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2010 Retailer of the Year

Phase 2

Margaret and Philip Isely, founders of Natural Grocers by Vitamin Cottage (NGVC), were mavericks of their time. Back in 1955, when the term “nutritionist” hadn’t truly been coined, they shared nutritional information and sold wholegrain bread door to door. From that modest beginning, they went on to vitamins and bulk foods, and eventually to an entire store dedicated to selling quality natural products and vitamin supplements.

Fifty-five years later, the Lakewood, CO-based “Mom and Pop” grassroots business has grown to a regional chain with 37 locations in Colorado, New Mexico, Texas, Utah and Wyoming employing over 1,000 employees to date. Still run by the Isely’s children and grandchildren, the original family goals to offer everyday affordable prices, quality products, nutrition education, commitment to employee health and welfare, and community outreach remain the foundation of the business.

Education and customer service are the cornerstones of NGVC, as evidenced by its in-store nutritional support programs, free Nutritional Health Coaches and free public health and wellness seminars. Add to this the fact the company has implemented numerous environmentally conscious efforts chain-wide and it’s easy to see why Vitamin Retailer has chosen it as its 2010 Retailer of the Year.

A Family Affair

Talk to the second generation of Isely’s and they will say all they ever knew growing up was the family business.

Heather Isely, executive vice president and daughter of Margaret and Phillip, recalled fondly her parents putting a swing set outside the original store, which was a converted house.

“We all started in the store as kids,” she said. “We’d go outside for awhile And entertain ourselves and then come inside and do some work. I can remember ringing customers up at the cash register when I was eight or nine.

“It’s hard to explain since it’s all we’ve known,” she added. “It’s something we enjoy doing—we like working together and we have a passion for this industry.

We hold the values of this industry and our parents very dear.” Zephyr Isely, co-president, credits his mother’s caring for her neighbors as the heart of the business, and can attest to the long hours she put in trying to be a beacon of health to her community.

“You have to remember the 50s and 60s were the heyday of food chemistry— Wonder Bread, Spam, Miracle Whip, canned vegetables and Velveeta ruled the day. It was hard to find whole grain bread, for instance, or peanut butter without added sugar and oil,” he said. “[My mother] started the business by helping her close neighbors feel better by eating better, then struck out farther around town knocking on doors. She set out finding sources for these whole foods, in some cases making them herself, and providing them to the community.” And that mission has not changed as the company has grown or as it was taken over by the next generation of Iselys.

“We strive to provide healthy food and education in areas that need it most,” said Kemper Isely, co-president.

“For many of our customers we fill a critical need for particular supplements and safe, non-artificial foods. We don’t appeal to everyone, but those we appeal to are very thankful for our values and standards, and they trust us to keep our promise.”

Product Mix and Sales Growth

Today, NGVC sells more than 25,000 highest-quality products including natural groceries, certified organic produce, vitamins, herbal supplements and beauty aids. Carrying on the mantra that taking care of one’s health should be affordable, the company strives to make its Prices some of the lowest in the country.

“In a recession, when many pundits believed that our insistence on exclusively organic produce, high-quality supplements and groceries would harm us, it did just the opposite: we are growing,” said Kemper. “We grew or expanded six stores last year and expect to have 40 in total by year’s end.

We work hard to keep our prices affordable, but also to sustain that growth.” Those low prices are the result of the company’s concentrated effort to keep overhead low while delivering impressive volumes that keep its suppliers’ attentions.

“We don’t have big elaborate stores, fancy offices or any unnecessary expenses. We also have enough volume that our business really matters to our suppliers—they know when we negotiate a lower cost so we can deliver a lower retail price, that is exactly what we will do,” said Kemper. “In the end, However, our pricing is part of our values.

Healthy food is not healthy if people can’t afford to buy it.” The company attributes its overall success to its long-standing integrity and quality control, for which it is fully accountable. Every product in NGVC stores or sold online must pass a strict review process to ensure it meets the company’s quality standards before it’s offered. If a product falls short, it won’t make the shelf.

“Actually, it’s what we don’t sell that is the biggest draw,” said Kemper. “The one desire shared by all of our customers is to eat foods that are clean and safe from chemical contamination and over processing. Everything we sell has to pass rigorous standards for clean ingredients, so folks shopping with us have the confidence to choose any food or supplement we offer.” NGVC’s home office buying staff evaluates each product for ingredients first and then whether a company is manufacturing to good standards. It begins with nutritional, environmental and biological science. It is pretty clear to the Iselys what additives in food may be dangerous, even in minute quantities, and which are part of the natural human environment.

