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Weathering the storm

Independent health stores have had a tough time with the state of the economy and the shock collapse of ToL and THS. With this in mind, Denise Barrett interviewed five retailers, each with their own distinct identity, to see how they are faring – and whether a new, vibrant set of distributors are offering them a lifeline to the supply chain.

Kathy James-Castle owns Health Foods and Nutrition in Okehampton, West Devon. They provide vitamins and supplements, gluten-free foods, vegan products, aromatherapy, plant-based refills of cleaning liquids, CBD and ethical beauty.

Things have changed a lot since our opening in November last year and we've had to move along with market changes. We constantly discuss how we feel suppliers dovetail with our identity. It takes time and consideration, but it is a way for us to engage with customers and both gain an insight into their priorities and focus our approach.

We have 12 suppliers ranging from local independent producers to large distributors. We prefer dealing with individuals, for example Holistic6. We are reassured by the time and consideration given to the quality of the products and the experience of the customers. Ryan Allen, owner of Holistic6, personally visits farms in Genova to experience the product through the growing and production stages.

However larger suppliers are unavoidable in terms of accessing certain brands, and reducing time spent on orders. At the end of the day, we need to source stock that meets the needs of our customers. However, we are a retail outlet that cares about people and the planet, not just profit. So, we have made some tough choices that we hope other health food shops can relate to.

To be perfectly honest, we became increasingly unhappy with one of the wholesalers that stepped in a year ago – unsustainable packaging, management of employees, and a concerning increase in products that we simply do not wish to be associated with. It has taken a few months to transition, but we are now comfortably ordering from Suma and CLF. These companies share our health and environmental priorities. As a small town in Devon, we are happy that they provide us with the size and frequency of deliveries we need.

On a product level we are reducing our plastic use as a company through the platform of Plastic Free Communities, which brings together initiatives focused on reducing plastic waste. We pledge to have a Gold Standard and have shifted away from Ecover (whose 15-litre refills result in waste) to Bio D plant-based refills (who refill 20-litre barrels).

In relation to Dundeis and Goodness Foods [two new wholesalers], changes in the market are inevitable, and there are a range of lifestyles and income levels to cater for. We welcome ethically and environmentally aware companies finding new ways to navigate global and local needs. If the overall market of health foods is going to be attractive and accessible to a wider range of consumers, it needs to listen to customers and find new solutions.

Customers often say, "We could go online but we want to shop local," which we really appreciate. It has to be more than a simple transaction to make it beneficial for customers to consistently make that choice. We want to be a hub for self-care offering more than a retailer-consumer relationship.

With direct suppliers, we find it time consuming to continually source small suppliers, so we limit this. We find that Thyme Store has given us access to smaller producers.

Of course, we face challenges. Making enough profit to keep up with increasing overheads is a big challenge! We don't want to increase prices above RSP, so instead we use our sales data to focus our orders on products that we know will meet customer needs to maintain turnover. We monitor stock so that if anything lingers on the shelves we can discount them and increase revenue.

Engaging in local agendas by using our central position to advertise (such as displaying posters and being a drop-off point for a clothes-swapping event locally) increases customers' knowledge and trust of our shop.

Fortunately, we had had no connection to ToL or THS. We've noticed problems in accessing some products, mainly in brans and grains. Maintaining transparency with customers is important, and keeping our website stocklists up to date allows us to manage any disappointed customers.

We take the view that if products, such as vegan frozen goods, become available in supermarkets it reduces our need for a costly freezer! We can focus on companies such as KUTIS and Scence who are innovating to produce plastic-free beauty products and keeping specialities such as manuka honey.

We are also expanding our supplement range to include companies that promote high standards such as Dr Vegan.

Josine Atsma, has owned Stirling Health Food Store since April 2011 and has been working in the shop since 2007. She has certificates from A.Vogel, Natures Aid and a Health Food Institute Diploma. She's currently studying for a degree in Natural Sciences with the Open University.

There are definitely some issues with supply lines: certain products are unavailable for months before they suddenly come back again (Cotswold teas and Meridian tamari sauce spring to mind). Just like it's always been, small brands start in health food shops before they move to supermarkets and Amazon where they are sold for less than the RRP. Sometimes even for less than the cost price we pay!

The cost of living is noticeable, and I try to stock cheaper Christmas gifts for example. I also try to give people a choice between a more expensive better-quality product like Viridian and a cheaper alternative.

Brexit is not helping supply lines. I spoke to a customer who is a lorry driver who told me that shipments from Europe are held up at ports and that he often went to a port to pick up a container, but it was not being released. I feel there are some problems with workers being off sick multiple times too, which affects deliveries (and possibly supply lines).

