While it may have been slow out of the gate, Rainbow Blossom bloomed into a full-spectrum destination for Kentucky shoppers.
Jimmy Carter is elected president, Elvis Presley dies of a heart attack and a gallon of gas costs 65 cents.That was in 1977, the year Rob and Pumpkin Auerbach founded Rainbow Blossom Natural Food Markets in Louisville, KY. In its inception, Rainbow Blossom was a natural food restaurant with a store connected to it.
The late 70s was also a time of lingering counterculture and the ecology movement; however, the conservative city of Louisville spent it on the sidelines.“My father always said that they opened the store about 10 years too early for the area,” said Summer Auerbach, the couple’s daughter and Rainbow Blossom’s current COO. Her father recalls local women coming into the store to buy a “gag gift.” “Consequently, the stores got off to a slow start,” she noted.
But rock intervened, Auerbach explained, when one day a call came from a music production company wanting to know if Rainbow Blossom could cater the progressive—and also vegetarian— English rock band Yes, who would be performing at an upcoming concert.Eager to keep the business afloat, Rainbow Blossom agreed to cater to the band.
“The band, who had spent months on the road, raved about how delicious the food was and said it was the best food they had had on tour,” said Auerbach.Elated, the production company began calling Rainbow Blossom for every big name that came through town, and the operation’s first several years of survival are owed to touring rock n’ roll bands including The Rolling Stones, Elvis Costello, Bonnie Raitt, Liza Minnelli and Van Halen.
Eventually, the retail store side of the business took off and Rainbow Blossom began to shift back to its original vision in the early 80s. “I was also a young child and the late evenings began to wear on my parents,” Auerbach added.
Business boomed and in 1989, Rainbow Blossom opened its second location, and in 2002, its third. But in 2003, the family’s world was rocked in a whole new sense.
No longer the only natural retailer in town, Wild Oats opened down the street from the flagship store, and months later Whole Foods opened its doors across the street from Wild Oats. The market was saturated like never before, and the two rivals competed furiously. As a result, Rainbow Blossom’s sales plummeted by 50 percent. “At the same time, my father was diagnosed with cancer and he didn’t have the strength to fight back or lead the stores to recovery,” Auerbach explained.
At that time, Auerbach was on a different career path. She had gone to business school [at Bentley College in Massachusetts] with the hopes of becoming an entrepreneur, but moved back to Louisville in 2004 to help out while the store faced the crisis. “Rainbow Blossom had lost its leader and its visionary in the most critical time. I had only planned on staying for a few months to help out, but I quickly realized that leaving was not an option,” she said. Eight years later, the stores have recovered financially, and the family has opened two new locations. The total store count is currently at five, with four stores in Louisville and one in New Albany, IN.
Rob Auerbach has fully recovered and just celebrated the five-year anniversary of his “new immune system [from a stem cell transplant],” his daughter reported.
Pumpkin Auerbach helps run the family farm and supplies eggs sold at the store.
Sales & Competitors
Since the day it opened, Rainbow Blossom has been selling supplements, with Carlson and Thompson being the first lines carried, according to Auerbach. “Now the majority of our square footage is designated to grocery, but we have a significant supplement set at every location,” she said. “I do not like divulging numbers, but we have a high gross profit margin, which is a result of our high supplement sales.”
Some of the stores’ current top suppliers are Nordic Naturals and Nutraceutical, according to Tracy Babineaux, general manager. “The popularity of recent research regarding omega-3 EFA and its benefits correlates directly with its popularity amongst our customers and their physicians,” she said. “Nordic Naturals has been an excellent partner for Rainbow Blossom, providing us the opportunity to promote these products using sales and wonderful merchandising materials. The ever-expanding umbrella of Nutraceutical brands explains its position as one of our top suppliers. From Vaxa to Dowd & Rogers, they continue to accumulate excellent lines, and as they continue to increase their buying power, we are increasing ours with them.”
But competition still surrounds the stores. “Of course, Whole Foods swallowed up Wild Oats, which helped us lose a competitor, but we have gained Vitamin Shoppe, Trader Joes and soonto- be Earth Fare, Auerbach noted.
“The closest natural products competitors are numerous in our area and surround all of our locations,” agreed Babineaux. “With drug stores and mainstream grocers joining the bandwagon, you could say we are always within a stones throw of a competitor.”
Standing out in the crowd can be a struggle, but independence is a virtue for the operation, according to Supplement Buyer Bunny Hayes. “We are a much different store in that we cater more to customers’ needs as opposed to being a corporate ‘franchised’ store setting. Taking pride in our customer service is one of our strongest points. We are always willing to help customers with any questions or Needs—from agar agar flakes to zinc, we try to leave no question unanswered.We also offer a much friendlier environment for shoppers; many of us are on first-name basis.”
Community involvement serves an intentional role in the business plan.“When I moved back to town, my goal was to differentiate ourselves from our competition, and remind our customers how loyal and rooted in the community we are,” explained Auerbach. “We do this through an ongoing series of events integrating local practitioners into our office space, and through our community room. We host a weekly farmers’ market in front of our flagship store, and have an annual farmers’ market celebration with music, an iron chef competition and local celebrity judges.”
Every month, the store hosts a largescale event at one of its locations, which depending on the theme, involves local artists, non-profits or other local businesses.
In addition, when Auerbach returned to Louisville in 2004, she helped found the Louisville Independent Business Alliance, which promotes a “Buy Local First” campaign in Louisville. “I’ve been deeply involved since day one, and I’m proud to say that we now have nearly 500 business members, ranking us the third largest independent business alliance in the U.S.”
Customer Loyalty
According to Auerbach, what keeps customers coming back to the store is the individualized service, knowledgeable staff and vast selection of unique local items.