Then it analyzes whether a product is unique and should be in its stores.

“We maintain a long detailed list of substances that we consider unhealthy—including all the aliases they hide under—and we simply don’t allow them. This review occurs not just when we first approve a product, but at regular intervals thereafter,” explained Kemper, adding that the most common problem is when a brand is reformulated For mainstream retail stores where it may need cheaper ingredients or a longer shelf life. “More than a few products have been immediately removed from our shelves after we found unannounced and unacceptable ingredient changes.”

Store Side

NGVC stores tend to be on the smaller end—10,000-15,000 square feet—but it packs a lot of SKUs in that space, which results in quick product turns, according to Liz Isely, executive vice president.

The stores feature a traditional layout, with produce, meats (prepackaged in frozen or refrigerated cases) and dairy around the periphery.

Grocery will be toward the left center of the store with supplements to the right, but it places its very best deals on supplements and grocery on end caps facing the main aisles and in special displays near the registers. About 10 of its stores have full-fledged event halls, while others hold smaller events in open areas of the store.

But, again, it’s what’s missing from stores that Liz Isely feels set them apart.

“We don’t have in-store bakeries, butcher shops, delis, cheese shops, pizza ovens, coffee shops, wine shops, etc.,” said Liz. “Many of our customers are ill, allergic, sensitive, vegetarian, Vegan, etc.; there are a myriad of conditions and preferences that we try to accommodate gracefully. Celiac customers appreciate the wide selection of gluten-free products and education.

Those with chemical sensitivities simply like the minimal amount of background contamination in our stores. So, we strive for a bright and clean environment where everyone feels welcome and safe.” The stores also keep relatively short hours (most open at 9 a.m. and are closed by 8 p.m.), but this lends to the company’s efficiency. “We stock during the day and have frequent deliveries to replenish,” Liz added. “We keep one register open, with three others available; employees jump in to open additional registers the second more than one person is waiting to check out. It’s very efficient and cost-effective.” Additionally, NGVC stores are not like typical chains—customers and communities are not inundated with having an NGVC on every corner.

“In some instances, our stores have customers who drive two hours or more to shop with us,” added Kemper. “By spreading our stores far apart, we can serve more people and spread the word about the link between good nutrition and good health.”

A Staff That Knows

Heather Isely, executive vice president, considers her mother “arguably the company’s first ‘nutritionist,’” though the designation didn’t exist at the time.

“She started with her own experience using wholesome foods and supplements to stay healthy, and was always reading the scientific literature to add to her nutrition knowledge throughout her life,” said Heather. “She had an extraordinary instinct for helping people improve their health. Now, each store has a degreed Nutritional Health Coach that provides free nutrition coaching sessions and education to our customers who request it.” Nutritional Health Coaches aside, NGVC uses the term “employ- Ees” for everyone throughout the company.

In stores, each department has a different training regimen that is extensive and ongoing. For all employees (including corporate), NGVC requires a monthly one-hour interactive training that includes updates on nutrition and how to provide FDA-compliant customer service when selling supplements.

It also offers additional paid trainings on particular nutrients and product lines, so everyone in the company can understand in great depth the usefulness of the products it sells. This training is in addition to ongoing free seminars and NGVC’s nutrition publications, all of which employees are encouraged to participate in.

The nutrition publication is The Health Hotline, a 20+ plus page journal published eight times per year. It is filled with the company’s best buys for those weeks, in-depth nutritional articles on important current issues regarding health or supplements, listing of all free seminars in stores, new store openings, periodic sale flyers offering low coupon deals at certain stores and much more.

“We have an in-house writer who writes articles for each issue, along with one of our Nutritional Health Coaches who writes a food article each month,” explained Kemper. “We also use outside journalists, like Jack Chalem, who offers an article six times a year.” In addition, the company reprints articles from various trade magazines (including Vitamin Retailer’s Healthy Shopper).

Environmental Efforts

Since the company’s inception, it has been using less, reusing and recycling.

“We have always recycled and reused tons of paper and plastic, and most of our incoming boxes go home with customers since we don’t give out disposable bags,” said Kemper.

