Retailer roundtable part II: Vendor relations
By Vibha Shukla
At the 2024 CHFA NOW, held in Vancouver, retailers were encouraged to participate and share their experiences in an idea exchange during a retailer roundtable.
Attending retailers were split into five groups and each group was asked a question about a pressing issue impacting the natural health retail industry—rent inflation, vendor relations, supply chain, consumer education, and ethical practices and sustainability practices.
In the July-August 2024 issue of CNHR, we presented highlights from the retailer roundtable and discussed the topic of “rentflation” in detail. In this part II of the retailer roundtable series, we will share community insights on vendor relations.
Evolving relationships
Vendor relations have always involved cultivating partnerships and business alternatives that benefit the retailer and supplier alike. With inflation affecting all areas of business, building vendor relationships and smooth supply chain operations is more important than ever.
As the industry continues to undergo changes, it requires retailers to adapt or pivot. This often involves retailers overhauling their process and transitioning their workflow in order to thrive.
“For us, as an independent retailer, we feel that overall vendor support has been on a decline over the past few years. This decline seems to correlate with the consolidation of manufacturers and retailers, and the shift of the natural health market share turning to favor mass market and e-commerce,” explains Dennis Schroeder, the founder of Good N’ Natural.
Ryan Oliver, co-owner of Oliver Health Food, echoes Dennis’ sentiment, “we have been frustrated with some of our vendors rolling back some of their support. We have seen worsening payment terms, less co-op dollars available, worse shipping terms, and relegation to inside sales reps instead of having reps come to visit and help us from some vendors.”
The impact of this decline in sales representative visits cannot be overstated. “The reps who do come to visit or do inventory bring a lot of value. They bring a personal touch and share industry information with you. That’s something you just don’t get over the phone,” explains Larry Ridge, Le Panier Vert.
Navigating through the changes
The change to in-store visits is likely an impact of the pandemic, as tradeshows were cancelled and on-site store visits had to transition to virtual meetings or phone calls. Another alarming trend is that manufacturers, both large and small, are increasingly selling their products directly on their own e-commerce platforms.
“The number of manufacturer reps that were tasked with creating relationships with health food stores and assisting us in advancing the natural health industry—and their brand’s market share—have diminished significantly,” explains Dennis.
Dennis clarifies that while this trend is on the rise, many manufacturers—often small scale—are still exclusive to health food stores, while others try to support both health food stores as well as mass market.
“There are some manufacturers that have continued to support and recognize the value of health food stores, although often doing so differently, which is understandable as the marketplace is constantly changing,” says Dennis.
Troubled communication
Brick-and-mortar natural health food retailers have noticed a downward trend in vendor support when compared to online or mass retailers. Natural health food retailers would like to see manufacturers bring back some of the earlier initiatives like early access to new products and flavours before they are introduced in the mass market.
Natural health food stores are often cornerstones of a thriving community in their region and, as a result, help small vendors build a loyal customer base. However, there is a noticeable disconnect between manufacturers and retailers.
For many retailers, engaging with company owners to address important concerns has been difficult. Feedback may not reach key decision makers, which may result in ineffective decisions being made without understanding the long-term impact.
“One vendor offered a loyalty card to our customers—buy 10 items, get the eleventh free. It was a great program for us, a wise use of co-op dollars. But it was cut and discontinued, as someone decided they could make better use of the co-op money. They didn’t even ask our opinion. Another supplier picked the program up and it is back to working well for us,” explains Larry.
Changing landscape
These reductions in vendor support have come with other, less obvious declines. For example, manufacturers have pulled back marketing support in recent years, ostensibly to offset potential price increases because of inflation.
A more likely explanation is that, as consumers have embraced e-commerce and digital marketing platforms, some vendor initiatives have been rendered inefficient, with a poor return on investment (ROI).
And this isn’t a one-way reduction. Vendors have also been cutting budgets and initiatives wherever there is not a measurable ROI, whether that return is measured in terms of short-term or overall sales on advertised products.
Successful vendor initiatives
It’s not all doom and gloom, though. Dennis points out that some vendors have successfully increased the manufacturer coupons that are made available to his stores, which has, in turn, allowed them to discount those products and ensure that the discounts are passed onto the consumers.
Such initiatives not only ensure ROI for manufacturers but also help retailers protect their margins—a win for both parties as well as the consumers. “Co-op advertising, although under overall downward pressure, is still an important vendor initiative for us. Some are increasing their spend and some are decreasing,” says Dennis.
“We try to use our co-op advertising dollars and look carefully at monthly and CHFA specials. Any perks like freebies with purchase are always awesome, and in-store demos are working well for us,” agrees Ryan.
Additionally, retailers have found educational material like catalogues, brochures, and newsletters beneficial. Product education and staff training offered by manufacturers has largely remained unchanged. The only difference is that now it is conducted online—a positive, cost-effective change for both parties.
Stephanie Skalic, senior merchandising manager at Nature’s Treasure, points out that “staff training and webinars ensure that our in-store nutritionists have the most up-to-date education and information on existing and new supplement products.”
Bridging the gap
Natural health retailers are embracing digital marketing and see the potential in training their staff for e-commerce and online campaigns. Dennis suggests manufacturers also update their advertising campaigns to increase their reach.
“Re-evaluate and update the process of using paper flyers. A strategic flyer with good graphics and pricing still works, but it could become even more effective if it was simultaneously supported with a strategic digital campaign in key geographic areas.”
According to Melinda Assaf, co-owner of Kardish Health Food Centre, their store has always benefitted from in-person and online staff trainings, webinars for consumers, seasonal or promotional discounts, and easy return policies for unsold or expired natural products.
She expects more vendors to provide these advantages to natural health food stores. Some of her other suggestions for vendors include special exclusive discounts or bundle deals based on local demand for in-store customers to encourage more walk-in traffic.
Connecting community
While the natural health products industry has undergone significant changes recently, local health food stores still have a unique role to play in connecting communities and customers to vendors’ brands.
“Natural health food store product advisors and e-commerce managers do more than explain a product; they transfer feelings of quality about manufacturing, confidence in the unique formulations, as well as trust in the manufacturer’s brand to our customers and the broader community,” explains Dennis.
Often when specific brands are marketed in health food stores, the consumer’s trust of that brand is elevated. “A well-run, growth-oriented health food store with a good reputation in its community is the best long-term influencer that a vendor’s money can buy,” says Dennis.
Vendors need to recognize the long-term and substantial benefits of earning consumer loyalty through established natural health food stores that are at the heart of these communities.
Dennis acknowledges that some manufacturers “do invest a lot in us and go to great lengths and expense to ensure that we understand their unique value proposition and commitment to the industry and health food store retailers.”
Since natural health food retailers bridge the gap between the manufacturers’ brands, the customers, and the community, “we would like to see vendors taking a fresh look at how we can work more collaboratively within our new environment,” concludes Dennis.