Health Check: Natural products retailing in 2018/19 – the findings Rosie Greenaway Editor, Natural Products News Dominic Roberjot Publisher, Natural Products News

How long have you owned your business?

What best describes your store(s)? More stores are embracing their sustainable values in 2019 and identifying as 'Green Lifestyle Stores’

How many shop units do you own? 2019 average – 1.23 stores down from 1.36 in 2018

How many staff do you employ? Average Health Store 2017 2018 2019 Full Time – per retailer 2.40 1.62 2.14 Part Time – per retailer 3.19 3.85 4.27 Full Time – per store 1.75 1.43 1.76 Part Time – per store 2.33 3.40 3.51 No Full Time Staff 13% 32% No Part Time Staff 18% 20% 22%

What was your revenue for 2018? Year Average store revenue 2014 £429,605 2015 £413,095 2016 £470,479 2017 £493,250 2018 £491,797 Average store revenue has decreased by 0.25%

Approximately, what % is this up or down on last year? 2015 2016 2017 2018 Up average 9% 10% 18% Down average -7% -9% -5% -7.5% Overall 6.29% 7.54% 7.03% 10.65% The gap between the retailers thriving and those that are struggling is widening. 18% of retailers reported a reduction in 2018 revenue (8% in 2017).

Has footfall increased or decreased in the past 12 months? The number of retailers reporting a decrease in footfall is at a 5 year high.

Has average consumer spend increased or decreased in the past 12 months? The number of retailers reporting a decrease in average spend is also at a 5 year high.

Over the past 10 years, has the average age of your customer base become: The number of retailers reporting a younger average customer has slowed (67% in 2018 and 70% in 2017)

What would you estimate the average age of your customers? 35-54 is the perfect demographic for health stores. The average health store customer is 43 years old – down from 45 in 2018.

Which health issues / lifestyle factors are the biggest driver of sales in your store? 2017 2018 2019 1 Digestive Health Stress & Anxiety 2 Sleep, stress and energy 3 Bone & Joint Health 4 Women’s Health Cold & Flu 5 6 Healthy Living 7 Allergy 8 Brain Health 9 Heart Health & Blood Pressure Preventative Care 10 Diet & Weight Loss 11

Approximately, what % of your store is given to: A significant amount of shelf-space has returned to high margin - Supplements & Remedies

Which product category do you think offers the strongest growth potential (for your store) in the next 12 months? 2016 2017 2018 2019 1 Supplements / remedies Vegan / Vegetarian Green Lifestyle / Eco 2 Special Diet / Free From 3 Vegan / Veg Organic 4 Bodycare & Beauty 5 Beauty / Bodycare 6 Raw Food Fairtrade / ethical Sports Nutrition 7 8 9 Fairtrade / Ethical Raw Foods / Superfoods Green Lifestyle and Eco Products are seen as the category with the strongest growth potential.

What is your biggest motivation to stock a product in your store? Motivation in 2016 Motivation in 2017 Motivation in 2018 Motivation in 2019 1 Quality of Product 2 Customer request Exclusive to independents 3 4 Support from Supplier Support from supplier New Product 5 Margin / Price deal Margin / Price Deal 6 Supplier Deal Supplier deal 7 8 Account Terms 52% of retailers state 'Quality of Product' as the main motivation for stocking a product. However 20% now cite ‘Exclusive to Independents’ as a key driver to help offer a point of difference.

Which wholesalers do you use? CLF and The Health Store remain the most popular wholesalers – but retailers are shopping around.

What do you currently see as the biggest threat to independent natural products retailing? Uncertainty surrounding BREXIT along with online retailers is seen as the biggest threat to independents. ‘Other’ focussed on town centre decline and local council mis-management.

What do you currently see as the biggest opportunity for independent natural products retailers? Changing shopping habits is still seen as the biggest opportunity for independent retailers. ‘Other’ included the growing consumer awareness around health and eco lifestyles.

Do you have an e-commerce site? A third of independent retailers sell via their websites. 16% also see selling online as their biggest opportunity in 2019.

If yes, what % of total sales do your online sales represent? Average % of total sales has dropped from 12.5% in 2018 to just over 7% in 2019

What marketing activities do you currently use? Retailers are embracing technology to promote their stores - at the same time as engaging with their customers through local and instore events.

Which social media platforms do you currently use to promote your business? 2017 2018 2019 Facebook 90% 93% 95% Twitter 50% 54% 44% Instagram 31% 47% 75% None 10% 4% 2% Pinterest 6% 5% 3% LinkedIn 0% 11% Google Plus Facebook is still the independent retailer’s most popular form of social media for promoting their business but Instagram has again seen the biggest growth.

Do you offer additional services? Yoga classes are now a more popular offering than cookery classes

In the near future, do you plan to: 2018 NO 1-2 years 2-3 years 3-5 years 5+ years Expand / refurbish your current premises? 57% 29% 11% 3% 0% Take on additional premises? 70% 17% 9% 2% Sell your business? 64% 14% 7% 8% 2019 51% 40% 4% 67% 27% 46% of retailers plan to expand or refurbish within the next 5 years. 27% of retailers plan to take on additional premises within the next 2 years.

Where do you currently get most of your information (industry and business)? Trade press and is still the most important source of information Trade shows and online b2b content are also increasingly important.

If you belong to a trade association, please let us know which one(s): Those who answered ‘no’ questioned the value of joining a trade association.

Are you more, or less optimistic about business than 12 months ago? Retailer optimism has dropped from 61% to 39% over the past 12 months.

What is the independent natural health store's single biggest Unique Selling Point? Invest in your staff! Staff product knowledge and overall customer care are the successful health store’s biggest USPs.

“Increase social media presence” Thinking about the things you learnt in 2018, what will you do differently in 2019? “Be bolder with new products” “More vegan products” “Do more instore promotions” “Do more instore events.” “Close our store!” “Increase social media presence” “Plan, implement and measure more than in 2018.” “Open an online store” “Sell the business” “Stock more zero waste products” “Try to take more time off” “Try to have less waste”

Thank you