“We have our pilot geothermal store in Northglenn in which we have eliminated the need to use natural gas for heat, which is very successful,” he added. “However, it’s all the little unglamorous actions you take when no one is looking that are the real foundation for environmental responsibility.” And those “little unglamorous actions” really add up at NGVC. All Stores are now 100 percent bag-free.

Customers are encouraged to bring their own bags, use the company’s boxes or buy affordably priced reusable bags in stores. By doing this, NGVC estimates this year alone its customers will keep more than 16 million bags out of landfills.

All stores also incorporate green construction features such as:

Ultra low-flow toilet fixtures insulation

• No VOC interior paints

• Landscaping with low-water drought resistant planting/xeroscaping

Air chamber vestibule doors to trap cold and hot temperature changes

• LED lighting systems throughout stores to conserve energy

• Polished concrete floors with vegetable based color dye

When possible the newer stores have such features as:

• Bio-based spray foam insulation

• Wheat sheets instead of gypsum walls

• Nontreated wood (no chromium or arsenic)

White TPO flat roof to reflect heat

• Natural open beams

• Sola natural light tubes “As new conservation technologies

Have developed, they tend to get government subsidies and lots of media attention,” said Kemper. “But this is part of our DNA, not a ‘green’ marketing scheme.”

Community Involvement

NGVC has its ears open in all the communities it serves, and is eager to give back. It donates some of its proceeds to humanitarian and wildlife organizations, including Habitat for Humanity, and local charities that customers bring to its attention.

“We have an extensive outreach program that provides tens of thousands of monthly free sample products, gift baskets, health and nutrition support literature and free nutritional coaching; we participate in numerous community events surrounding each store in each state—up to 40 events in a month sometimes,” explained Kemper. “Our criteria for the non-profits we support is that they offer services to support community health and welfare. They also have to demonstrate efficient use of the money and successful results from their program.” One organization dear to NGVC is Second Wind Fund, which was started by parents at Green Mountain High School when several students committed or attempted suicide in a single year. The school is a stone’s throw from NGVC’s corporate headquarters.

“We have been a founding sponsor and supporter of Second Wind Fund from the first days of the organization, and, happily, have been instrumental in its survival through tough times to its current success and national expansion,” said Kemper. “The group takes referrals from schools and other organizations through a network of trained teachers and counselors. When they identify a child at risk for suicide, the child and family are contacted that Same day and intervention begins. They assist nearly 1,000 kids per year, and are proud to say that not a single child who has completed their program has become a suicide statistic.” Currently, NGVC is funding a yearlong statewide campaign on Colorado Public Radio to help generate interest and funding for dozens of additional chapters being created.

Most recently and closer to its core, the company introduced its Healthy and Delicious Meal Planning program, which is a unique offering to help those with challenged diets create a balanced and economical menu plan and built-in shopping list, available for any special dietary needs.

“There were two starting points for this program,” said Heather. “First, we tend to find when people talk about healthy meals, they’re confused. They give up because it seems so complicated, between government standards, percentages, counting calories, etc. We wanted to simplify the process and take the confusion out of how to plan a full, healthy meal.

“Second was the downturn of the economy,” she continued. “Grocers and supermarkets responded by showing how to make ‘meals’ for a low cost, but the majority of ‘meals’ were nothing more than pasta dishes. Pasta may be a course, but it’s not a meal. We wanted to show how to make a healthy meal using naturally raised meats and organic vegetables for under or close to $20.” The program began as demonstrations put on by the Nutritional Health Coaches, beginning by designing a meal around a quality protein and then adding three to five servings of organic vegetables and fruit, and grains to preference and/or tolerance.

“Most of the time when we talk to people they are so relieved,” said Heather. “Our demonstrations showed people how to plan seven-day menus, and that through planning, they can afford to eat better. When you buy the ingredients so everything is covered, they could see that you don’t have to spend a lot on meals, especially when we utilized the store specials we were offering.”

The demonstrations evolved into classes taught by the Nutritional health Coaches, and from there NGVC is looking to take it a step further: into the schools.

“This is a junk food society, so it’s no wonder that kids have poor eating habits. But we’re looking at opportunities to talk to parents, teachers and caregivers on how important it is to get kids invested in eating healthy foods while they’re young,” said Heather. The company is in talks with several school districts at this point, including Jefferson County, the largest in Colorado.

“It’s really about getting people to understand the core of how to take care of themselves,” said Heather. “Provide people with the education they need to make a decision, and then the decision is theirs—that was Mom’s idea.”

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