Panelists:

Ramona Billingslea, Marketing Manager, Betsy’s Health Foods, Houston, TX, www.betsyhealth.com

Bill Giebler, Content and Insights Director, New Hope, Boulder, CO, www.newhope.com

Karen Howard, CEO and Executive Director, Organic and Natural Health Association, Washington, DC, www.organicandnatural.org

Edward Jones, Founder, Nutrition World, Chattanooga, TN, www.nutritionw.com

Dan Lifton, CEO, Quality of Life Labs, Purchase, NY, www.qualityoflife.net

Steve Mister, President and CEO, Council for Responsible Nutrition (CRN), Washington, DC, www.crnusa.org

Len Monheit, CEO, Trust Transparency Center, Spring, TX, www.trusttransparency.com

Dan Richard, Vice President of Global Sales and Marketing, NOW, Bloomingdale, IL, www.nowfoods.com

Marge Roman, Manager, Stay Healthy!, Las Vegas, NV, www.stayhealthylasvegas.com

Debra Short, Executive Director, SENPA Natural Industry Alliance, New Port Richey, FL, www.senpa.org

Globally, the coronavirus (COVID-19) has killed more than 2.13 million and sickened more than 99 million people over the last year. In the U.S. the first COVID-19-related stay-at-home order went into effect on March 19, 2020.

While several major grocery chains filed for bankruptcy—with their woes either exacerbated or caused by the pandemic—dietary supplement sales in the natural channel appear to be strong, with the natural products retail business turning out to be more resilient than some had predicted.

We turn to a panel of experts to discuss the following, and more: How has the pandemic affected the industry? Have supply chain problems improved? How have virtual events worked out? How is the natural industry meeting the demands of consumers mid-pandemic? What other challenges and opportunities have emerged?

VR: During the pandemic, what kinds of questions have you gotten from customers about what supplements to take, and how have you dealt with these questions?

Billingslea: Initially, people came in very concerned asking us what they could do. At that point, we helped them with general immune support. Now, almost a year later, people are asking for specific things they’ve read, seen or heard about. Most of the time, they are asking for one or more of the following: vitamin C, vitamin D, zinc or quercetin. In this case, besides checking for possible contraindications, we discuss other safety issues, like too much vitamin C causing loose stool and too much zinc actually lowering immune function. We also always try to discuss a whole-health approach because our goal is to help people lead their healthiest lives.

Roman: We always get the “What can I take to prevent COVID?” question. Many customers come in with lists from doctors or the internet. We tell our customers about immune system basics.

VR: Did your business come back the way you hoped after the lockdown?

Roman: Our business was only closed one day, and business has remained steady.

Billingslea: We actually stayed open during the lockdown. Ironically, once things loosened up a bit, our business slowed down some.

VR: The pandemic has led to the closure of retail grocery chains, yet some natural chains posted overall growth for 2019. Was this hit or miss, or did the ones who succeed simply adapt better?

Jones: I must admit the natural foods and nutrition industry was fortunate that the public focused more on us because of the philosophy of health and immune building that the industry is built on. However, the natural foods stores that “sharpened their swords” during the most intense months of chaos fared even better.

What I’m speaking of is meeting the consumer where they desire to be met. These are the businesses that created a safe and hygienic shopping area for their customers, coached staff to present confident attitudes and implemented signs on doors with common-sense rules for safe shopping without the harshness of words that many businesses felt obligated to post. This showed a deep appreciation for each customer who was brave enough to venture into our business.

Every day I reminded myself that my business is here to serve the customer, and not the other way around.

Short: In most states, grocery and health food stores were deemed “essential,” and stores that were quick to fall in line with federal, state and local governments’ guidelines stayed compliant and, therefore, created safer shopping experiences for their customers. In some cases, smaller chains and many independent stores were far more nimble to quickly comply with recommendations.

This also created opportunities for many stores to increase customer service with optional strategies they may have never used in the past, such as delivery, curbside pick-up, online shopping, etc., creating solutions for consumers that were immune compromised who didn’t want to venture out of their homes or cars.

Not only did most stores adapt, the demand for their products increased. People cooked most meals at home. People have been more aware of the nutritional supplements to boost immunity. Both of those factors gave retailers in this sector a boost during these challenging times.

Richard: Many consumers responded to the threat of COVID-19 by trying to support their health with supplements and natural products, so for stores that have been able to navigate the operational challenges brought by the pandemic, business has been strong.

