Fight on to maintain a healthy market share

THE heavyweight retail players are rapidly expanding their share of the $516 million vitamin and mineral supplement market as health food stores struggle to compete with the buying power of the major supermarkets.

Although the individual products and product lines are strongly branded, health food stores have failed to cultivate strong brands or sufficient customer loyalty, which leaves them vulnerable to being undercut by the big grocery retailers.

In the current environment, sales of dietary supplements are evenly shared between chemists, health food stores and supermarkets. But with products up to 25 per cent cheaper in supermarkets, the national retailers are poised to win the race.

Coles Supermarkets have a natural health department in 150 of their retail stores in Australia. Called Natural Health Solutions, they are dedicated to health food and health products, such as vitamin and mineral supplements.

Coles senior buyer for health foods, Gary Kimberley, said the demand for health food and health products had grown significantly during the past seven years. Today the emphasis in healthcare has moved towards the prevention of illness, he said.

“But the real problem is product parity. There are no recognisable (store) brands, so what you haven’t got is loyalty to a store and the perception is you can buy it cheaper at supermarkets.”

Convenience is a key driver for many grocery shoppers and the supermarkets are just capitalising on increasingly time-poor consu-mers.

Although the health food stores claim they still have a significant role to play as incubators for new products, the supermarkets have highjacked the popular, high volume health product market.

Go Vita chief executive officer David Johnston said that, without the proper information on supplements and health products that is available at health food stores, a lot of consumers end up confused.

“I think a lot of supermarkets saw the supplement market as a lucrative option, but at the end of the day they’re just looking at getting money for space on a supermarket shelf,” he said. “I don’t know if it’s working for a lot of supermarkets. Some products they seem to take out (off the shelf) are very stable but they don’t seem to be selling the volume.”

While consumers are still visiting pharmacists to get prescriptions filled, the drive to visit the health food store is becoming the road less travelled.

“Health items such as vitamins have become extremely popular as people use them to obtain the components they need to help maintain good health and wellbeing,” Mr Kimberley said.

Aidan Wood, director of WA health food chain Betta Health, said that, in recent years, competition between health food stores and supermarkets had become increasingly fierce.

“We certainly differentiate ourselves from grocery stores by having a better level of service,” he said.

“At the supermarket you can’t get any help or advice, whereas we have well-trained staff.

“A lot of people perceive health food stores to be more expensive, but we also stock some pharmacy and health food store-only brands. On a like-for-like basis our prices are pretty similar.

“Grocers stock brands with lower strengths and, if you compare strength for strength, we’re on a fairly even par with grocery shops.”

Retailers like Betta Health claim the health food indus-

try is a launch pad for new products, furthering the

development of new treatments.

While Betta Health has not opened any new stores in WA in the past 12 months, Mr Wood believed that, as the economy strengthens, several new retail outlets would be established.

“I think most brands of vitamins to continue to function have to bring out new products and that’s where we come in,” Mr Woods said.

To further complicate the mar-ket, US retailer General Nutrition Centres GNC is preparing to set up shop in Australia, offering its own strongly branded range of products.

But shopping habits are difficult to change and consumers who have relied on health food stores for their supplements won’t necessarily swap over to the supermarket just because it’s cheaper.

“Its very difficult to change shopping habits,” Marketing Focus managing director Barry Urquhart said.

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