Consistency is one trait that consciously strengthens the store brand.“Upon entering our stores, a customer will right away know they have entered a Rainbow Blossom,” said Babineaux.“Our color themes are similar at all locations and the uniform is the same at each one. Each location is very clean and well lit, and our music selection is conducive to a positive shopping experience.And each of our locations has several customer service representatives who are knowledgeable in herbal remedies, nutrition and supplements.”
The stores’ loyal following often consists of generations of families, Babineaux added. “Gestures as simple as offering a child a balloon when they come in our stores will stay with them as they continue to shop with us as adults.Interacting with all shoppers is important to us. We strive to greet each customer upon entry and during his or her shopping experience, and to be available for conversation with them.”
The stores are very clean and professional looking, agreed Auerbach, and as they grow, the business environment has evolved. “Historically, we have been pretty laid back, but as we have grown, we are learning how to become a little bit more structured and systemized in terms of the way we operate. It seems to be working.”
As with many natural retailers across the country, one of Rainbow Blossom’s biggest challenges (and blessings) is medical-themed television talk shows, Babineaux noted. “Many of our new customers are coming in because of products they’ve seen on these shows.Often some of the products run counter to our principles in regard to ingredients.We treasure these new shoppers, but find it sometimes difficult to maintain our standards and instill trust in alternative recommendations,” she said.
Happy, Educated Staff
The more employees know about the merchandise on the floor, the more effective they’ll be in their jobs. Not only will they be better equipped to help customers, but they’ll also take new interest in their work. Hayes said the professional and educational backgrounds of the 90-member staff at Rainbow Blossom vary, with the turnover rate similar to any retail store.
“Our employees range in all ages and educational backgrounds—some high school, some college, some home school as well as the school of hard knocks (life in general),” she said.
“Across the board our stores’ atmospheres are quite friendly and engaging.We are one big happy family.”
And there are many training opportunities available to staff members. “We use many reference books, Aisle 7 computer systems and an employee lending library. In addition, we set up a lot of lunch and dinner trainings that bring all the stores together for learning opportunities as well as in-store trainings from various companies,” she said, adding that education is of high importance to customers. “In this day and age, a lot of customers have already ‘researched’ products and come to us for the reassurance that they did their homework.Other customers leave it up to us to educate them about what they want/or need to use.”
Environmental First
Rainbow Blossom established a number of Louisville firsts: the first to carry organics, the first to offer frozen self-serve yogurt and the first to have scanning checkouts. Recently, the store made a substantial investment, this time making a statewide first in eco-friendly retailing.
“We have always been committed to environmental sustainability, but the opening of our last store seemed like a great opportunity to go for LEED certification,” explained Auerbach. “We ended up achieving it, and became the first LEED-certified retailer in the state of Kentucky.”
LEED stands for Leadership in Energy and Environmental Design and was developed by the U.S. Green Building Council (USGBC) to establish a benchmark for design, construction and operation of high-performance green buildings.
Meeting those standards wasn’t easy, Auerbach admitted. “The LEED certification process is very complex. There is a checklist of tons of things that you either can do or must do in order to get the certification, and each item has a number of points associated with it.When all of your points add up to the amount required for the certification, you may apply. Until the USGBC formally accepts all of your points, you cannot call yourself a LEED certified building— only a candidate for LEED certification.”
Some of the items the store implemented as part of its certification are:
• A shower, to encourage employees to bike to work
• Zoned HVAC
• Lights on timers
• Energy efficient cooler and freezers
• Dual flush toilets [which give users a choice of flushes]
• Sorted recycling and composting
• Recycled rubber flooring
• Some recycled fixtures
• Bamboo cabinetry and countertops
• Installing bike racks and establish-Ing the store on a bus route
“In the end, it was gratifying to get the certification, but it also ended up being very costly due to all of the paperwork that is involved,” Auerbach said.
“Literally every person involved had to provide documentation and calculations showing both the percentage of recycled materials for say, cabinetry, in both a dollar figure and in actual volume.”
The certification also required hiring professionals Rainbow Blossom didn’t have to use for previous store openings, including electrical and structural engineers, and of course, a LEED architect, said Auerbach. “This ended up adding significantly to the total cost of the project.”
The store is involved in other environmental issues including participating in the I Love Mountains campaign that protests mountaintop removal mining, added Hayes. “We have recycling areas at our stores, local farms get our produce waste for compost and chicken feed, and we donate items to Kentucky Harvest [a volunteer network that helps feed the hungry].”
And she highlighted the stores’ commitment to community service through its volunteering at local business events, learning events, schools, musical events, pledge drives, as well as product donations for raffles, auctions, etc.
Promoting Health
In May, all eyes are on Churchill Downs, the home of the Kentucky Derby, but state residents have other more infamous attributes: a high prevalence of smoking, obesity and diabetes.
For Rainbow Blossom shoppers, “health issues vary from season to age group to environmental issues,” said Hayes. “Obesity is a major concern as well as longevity, sleeping problems and low immunity. We try to meet all health concerns with the ideas of education, tested product and follow-up with the customer’s next visit. We usually hear the customer say, ‘the last product you told me about worked so well, I thought I would come see if you have something for (insert next general ailment).’
“Customers are looking for friendly, dependable, helpful visits to our stores,” she added. “They like to be educated, informed and reassured that their decisions and health problems are being addressed, and that we are helping them achieve a healthier lifestyle.”
This year marks Rainbow Blossom’s 35th anniversary, and though her parents still own the store, the business has been unofficially succeeded.Auerbach said her father teased her, because recently while having dinner at a local restaurant he ran into someone he knew. “It was a customer who told my father, ‘I shop at your daughter’s store!’”