Monheit: It’s really a mixture of both. Supplement sales across the board have been boosted this past year, benefiting from an overall health halo atop the popularity of immune supplements and vitamin D. Core consumers have doubled down on healthy options, and being declared essential helped those that had plans in place for curbside and effective online programs. This was a time where having lots of tools for consumers gave a huge advantage to some. VR: Speaking of adaptation, some natural retailers and grocers experienced dramatic upticks in online ordering. Was this just a replacement of in-person sales or something more?

Richard: Online sales seem to be replacing in-store shopping rather than adding to the pie. This is a big challenge for retail because shoppers who pick up orders at curbside do not buy impulse items or anything being sampled as they do in normal times. Natural Grocers, for example, started making customer deliveries via Instacart to help topline sales, but this has to take away from in-store customer visits. In comparison, Walmart reported Q3 2020 e-commerce sales up 79 percent while same-store sales were up only 6.4 percent.

Natural retail stores have an advantage over many stores because food and nutrition stores are considered “essential” and can stay open even when other stores must close. Also, COVID-19 has driven many people to take immune-supporting supplements, so it seems that total supplement consumption is up.

SPINS total supplement brand sales in 2020 show only 3 percent growth in large chain stores though, with the highest growth coming from private retail brands. So, online sales and Amazon, especially, are getting the lion’s share of supplement growth.

Jones: I did find that some online traffic was replacing my regular walk-in customers. However, we increased our customer count far more than anything we were doing before. This showed me that we recruited many new customers.

This was our time to shine, so I told my staff to be sure to impress our new customers while reminding our old customers how we can continue to meet their needs and make them feel welcome.

Monheit: We believe part of this was channel replacement, and part more. True, older demographics upped their online adoption, meaning they joined younger demographics in this practice. Compliance was also higher, meaning that all consumers paid more attention to their regimens and online became a convenient, practical, sometimes automatic way to ensure that supplements, always important but for many not top of mind, took on an increasing importance in many households. Online sales are not going away, so natural retailers and grocers will need to continue to evolve in this area.

Billingslea: I think it was a little bit of both. We have more new customers now in-store and online. All of our customers, new and recurring, have increased their online ordering. We certainly hope it is something more, but that it is loyalty to our online store and not online shopping in general.

VR: Many national and regional natural products industry trade shows have postponed and cancelled in-person events. How are these working?

Jones: I’m 63 years old. Despite loving technology, I was resistant to all the interaction portals. However, now that I’ve been forced into them, I’ve grown to like them. This is one of the silver linings to the COVID-19 pandemic.

Lifton: Trade show organizers are doing the best they can under difficult circumstances. Fortunately, however, I do believe that there is a light at the end of the tunnel, as in-person events are returning this year. While online shows have been rolled out in the meantime, I think that there is no substitute for the value of in-person conventions, including all of the intangibles that cannot be achieved with online-only events.

Richard: NOW has participated in some virtual shows, but in general these have been less effective than in-person experiences. But something is better than nothing, so at least everyone understands the challenges, and are open to at least trying out the various solutions being offered. People will be eager to get back to face-to-face trade shows when we get to the point where it’s safe to gather in numbers.

Short: We were forced to cancel SOHO Healthfest and our scheduled SOHO Road Show events due to government COVID-19 restrictions early during the pandemic. Many trade shows made the shift to virtual options. While these offered a safer way to connect, for the most part the feedback we’ve heard from retailers has been underwhelming. Retailers in this industry are so accustomed to face-to-face contact that virtual, though nice to connect, didn’t offer the same “feel-good” nature of networking in person.

SENPA was able to safely host SOHO Expo this past December in Orlando, celebrating its 50th anniversary. SENPA, The Gaylord Palms and The Expo Group combined efforts and worked diligently to ensure all government recommendations and restrictions were complied with to safely produce the only trade industry in-person event with very positive feedback from our attendees.

Howard: Organic & Natural hit the ground running with producing our own virtual events, including, “The Nourish Mint,” an online pitch session for retailers to hear from brand and raw ingredient companies about what’s new.

Also, as soon as COVID lockdowns began, in March 2020, we launched a weekly cocktail networking event called, “Thirsty Thursday,” to replicate those casual and innovative conversations that typically happen at conferences around hotel bars, allowing for weekly conversations on hot topics in the industry and valuable networking.

Virtual will never take the place of being face to face, yet the creative nature of these offerings themselves inspired great work and fascinated meaningful collaborations.

VR: Regarding shows, will “online plus in-person” be the new normal?

Short: We surveyed our members about their virtual show experience and found, overwhelmingly, networking with your peers in-person was the most productive and popular means of doing business at a trade show event. There may be more virtual components included at in-person events such as virtual pitch meetings with brands that feel more comfortable participating remotely but still want to get in front of the retailers at shows.

