Consumer Shifts Drive Sales of Natural Products

CHICAGO — Consumers are purchasing more natural products in 2020, both pre-COVID-19 and during the pandemic.

According to COVID-19 and Navigating the Path Ahead: Supporting the Natural Products Consumer, a new report from IRI and SPINS, dollar sales for natural products continue to grow over one year ago, as much as 78 percent in the middle of March during consumers' initial stock-up period and continuing in the high teens at present.

"Given that natural products represent more than 8 percent of total store sales year-to-date and are outpacing sales of conventional products, there are significant opportunities for manufacturers and retailers alike to show support for consumers," said Steve Ramsey, executive vice president and general manager, Strategic Accounts, IRI.

The IRI and SPINS report highlights natural shoppers' product and shopping preferences, recommended strategies for manufacturers and retailers to attract and retain consumers, and suggested strategies to employ that will maximize new opportunities in the future.

"We continue to see an ongoing shift in shopper thinking when selecting from natural and conventional products," said Kathryn Peters, executive vice president at SPINS, who is also a 25-year veteran of the grocery industry. "As the pandemic dominates the news and the focus remains on health and well-being, natural products will continue to outperform other products as consumers continue to invest in better-for-you items to eat, use on their bodies and to maintain their homes."

During the coronavirus pandemic, natural product shoppers are doubling down and widening their preferences through strategies, such as seeking and avoiding various ingredients and carefully studying label claims and certifications.

One change consumers are making is channel shifting, particularly focusing on e-commerce during the post-stock-up period. Trips per buyer for natural products vs. one year ago grew 27 percent for e-commerce while exhibiting slow or negative growth among other channels.

Similarly, e-commerce dollar purchases per buyer of natural products rose 15 percent vs. one year ago, at roughly the same pace as for the grocery channel. Other channels grew at a significantly slower rate.

NEW OPPORTUNITIES

As health concerns surrounding COVID-19 have driven a wider range of shoppers to the natural marketplace, creating an opportunity for manufacturers and retailers to create loyalty with new shoppers as well as reinforce their commitment to existing ones, according to IRI and SPINS.

Two segments of IRI’s NaturaLink segmentation represent the leading edge of natural trends: "True Believers" and "Enlightened Environmentalist," which represent 22 percent of shoppers but 44 percent of natural product sales.

More consumers across all NaturaLink segments bought natural products at a higher rate during the March stock-up period, representing an opportunity to attract and convert new shoppers increasingly focused on their health. Refrigerated plant-based meats is one example; overall buyer count increased 62 percent during the stock-up period and dollar sales increased 51 percent in that time frame across a range of shopper segments.

FORGING FORWARD

Economic pressures on consumers and product availability are impacting shoppers’ category buying strategies but to date have not dampened their interest in natural products. Brands and retailers can gain valuable insights from both past weeks' behavioral data and shopping patterns during the last recession, IRI and SPINS stated.

Shoppers will continue to face canceled promotions, disrupted supplies and heightened costs due to plant closures resulting from COVID-19, leaving buyers to adopt new strategies, like looking for sale items, larger package sizes, private-label options, and potentially different product attributes that fit their tightened budgets.

Particularly, private brands are exhibiting outsize growth rates, similar to their performance during the last recession. For example, sales of private-label vitamins and minerals jumped 1,286 percent compared to a year ago, as compared to 41 percent total category growth. Among non-foods, sales of private-label household cleaners and supplies grew 120 percent vs. total category growth of 37 percent.

Three core strategies IRI and SPINS recommend creating a road map for success are:

• Reinforce commitment to current shoppers by better understanding their engagement with natural foods, and design strategies to maintain their loyalty and increase share of basket.
• Identify potential new buyers, gain a deep understanding of their behaviors, build conversion strategies and actively engage them through targeted marketing.
• Continuously refine a fluid channel strategy to reflect changing circumstances that target both brick-and-mortar stores and the growing importance of e-commerce.

More information on COVID-19 and Navigating the Path Ahead: Supporting the Natural Products Consumer is available here.

Chicago-based IRI is a provider of big data, predictive analytics and forward-looking insights that help consumer packaged goods, over the counter health care organizations, retailers, financial services and media companies grow their businesses.

Established in 1995, SPINS LLC is a wellness-focused data technology company and passionate advocate for the natural and specialty products industry.