Finding Key Sales Opportunities in the Natural Product Marketplace
By Shep Kroner, Senior Sales Analyst for SPINS Consulting ServicesPublished in the March edition of Facts, Figures, and the Future.
Natural Product sales are up by 18% over 2004, continuing to outpace those of Conventional Products, which have increased by only 2-3% in overall supermarket sales. This is just more evidence of a long-term retail trend that shows no signs of slowing down.
For many of you readers, the news that Natural Product sales are still booming is not new. However, drilling down into this growth statistic will show that there is much more to the story. By looking at sales performance at the channel, department and category level, you can determine exactly where the greatest sales and new product development opportunities lie. For example, Natural Product sales growth in Natural Supermarkets is just slightly outpacing the growth of these products' sales in the FDM channel, but their department and category performance differs considerably.
Let's examine the Natural General Merchandise department, specifically Natural Household Cleaners & Supplies. This category is growing at 20% in the Natural channel and 5% in FDM channels, while the growth of Conventional Household Cleaners is stagnant at 1%. Sales of these eco-friendly products have been growing for quite a few years within the Natural channel, and serve as a good example of how the Natural industry has reached all product segments. Today these products account for 40% of Natural channel General Merchandise sales, where in FDM they only account for 20%. The category is clearly underdeveloped in FDM.
| General Merchandise Opportunity |
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The Natural Body Care segment is growing at 5 times the rate of Conventional Body Care, and is only expected to increase in popularity. However while it's gaining distribution in all channels, Conventional Supermarkets have yet to devote shelf space that's comparable to grocery categories to Natural Body Care. This suggests a considerable sales opportunity for these retailers as well.
| Natural Body Care Opportunity |
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The sales potential for Natural Household Cleaners and Body Care in FDM is clear. Deeper analysis shows that several major product categories in the Grocery, Frozen, and Refrigerated departments are also ripe for growth through Natural Products.
Natural Products Share of Dollar Volume |
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Natural Products represent 5% of total retail sales, but are growing nearly nine times as fast as Conventional Products. |
Consumer panel research has consistently found that Natural and Organic product consumers tend to increase their purchases year over year. If you're not monitoring Natural channel performance, it's likely you are missing out on trends that are driving sales growth across all retail channels. Those organizations that gain an early understanding of these trends have a greater chance of becoming brand leaders in emerging categories. |
The Natural Product Opportunity Report
SPINS, the leading information and service provider for the Natural Products Industry, has collaborated with ACNielsen to develop the Natural Product Opportunity Report - the first to demonstrate Natural Products' performance and share of retail at the category level. Sales and growth trends in the Conventional FDM channels are provided through a partnership with ACNielsen's Scantrack service. Development Indexes in the study demonstrate the biggest opportunity areas across categories, giving Natural manufacturers a view of the total retail picture, and Conventional manufacturers a sizing of Natural segments across categories.
For more information about the Natural Product Opportunity Report, contact SPINS National Sales at 415.957.4400.
Source: SPINSscan Natural and SPINSscan Conventional channels (powered by ACNielsen Scantrack), 52 weeks ending 12/31/05. Data excludes Wal-Mart and private label sales.
About SPINS
San Francisco-based SPINS was founded in 1995 as the first company to offer Natural Products movement data to the industry. Today, it is the premier provider of industry reporting and consulting services for this rapidly expanding sector. SPINS' comprehensive offering includes retail measurement services, content-based reporting, consumer information and consulting services. Learn more at www.spins.com.