It’s not often these days that I encounter a supermarket concept that could be loosely described as ‘unique’, but it still does happen from time to time. The most recent instance was when I stumbled across Natural Grocers in the rather splendid city of Flagstaff, AZ, a delightful place graced with many fine stores and what felt like about 87 breweries (shout-out here for the Lumberyard Brewing Company whose chili burger was exemplary).

There’s no shortage of retailers in the natural / healthy / organics grocery sectors in the USA, with specialist players like Whole Foods, Sprouts Farmers Market and The Fresh Market competing alongside a more concerted effort from mainstream supermarkets to address health & wellness opportunities.

What strongly came through as I visited Natural Grocers was a real sense of commitment to the cause: each store has a Nutritional Health Coach on hand to educate shoppers on making more healthful choices. In addition, most stores have demonstration kitchens and/or community rooms that can be used for educational events and the retailer is also very active in getting involved in advocacy and campaigning on broader issues such as GMO labelling.

Natural Grocers is expanding at a robust pace. It ended its last financial year generating sales of $769 million from 140 stores in 19 states, a contrast to 1998 when it traded through just 11 sites, all of which were in Colorado. Longer term, the company has suggested that the entire US market can support at least 1,100 Natural Grocers stores.

What sets the stores apart is the fact that a quarter of the sales floor is devoted to dietary supplements. Stores also have significant space dedicated to books on nutrition and health & wellness, really adding to Natural Grocer’s stature as a destination for shoppers looking to lead healthier lives. A typical store is 11,000 sq. ft. in size, selling 21,200 SKUs, including approximately 6,500 SKUs of dietary supplements. This is a real point of difference, with competitors typically being more grocery-focused and barely scratching the surface of the nutritional supplements category.

The store in Flagstaff benefited from being housed in a very handsome building (I’m unsure if it had a previous life or was a new-build) on which was painted an enormous cow. I’m no design expert, but I feel confident in stating that there are not enough bovine murals in the supermarket industry.

The whole look and feel of the store was most pleasing, with a degree of rustic informality suiting the proposition down to the ground. Produce – which is 100% organic – was nicely done, the merchandising looking smart and the organic credentials communicated clearly. There was an extensive range of chilled and frozen groceries, categories such as dairy boasting a tremendous strength in depth. Other nice touches included a lovely coffee end-cap, a surprisingly good range of health & beauty items and a respectable array of kitchenware.

The retailer has a decent looking loyalty programme called {N}power, which provides members with digital coupons, personalised offers, points on transactions and extra rewards for attending events etc. The scheme has attracted 575,000 members – not too shabby for a retailer with around 150 stores.

With cheerful and friendly staff on hand, I was left with a very favourable impression of the store. With its distinctive grocery / supplements model, ongoing enhancements to the proposition (wine and beer is being rolled out across the estate) and benign consumer and demographic trends, the future looks bright for the business. A very enjoyable store visit indeed. Bonus points for the cow.

Bryan Roberts, Global Insights Director

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