Mister: In addition to CRN’s Annual Conference, we immediately shifted our communications and webinar programs at the start of the pandemic to increase virtual points of engagement with members. CRN did this by adding new communications outreach in response to the crisis, creating a crisis resource microsite, incorporating more video communications and increasing our educational webinar series.

While we’ve received positive feedback from members on our virtual initiatives, CRN recognizes that in-person events are critical and virtual platforms are no substitutes for the face-to-face interaction attendees get through in-person education and networking opportunities. We are looking forward to hosting our in-person conference in October 2021 and are considering a hybrid platform that will allow attendees to view some aspects of the Conference online.

Monheit: Our own experience suggests that the interaction is really lacking. So the replacement networking events, considering how engaged our industry is—well, they have not solved that need set quite yet. And it’s so difficult to replace the tradeshow sampling environment or even in store for that matter. That where we’ve got a gap.

On the portals for education, I think that’s working much better. We’re involved in our Naturally Informed virtual conference series, which has been well-received. I think the future will certainly need to move back to some in-person when we can, but I think those events will be smaller, more intimate and we will continue to see virtual conferences and educational environments persist – it’s cost effective, we’ve adjusted to it and the platforms are good. Where in-person is still needed is for the things that truly need engagement, like networking.

VR: Has the temporary need for online-only shows forced the industry to recognize a reduced need for in-person networking, or is something else at play?

Monheit: We need the intimacy and personal touch in this industry if only for effective sampling of new products, but in reality for more. I see our tradeshows returning, but not to the levels of the past. Budgets for those shows will take a long time to come back, and one will need to have a solid online plan moving forward, especially for the educational component. Networking and meeting new folks will need the whiteboard environment of the face-to-face conference or tradeshow. The online tools in that area just don’t cut it or rather fall short of what we really need and expect.

Richard: Maybe for 2021, and even 2022, online events will be common, but hopefully not long-term. We’ve already received word that a trade show we were scheduled to be at in October will be virtual. People are social and we enjoy in-person meetings.

It’s said that non-verbal communication is done much more than verbal—in person—so physical meetings seem to be needed long-term. For our international business, Zoom and Webex have become very useful and will likely save us some business travel in the long-term.

VR: Personalized nutrition offerings and partnerships have been expanding. Briefly what are your thoughts about, and predictions for, this macro trend?

Lifton: Personalized nutrition is intriguing, however it is important to keep in mind that nutrition has always been personal, regardless of what our genetic dispositions tell us. Our bodies need different nutrition at different times, at different stages of our life and for different reasons.

Consumers are much more knowledgeable and intuitive about their health needs than they are often given credit for. Generally, they have a good idea what they need. It’s up to credible companies and retailers to provide those high-quality supplements with ingredients that are backed with human clinical studies.

Giebler: We placed supplement sales through personalized nutrition models—including those from online surveys, which accounts for 90-percent of the sales—at just over half a billion for 2020 and are estimating a doubling this year and next. This becomes very significant as the category approaches 10 percent of the supplement market in the next few years. Still, there are significant logistical barriers that have held it at bay for several years and may keep it from grabbing a greater piece of the pie any time soon.

Mister: The personalization trend has been growing prior to the pandemic and is likely to gain popularity in the future as consumers continue to seek products and services that best serve the unique needs of the individual. One of the likely reasons we’re seeing personalization trends growing is that consumers today have access to more services, diagnostics and programs to help identify their individual needs.

For instance, blood tests to determine nutrient deficiencies are more common, phone and watch applications track fitness habits and automatically set personalized goals, and food delivery services provide individualized meal options to accommodate consumers with various dietary restrictions or preferences. CRN is seeing similar personalization options in the dietary supplement industry.

Some companies are creating innovative methods to identify nutrient needs of consumers through online quizzes that provide suggested products for each customer, while others offer virtual access to RDs and dietitians to help make personalized product recommendations. Additionally, companies are expanding delivery form options to help provide the public with more choices when it comes to how they prefer to take dietary supplements.

Billingslea: As a small, independent retail store, we certainly hope people don’t start just taking quizzes online to choose supplements. Also, with decades of experience helping customers, we know it is almost impossible to design a questionnaire that covers everything you might need to know in order to properly discover the supplement program an individual needs.

At best, these “personalized” programs will offer cookie-cutter nutrition that is better than nothing but certainly not as helpful as one-on-one advice can be.

