Supermarket Wellness Watch: A changing landscape for selling healthy products online
Given that online shopping and health and wellness are two of the biggest consumer trends, it made sense the two would become more intertwined. That happened big time in 2017 with the Amazon-Whole Foods merger.
As the year comes to a close, this segment of the market is in flux. Amazon is marketing Whole Foods products online. Consumers still have plenty of other online choices for organic, natural and better-for-you products. And the recent demise of one such pure-play e-commerce company raises questions about future prospects for others.
Where will this sector head in 2018? For that question I reached out to an expert on e-commerce, Bill Bishop, chief architect and co-founder of Barrington, Ill.-based consulting and retail advisory company Brick Meets Click.
“I believe that a year from now the market for healthy products will have expanded substantially online,” Bishop predicted. “People are aging and spending more on food and related products to maintain wellness. The healthcare system continues in turmoil. More of these sales will shift out of brick and mortar stores, except in cases where retailers improve service and solutions in stores.”
The big picture is that online grocery shopping overall currently represents about 4% of U.S. food and beverage sales, Bishop said. That number will likely rise to about 10% nationally in five years, he predicted. Some 25% of households are now regularly buying groceries online, a percentage that gradually increases each year.
The Amazon-Whole Foods combination is likely to accelerate this momentum overall, especially in the health-and-wellness products segment. However, Amazon has both positives and negatives working for it. On the plus side, “they have sets of consumer data and ratings, understand households, and can make suggestions to consumers,” Bishop said.
However, he added, working against Amazon is that “while they are extraordinarily good at focusing on individual items, they aren’t well constituted to sell solutions. They don’t really bundle products. They refer to, but don’t sell multi-product solutions. That’s where others have a chance, because health and wellness is so solution-oriented.”
Benefitting from this opening could be traditional brick and mortar retailers, many of which pursue omnichannel strategies. “I think the idea of doing more with personal selling and building solution bundles provides opportunity,” he said. “Brick and mortar retailers are able to do this more effectively than Amazon. But relatively few have invested in the staff capability to do this in stores.”
What about pure-play, online purveyors of health and wellness products? There is still a wide field of these operators, including those with category niches and others selling fuller shopping experiences.
The outlook for these types of companies is changing in the wake of the Amazon-Whole Foods combination. One of the signs is the recent shut-down of online grocer Door to Door Organics, a company that launched some 20 years ago when the Internet was just getting going. Door to Door said recently it would close due to “timing of recent events in our industry and the impact that had on our funding prospects.”
Bishop said that while the reasons for Door to Door’s demise may have been unique to that operator, the bar is now higher for many pure-play companies because investors are more scrutinizing.
“It’s harder today to bet against big tech,” he explained. “You’ve got to be fast, compelling in offer and demonstrate you add value now rather than in the future.”
As we move into 2018, we’ll get a better sense of how all this competition will play out, and whether online takes more share from brick-and-mortar (or the other way around). It’s all part of the quickly shifting food retail reality.
Physical stores to win out on Black Friday, Deloitte says
Seventy percent of consumers who plan to shop on Black Friday plan to do so in stores, while 47% plan to shop online, down from 55% who said they planned to shop online last year, according to a survey from Deloitte. Three-quarters of Americans plan to shop over the Thanksgiving holiday weekend, the survey found. People surveyed plan to spend an average of $427 between Thanksgiving and Cyber Monday, up from their intentions to spend $400 in last year’s survey.
The momentum in stores is expected to continue through the weekend, as 52% plan to shop in-store Saturday, compared with 24% online, a drop from 36% online in last year’s survey.
In other findings:
• Despite the showing in stores, shoppers expect to spend 52% of their holiday weekend budget online and 46% in physical stores.
• Nearly three-quarters (72%) of respondents plan to shop online on Cyber Monday.
• Early-morning Black Friday shoppers will outspend others, as those shopping between 1 a.m. and 5 a.m. plan to spend an average of $225. Those shopping at 6 a.m. expect to spend $147, followed by $161 between 7 a.m. and 9 a.m.
• Socializing is a primary motivator for spending time in retail stores, as 64% plan to shop in-store with family or friends over the weekend.
• Traditional department stores are the No.1 physical store destination for the weekend, with 51% of shoppers planning to visit them, followed by mass merchants at 39% and electronics/office supply/computer stores at 38%.
• Nearly four in 10 (37%) people surveyed say they haven’t started any of their holiday shopping yet.
• Clothing and accessories are the top item people plan to buy over the weekend, cited by 65% of respondents, followed by electronics (55%) and toys and hobby items (47%).
• Regardless of where people shop, many will rely on digital shopping tools for assistance. Thirty-eight percent expect to buy something online while in-store due to better pricing and/or price matching, and 36% say they’ll be influenced by deals from a mobile device while in-store over Thanksgiving weekend.
• Consumers also may not have much tolerance for website performance issues, as 46% said they’ll use another retailer rather than wait if an online site has technical problems.
“Consumers are gearing up to increase spending, and while online is expected to pull more of shoppers’ budgets, there is still a healthy outlook for traffic in the stores, particularly on Black Friday,” said Rod Sides, vice chairman, Deloitte LLP and U.S. retail, wholesale and distribution leader. “That’s a tremendous opportunity to elevate the customer experience and create a strong rapport to drive sales. It starts with the digital part of the shopping journey, delivering creative and personalized promotions and touch-points that create inspiration before the holiday weekend. That follows with an in-store experience that delights with displays, merchandise and seasonal atmosphere, along with services that make it easy for customers to find unique items and make quick transactions.”
SodaStream brings flavor essences, Fruit Drops to retailers
Fans of SodaSteam will be pleased to know that the company has announced in-store availability for its latest product launch, the premier flavor essences, Fruit Drops. This announcement comes after the line of unsweetened products sold out within two weeks of becoming available on the brand’s website.
Fruits Drops enhance ordinary tap water when made into sparkling water with a SodaStream machine, contain zero calories, all-natural flavor and no preservaties, according to the New Jersey-based company.
"SodaStream is on a mission to make water exciting for millions of consumers around the world," Matti Yahav, VP Global Marketing, SodaStream International Ltd., said. "Fruit Drops is our first product that invites consumers to enhance ordinary water as well as fizzy water simply by adding a twist of naturally flavored fruit essence. Fruit Drops offer great taste, great value and a great way for consumers to hydrate healthy."
The product is currently available in five flavors: Lemon, Lime, Raspberry, Orange and Mango. Packaged in individual 40 ml glass bottles, each contains 20L (80 servings) of sparkling water. SodaStream Fruit Drops can be purchased for the suggested retail price of $3.99 for 80 servings and can be found in major retailers including Target locations throughout the nation, with expansion to Bed Bath and Beyond locations in Nov.