CLF is our main wholesaler and I feel they are trying to fill the gap left by TOL and THS and they are very good at listening to us.

I'm probably going direct to suppliers more, although we've always got supplements directly from the supplier, but I'm sourcing more from other suppliers too as they give me larger profit margin.

We have challenges, big time. There are major roadworks in Stirling which closed the road (including pavement!) for two months in front of our shop, so I basically lost half of my footfall. Other than that, I am trying to continue trading the way I did in 2019 with a new member of staff, Christmas hamper prize draw and elaborate Christmas decorations in the window.

An absolute game-changer, Susie Falco's streamlined REco Store, in Tiptree, Essex, champions refills and package-free shopping.

We buy locally wherever possible and are always working with suppliers to improve their packaging or to initiate closed-loop supply systems. We have an ongoing problem competing with supermarkets both in person and online. We are a refill shop, so the main point of difference is that we offer 'package free' shopping. However, in the current climate customers are also mindful of price. While we can often beat Sainsbury's on price, we are also supporting many other small businesses and many of our products are produced far more ethically than those found in the supermarket.

Our aim is to open the public's eyes to the fact that fair trade is not just about those products branded with the Fairtrade logo, it's about smaller businesses who are trying to be ethical and produce products that are genuine, good for us, good for the planet and have far more in mind than just profit.

A disadvantage is that post-Covid, it seems people in general have become a little lazy – it's far easier to just get everything from one store and not have to think about the supply chain or the consequences for the planet from the products purchased. Regarding the supply chain, we have very few problems getting stock. Being a small business, we are much more dynamic and flexible in our approach to buying so we are rarely caught out.

The cost of living affects our ability to entice new customers. There is a perception that a small independent retail business like ours will be vastly more expensive than larger shops or supermarkets. This is a misconception but one that is hard to communicate to the masses.

One advantage that we do have is that we sell all our loose food and liquids by the gram, so customers are able to buy the exact amount they need rather than predetermined pack sizes, meaning that either there is no waste, or that they can try a small amount of an item first, or they can shop specifically to their budget.

We regularly buy from Suma and Infinity and have found that over the last four years their range of stock keeps getting better and better. While we do not sell vitamins and supplements, we do sell wholefoods and other health-promoting natural foods and have found that both Suma and Infinity have an excellent selection. Infinity in particular have managed to be the most competitive on price for many of the products we purchase. As for going direct to suppliers, this has been an interesting evolution over the last four years. Many of the products we stock are from small businesses, so we buy direct from them. However, Suma have slowly been adding some of these products to their list. For us this is sometimes a more convenient way to purchase, particularly with relatively large minimum order quantities.

On the flip side, we need to be continually searching for new and innovative products and ones that give us a point of difference over our competitors, so sometimes if it is available from Suma then it's already too mainstream for us. It's definitely a balancing act!

Our biggest challenge is promoting our business to the local area and getting new customers through the door. Word of mouth has been the best form of advertising for us, so we just keep going, bringing in new products and coming up with new ways to connect with people on social media.

For us, it is trying to bring about a mindset change in people – asking them to be more mindful of their purchases and to try to see through the 'greenwashing'. Not enough media coverage is given to the fact that many of the household cleaning products from the big producers are actually harmful to our health. The toxic build-up in our systems from all the environmental toxins is alarming but there are alternatives, and ones that are even cheaper.

After more than four years in business and having survived the challenges that the pandemic gave us, we will keep striving forward, educating and inspiring as much as we can.

Grampian Health Store in Market Street, Aberdeen, is owned and run by Callum Eddie

In the last 12 months there appears to be a number of new distribution players on the block and whether there is room for them all I do not know. We predominantly use CLF as our primary wholesaler, using their partner Emporio RMH EPOS System which provides real time stock availability when an order is submitted. Green City (Glasgow) and Suma Wholefoods (Leeds) are cooperatives we use to supplement our wholesaler purchases.

All three have worked hard at trying to maintain supply levels and increase product listings following the demise of THS and ToL. Initially there were problems but, in most areas, this has now been resolved.

I have had an introduction to Hunts/Queenswood and now that they have consolidated their ordering process and picking from one depot they may be an attractive option.

We have always tended to purchase our ambient/chilled/frozen food products via a wholesaler in order to to maximise our spend and achieve at an agreeable discount value. Our primary brands for herbals/supplements and bodycare are purchased direct from suppliers with the overspill products again purchased via the wholesalers.