For those programs using bloodwork to offer supplements, I see cost as a barrier. Also, as a retailer, it’s just another thing we have to compete against. All we can do is concentrate on our brand and on providing a wonderful shopping experience customers want to return to.

VR: Regarding personalized nutrition, let’s talk about socio-economic barriers. What are your thoughts about the access gap that the emergence of elite product offerings such as these represent?

Billingslea: I will be glad to have customers who need my help if the personalized nutrition is priced outside of other people’s pocketbooks.

As far as an access gap goes, I suppose that is the nature of a capitalistic system. It promotes innovation sometimes at the cost of access gaps.

Giebler: There’s no denying that personalization is nutrition at its privileged zenith. Nor is it the low-hanging fruit of access to nutrition. Test prices will come down over time, but access for all—or even most—socioeconomic strata is nowhere in view.

Monheit: Frankly, that’s always been the case with premium supplement brands—there is an elasticity that’s expected among a core passionate consumer base.

There’s still more room to go for affordability and access, the platforms, tests and logistics implications are certainly a barrier, and while it will diminish over time, it will always be there to a point.

We envision, in certain stores, a full service ‘microbiome center’ eventually, which will bring access closer and reduce price, and at the same time, truly serve health-oriented consumers. We’re a ways from that though. Howard: This is not a modern solution for the populations who stand to benefit the most from effective nutrient supplementation such as: Minority populations, frontline workers and individuals with underlying health conditions.

Giving back needs to be institutionalized in our industry, otherwise, we’ll never see institutional change in our public health system.

VR: Dietary supplement use was reported to greatly increase in 2020, despite persistent out-of-stock issues with distributors and manufacturers. Where are we now?

Richard: NOW continues to see very, very high demand for many products, and not just supplements either. Our food category had our biggest supply challenges in 2020 due to very high demand with more people cooking at home.

We would not have guessed that items such as maple syrup, pastas, dry milk powders and basic nuts would increase so much in demand. It really was overwhelming, and we are still struggling with inventory challenges today. NOW also felt very high demand for do-it-yourself personal care ingredients, such as almond oil, vegetable glycerin and jojoba oil.

We are also struggling to guesstimate demand in 2021 and beyond because the overall higher demands have remained constant. Back in the spring we did not think high demand would continue even through summer of 2020, but it has and then some.

Billingslea: During the election and holidays, use slowed. Since the New Year, our sales have come back up some. Yes, immune support sales are strong, but people realize overall health is important, too. They also are experiencing more stress, which causes another host of issues, including sleep. So, many categories are seeing growth, not just immune products.

Giebler: We’re seeing supplement sales up across categories and conditions. Immunity of course, but also adjacent conditions like stress and sleeplessness, and there’s no sign of that letting up. Further, our consumer surveys suggest it’s here to stay, with few consumers dropping back down to pre-COVID levels.

Monheit: Immune support was certainly the first wave, and some of that has maintained, but there was a health halo across the industry that boosted several categories. This now includes mood, stress, sleep, leading into energy, adaptogens, cognitive assist and nootropics and more.

What we saw drop off was rates of new product development and innovation, which really took a back seat for the better part of two quarters before starting to revive near the end of the year. And of course, if you weren’t on shelf early in the year, then you weren’t going to make it later.

Also, if you were trying to get a new ingredient introduced, it won’t be a good time for a bit, until vendor qualification and product development teams got away from more critical issues and got back to speed, especially if they had had process or supply chain challenges.

Lifton: I think that almost every supplier, manufacturer and distributor has had to contend with significant supply chain disruptions and out-of-stock issues this past year. On the plus side, recently the market has started to become more stable and supplies have begun to be more reliable, however many manufacturers, including Quality of Life (QoL), are working to catch up. Consumers and retailers have generally been pretty patient with many of these challenges, and companies like QoL have been doing everything possible to try to keep customers happy.

VR: Recently, two bills were introduced in New York that aim to restrict “the sale of over-the-counter diet pills and dietary supplements for weight loss or muscle building.” What are your comments about bills such as these?

Howard: This kind of legislation and regulation pops up regularly, from Oregon to New York. Accidental or intentional, uniformed or driven by financial interests, it is imperative that local stakeholders including retailers, practitioners, suppliers and brands use their constituent collateral to educate and advocate. Creating uniform strategy and cross-boundary alliances can go a long way to ensuring access to safe, quality products.

