to see any light at the end of the tunnel at the moment as every area of the business is being affected, sales, costs, staff, supply; there is only so long that you can keep holding on. We try and take positive action where we can to adjust and modify what we do to adapt but some things you just cannot win against! At the moment, we are just taking it month by month as planning in advance has not really worked, so we are just staying close to the numbers and making quick decisions and changes where we can. We are still passionate about what we do, and this just drives us to work harder to make it work, by whatever means we can.”
Learning lessons
It’s important to note that the pandemic also brought certain focus to areas of trade that had some positive effects, of which some have been retained by stores. Melanie pointed out: “Overall, the main thing we learned was that we are able to adapt and diversify when needed, we have had to look much more closely at everything we do to try and stay ahead of the game. When things are going well, you tend to get a little complacent about some things as, if it is working then there is no need to change anything. However, when things are not going so well, you start to look at everything in much more detail, from stock levels, costs and staffing and make quick changes and decisions based on the information you have. We are not afraid now to make changes where needed, take a little risk and try things to see if they help. It has definitely made us work in a new way.”
And Tressa added: “The success of our click and collect service is something that we have continued and expanded, allowing customers to partake in our loyalty scheme and take advantage of discounts offered. We realise the importance of sanitising stations and protecting staff, so will continue with the precautionary measures introduced.”
On the supplier side, Lucy commented: “During the pandemic, we introduced staggered hybrid working to reduce the number of staff in the building each day. We’re a small, closeknit team, so we’re pleased to be able to have everybody back in-house together. It’s all starting to feel normal again – which is definitely nice! One thing that has carried on though is that the office staff work from home every Friday and cutting out a long commute for certain team members, just for one day, has really been appreciated.”
Cheryl went on: “As a company that’s been dedicated to environmental issues since we launched in 1999, we’ve found that embracing Zoom and MS Teams for internal and supplier meetings has significantly reduced mileage overall. While our face-to-face calls on stores will remain in place, this is now augmented with video training and is likely to continue.
Localism too had been a key trend through the pandemic. Viridian is continuing to work closely with health food stores to create local marketing campaigns to maintain and build on that momentum.” And what does the future look like? Tressa commented: “Keeping pace with ever changing nutrition trends whilst developing our links with complementary health practitioners will be key for us this year. This, coupled with people’s greater understanding of supplements that can form part of maintaining a healthy immune system, will mean that the advice that our staff can provide face to face will be invaluable to our customers. Our social media activity is so important for raising the company profile and developing partnership links with other businesses, so this will be another key area, together with maintaining a vibrant website and internet business.”
Developing business to expand opportunities has been key for Organically U, and Kylie explains that the website is the latest addition. “We are days away from launching our long-awaited website and we are hopeful that this will help business by bringing in extra sales and customers – we are aware that convenience is a huge factor when shopping and if we want to survive and evolve we need to make this as easy as possible,” she explained. “We are old-school so face to face service will always be more important and preferential to us but at the same time, we need to move with trends and keep up with the times! There is lots in the pipeline for us and we are excited to begin this new chapter.”
Melanie explained that the future – for now – is about adapting as trade continues to change. She commented: “We will be spending more time on marketing and getting more involved in local community events, such as markets and fairs to help promote the stores and also heavily promoting the website. We want customers to use the click and collect feature more and more and we think that this will create a great synergy between the website and the stores whilst still encouraging footfall and purchases in store.
“Beyond that, we are just evolving on a weekly basis it feels, trying to adapt to changes. We are much more reactive as a company and hope that this will bring about a shift in the overall sales for the shops. We love the shops and will work hard to do whatever we can to secure their future.”
A more knowledgeable consumer is also likely to shape the future in terms of this industry.
“Since the pandemic, I believe consumers are far more clued up on the supplements they take, how they work within the body, and which delivery methods are best to ensure maximum absorption,” Lucy commented. “Due to customers being more informed on bioavailability and the best delivery methods, I think trending products will include those that utilise the best delivery methods for the nutrients, such as liposomal vitamin C, transdermal/topical magnesium, ionic iron, and nano silver. “We all have to be promoting a holistic approach to health, with quality, real food and quality, pure supplements whilst working together to keep the business alive on the high street.
We continue to solely supply the independents, and we work tirelessly to protect the integrity of the Good Health Naturally brand and stop our products being sold on thirdparty websites. We’ve definitely had even more of a battle where this is concerned since the pandemic, but we will keep fighting the good fight!” Meanwhile, Cheryl commented: “Looking back on nearly 40 years working in the specialist health sector (I started working in health food stores when I was 21), the trend has been for relentless growth. The food industry will continue to pump out fat and sugar laden products, people will continue to make poor health choices and the pharmaceutical industry will continue to ‘resolve’ symptoms causing multiple health issues as they fail to address root causes. Society will continue to be calorie rich and nutrient poor. This tragic downward spiral will continue to fuel the pandemics of obesity, diabetes, cardiovascular disease, depression and worse. The natural health movement will thrive as we educate, campaign for change and provide pathways to better health to those who are willing to listen.
“The specialist independent sector will enhance its reputation for effective and ethical products and services to those who care to dig deeper and take responsibility for their health. The industry will be wise to encourage self-care and health ownership, which will lead more people to choose a natural path. I firmly believe that the specialist independent health food store is best placed to have the conversations, personalised recommendations and follow up. Stores that continue to invest in training and have a passion for their community will continue to thrive.”