Our main challenges are overheads, as in utilities and wages. These appear to be ever increasing and are a challenge for all businesses regardless of their size. We monitor our costs very closely and where possible are making savings and efficiencies.

The increase in prices of products over the past 12 months has been difficult to manage and unfortunately we have needed to pass this on to the customer to maintain an acceptable margin. We do have a loyalty scheme which benefits our regular customers and has proven popular.

We have experienced alarming out-of-stock levels from suppliers in recent months, both wholesale and supplement/body care brands. Retail is very challenging in the present climate and higher than average out-of-stock items only adds to the difficulties.

Online and supermarkets have always been a challenge to compete against, but we do sell online (not discounted) and we are achieving an ever-growing sales volume via good service and communication, and as our site is 'live' stock, the customer knows there will be no delay in processing and dispatching.

The demise of THS was very disappointing as we had a close affinity with them. They were in fact our primary wholesaler. Sadly, having served on the THS Management Committee for several years when it was still a cooperative, and afterwards as a non-exec director when it became a limited company, I had an insight to the problems it faced in a very challenging market.

With more competitors entering the market it became ever more challenging and its once-loyal retailer core customer base began to spread their buying around more. Nothing remains the same forever. When the sale was agreed to Health Made Easy, the shareholders did receive a return on their shareholding which was a positive.

Pauls Natural Foods is owned by Paul Nugent and is based in Elsecar, Barnsley, with a holistic and ethical approach specialising in food intolerance, organic, free-from and vegan foods.

The supply chain is still working but is much more volatile and unpredictable. Many products that I would expect to be 'more or less' available all the time are often out of stock, so nothing can be taken for granted. Since wholefoods are a decent part of my product mix, I'm finding I have to search different and even new wholesalers to find less popular stock, and sometimes everyday essential wholefoods have to be chased around for.

However, I have several good wholesalers I work with and overall, we seem to be doing reasonably well with availability. It appears that supermarkets are experiencing similar problems as you often see less full shelves and less choice, which implies missing ingredients could be affecting big brand production.

I feel my suppliers are trying hard to support me with offers and exclusive deals. I keep my eyes peeled for them, and generally support them. I have discounting and deals in my shop, which I feel is not only a 'nice touch' but now it's a retailing necessity.

I didn't trade with the brands that ceased trading, as I thought their websites were very poor. I think this is really important to small independents like ours as online real-time ordering is much more time efficient than phoning orders through. For that reason, I've committed to CLF Distribution, Suma, and Lembas (all workers co-operatives) for most of my natural foods.

People are clearly feeling the pinch (who isn't?) So, I've ramped up our customer service levels in every aspect, from face-to-face engagement to contact with all online sales and social media enquiries. I pepper the shop with offers all the time, so there are always deals and reductions happening. This keeps the shop interesting and sends messages out to customers that I understand money is tight, and I'm trying to help with prices.

I've invested in a member of staff to focus on social media, and although this is an added cost, it's starting to really pay dividends. Despite being a small retailer, we are getting noticed on Instagram and social media much more as we're constantly propelling posts and videos (these have worked really well recently with CLF on a series of baking recipes from their vegan book) and are finding new followers who then feed into our website. I'm also about to launch a 'wholefoods delivery service' in my immediate area, where customers can access pre-bagged and weighed-out wholefoods to order. All in all, I'm trying to broaden my offer despite working from a relatively small retail shop.

I think Suma, Infinity and Essential have recognised stronger competition, as they have made changes to their websites and customer services contact with me has been higher and more responsive.

Going direct to suppliers is something I'm certainly looking at. I tend to look at any new products that come available and research the company behind it. If it's receptive to working direct then I follow it up, especially if they are a smaller business like me. However, I'm always conscious of maintaining strong working relationships with my natural food wholesalers and I don't want to dilute my orders too much at the expense of denting the relationship we have.

As for challenges, there are two key aspects. If prices fluctuate and appear to be constantly rising, then customers are wary of visiting small shops. Customers want stable prices. Secondly, having really good staff is massive. I can't stress this enough. Sales are holding up really well for me due to my helpers being obliging and courteous, and people respect and respond to that.

I have lovely loyal customers, so my shop does well. I find that I constantly need to spend time and money improving my website as I'm trying to address the movement towards shopping online. This is an expensive but essential challenge.

I'm excited about launching a home delivery service early in the new year. I'm always looking for a chance to present goods outside my shop on tables, the old-fashioned way. People enjoy this. And I sometimes will attend local events and do a pop-up stall, which is fun and gets my name out there. All in all, my approach is to consider and push all the options of how I can sell and see what happens!

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