Mister: CRN opposes New York Assembly Bill 431, New York Senate Bill 16 and other similar legislation seen across the states that would restrict access to two broad categories of dietary supplements and functional foods: sports nutrition and weight management products. As the legislation so broadly defines muscle building and weight loss products, CRN is concerned that beneficial dietary supplements, such as protein, amino acids and creatine, could be negatively impacted by this legislation.

Beyond restricting access to consumers, these bills would place unreasonable burdens on manufacturers and marketers of safe and regulated dietary supplements, cause lost revenue to in-state retail establishments, and drive purchases for these same items to online websites.

The legislation also does nothing to regulate online sales of supplements that fall under this broad definition, which does a disservice to consumers as many products associated with contamination issues identified by FDA (U.S. Food and Drug Administration) are often offered exclusively through internet sites from companies selling illegal products or ingredients.

Lifton: Our trade associations are right to shine a light on misguided efforts such as these, whether they’re happening in New York, Illinois, Massachusetts, Oregon or anywhere else. Attempts at overreach such as this always hurt consumers, decrease access, harm retailers and cause unwarranted confusion. They always have a great deal of unintended consequences, too, as they often target many more products in their overly broad “net” than was perhaps ever envisioned.

VR: What products have you been promoting or bundling together during the pandemic? Since the pandemic hit have you been offering special discounts or promotions?

Roman: We have been concentrating on immune products. We have done many extra promotions, including coupons, free product and larger discounts on immune products. We pass on all discounts we get from our vendors. We have done daily radio shows and do questions-and-answers on a regular basis. Other than COVID, stress and sleeplessness seem to be the most talked about.

Richard: NOW has done almost no promotions of immune-related products because we’re just working very hard trying to meet the demand. We have been able to secure enough raw materials, but NOW has been very challenged to convert bulk ingredients into finished ready-to-sell products. We have done zero bundling promotions for supplements.

We do sell some kits of essential oils, which we had before 2020, and those sell fairly well. NOW has added a new C-1000 + Zinc Glycinate in vegetarian caps, plus a Vitamin D-3 in 50,000 IU soft gels in our SuperNutrition brand in 2020. We have promoted a lot of our personal care items and essential oils because people are more focused on self-care and DIY recipes.

Lifton: We’ve released new products this year and have increased our bundle offerings. In addition, we’ve been promoting products that improve immune health other than AHCC, such as Advasorb Vitamin C and our ProbioPure Morinaga BB536 probiotic. And we also now offer pre-order on our products. We have continued to provide customers with discounts in spite of severe product shortages and some cost increases that we had to bear.

VR: Has COVID-19 given companies the chance to spotlight their own pandemic-conscious values and USPs? If so, how?

Richard: Definitely yes. One of NOW’s core values is how we treat our employees. NOW ranks safety as our highest priority and this is emphasized in many ways with every employee.

With COVID, we have made extensive changes in work-at-home policies, scheduling changes to avoid rush hour conflicts, worker separation, signage, aggressive safety rules and ongoing facility cleansings. Face masks have been required throughout our facilities and no out-of-state travel has been allowed.

We’ve made sure our employees know how much we appreciate them rising to meet the new challenges, including bonus pay and gifts.

For consumers, we know that COVID has had a financial impact on many households, and as a value brand we are proud that our quality products are still attainable and affordably priced when supplement demand is at an all-time high. VR: Briefly, what are your predictions for natural products retailing for the remainder of 2021, or what else would you like to add?

Monheit: First, the fundamentals: Meet your customers where they are. They are stressed, their lives have been turned upside down, and many things they took for granted have been exposed. This creates new connection opportunities and environments. Next, while consumers have moved online, with Amazon the biggest beneficiary, your solid digital plan and engagement strategy is critical.

And your role as a true gatekeeper has never been more important, so being proactive, transparent and demanding, and expecting more from the brands you choose, and telling that story is critical.

Finally, introducing new products will undergo a fundamental change. Part of this will be the reduction or even outright elimination of many sampling opportunities, another piece is the cadence.

While seasonality will always be important in some product categories, if we accept that it will be some time before tradeshows re-emerge, the role of the tradeshow in product rollout will be seriously diminished. Richard: Unfortunately, COVID-related issues will likely continue, and worldwide health will remain under threat throughout 2021.

So, for our industry and natural products retailing, that means continued high demand for immune products and continued change in the way people do things at home, instead of shopping in person. It seems likely that physical stores will continue with reduced customer counts, yet, hopefully, with higher rings at the register for each shopper.

We can only hope that the health of our nation and the world improves and some sense of normalcy returns sooner rather than later. The only question seems to be when. “Back to normal” is likely to be more in time for Expo East, rather than Expo West—if at all in 2021. VR

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