We are in the midst of a shift in our food supply toward natural, clean and healthy products. The evolution is evident not only in the climbing dollar sales of natural and organic products, nearing $100 billion this year, but also in the growing number of mainstream retailers who are rising to meet the changing demands of their shoppers, according to SPINS, a U.S. market information and insights provider for the natural products industry.
SPINS Trendwatch says more conventional outlets in the U.S. have stocked their shelves with healthier offerings, expanded their produce departments, introduced higher-quality private label lines, and even cast a more discerning eye on harmful ingredients best left out of their product mix.

“As health and wellness products continue to expand beyond the natural retail realm and into the world of the mainstream, forward-focused conventional retailers play an integral role in our mission to see healthy brands succeed in the market at large and to make quality foods and a healthy lifestyle attainable to all,” SPINS Trendwatch says.

The next several years will be pivotal in terms of accelerated growth and widespread distribution of better-for-you products.

While some mainstream grocers were quick to introduce natural and organic lines to their shoppers, others have yet to hit their potential and are now scrambling to stock more healthy options.

As more conventional outlets realize the marketplace is evolving and health and wellness products move to mass, club, drug and even convenience, brands have the opportunity (though coupled with challenges!) to reach the mainstream shopper and establish themselves as consumers’ brand of choice across all channels.

In the U.S. the conventional multi-outlet channel includes 101,000 outlets spanning grocery, drug, mass, convenience, dollar, club and military and the major players such as TargetSafewayKrogerWalgreensWegman’s, and Walmart.
And conventional shoppers are embracing the healthier options available to them. For the 52 weeks to October 5, 2014, compared with the previous 12 months, Total Channel and Conventional Channel sales growth was flat or in decline at under 2% or under 0% respectively, while Natural and Organic have grown by double-digit growth in dollar volume year-on-year – Natural is stable at 10%, with stronger growth for organic (70%+ organic) at 14%+.
Data Source: SPINSscan Natural (proprietary), SPINSscan Conventional Multi Outlet TPL (powered by IRI). 52 weeks ending October 5, 2014.

How are mainstream retailers going greener?

Trendwatch says that by incorporating natural into the mix, a growing number of mainstream shoppers are looking to shop healthier, but crave the convenience of doing so right within their grocer.
Many conventional retailers are taking the opportunity to increase their shoppers’ dollar spend within their stores and differentiate their product offerings, both by stocking more natural and organic brands and by introducing their own healthier product lines. These products are merchandised in a number of ways, including:
Store within a Store Natural and organic items featured in their own section within the store.
Segregated Integrated Natural and conventional items are merchandised together, but on separate shelves.
Fully Integrated Natural items are placed right alongside conventional items on shelves. This format is the way forward; expect it to ebb out Store within Store formats!

Realigning their mission While some mainstream retailers are bulking up their healthier food offerings, others are setting about cleaning up their full product mix. Several historically traditional conventional grocers, including Strack and Van Til and the newly purchased Fresh & Easy, are reinventing themselves to have a stronger focus on natural and organic foods throughout their stores.
Targeted campaigns In addition to making natural and organic products more accessible to conventional shoppers, some retailers are making them the headline. Target’s recently launched Made to Matter campaign features sixteen brands in the health and wellness space and provides a hefty platform for their better-for-you products to reach a huge consumer base.

Natural and Organic: The bright spot in mainstream.
Given the growing demand for better-for-you products, it’s no surprise that mainstream retailers want their piece of the pie.
While conventional products are in decline, natural and organic dollar sales continue to escalate and are fueling the modest gains the overall conventional channel is experiencing. What’s more, they represent an increasing percentage of total channel dollar sales each year.
Healthier foods are snatching up dollar share. Natural and organic now represents nearly 6% of Conventional Multi Outlet total channel dollar sales and account for two-thirds of absolute dollar growth in the past year.
While that’s just a fraction of the 82% dollar share these products get in Natural Supermarkets, the number rises each year!
Natural categories leading in conventional, ranked by dollar volume and showing dollar growth are: Yogurt & Kefir 6%, Packaged Produce 13%., Vitamins & Minerals 6%, Chips, Pretzels and Snacks 20%, and Milk 7%.
With organic dollar sales up 14% in 2014 over the previous year, growth rates of organic products are among the highest the Conventional Channel has seen – and that spells opportunity!

Private Label or Branded? While in the U.S.sales of private label organic items have reached nearly one billion in the Conventional Multi Outlet, branded organic products are driving twice the dollar growth.
For dollar sales growth in 70%+ Organic Private Label, sales are $995 million with 7%+ growth, while for 70%+ Organic Branded, sales are $7.8 billion with 15%+ growth.

Trend Spillover: Natural pursuits go mainstream.

Trends seeing the largest gains in dollar volume in mainstream outlets over the past year are those that arose from a need for change within our food system. Because of natural companies’ commitment to providing quality products and educating consumers on the importance of understanding what goes into what we consume, these trends have garnered widespread attention and have found a prominent place on conventional shelves and in the baskets of mainstream shoppers, SPINS Trendwatch says.

Gluten Free sales rose by 15%+ in dollar growth, Non-GMO Project Verified also rose 15%+, Organic rose by 14%+ and Vegetarian Diet Fed by 18%+.

What’s next? SPINS’ team of Trend Analysts weigh in on what products conventional shoppers may find reaching for next. These are Raw Positioned, Sprouted (Differs from raw!), and Fair Trade Certified.