Dissemination of the Supplement Category Changed Everything
We all know that when a rock is thrown into water, it creates ripples that move away from where it landed. Being distracted by these ripples, some might miss the fact that the water near the surface rushes back to fill in the space it left behind.
What does this have to do with supplement industry retail? Maybe more than you realize…
“Specialty” Retail
The four largest specialty retailers positioned in the supplement industry have historically been:
GNC
The Vitamin Shoppe
Bodybuilding.com
Vitamin World
Over the last 5-7 years, each specialty retailer has had its own set of unique challenges/circumstances, but all have (at the least) struggled immensely to retain market relevancy and (at the most) faced business continuity problems.
With most supplement industry sub-categories consistently showing high single-digits CAGR over the last decade, how are these specialty retailers struggling?
Supplements Are Everywhere Now
If you haven’t noticed, specialty retailers are no longer the only game in town when it comes to buying supplements. The supplement category has disseminated across all sales channels. The reallocation of categorical revenue from specialty retailers and incrementality has shifted into three commerce buckets:
Direct-to-Consumer = This is arguably the hardest to spot, but it’s a classic “death by a thousand cuts” scenario. These are supplement brands that have learned to pull hard on various demand drivers like affiliate, influencer, and digital marketing. (Note: There’s a surprising amount of 7, 8, and 9-figure supplement brands that would be unknown to most industry veterans)
Amazon = This is arguably the easiest to spot, because everyone loves to point a finger at the “house that Bezos built.”
Large Retail Channels (ie. grocery stores, mass retailers, wholesale clubs, drug stores, convenience stores, and dollar stores)
Flywheels Spin
Walmart and Amazon (aka Wal-Mazon) have had the largest gains in categorical buyer count. These retail giants are sharks, which smelled specialty retailer blood in the water. The merchandising teams at Wal-Mazon are extremely bullish on the supplement category. That has caused them to:
allocate more resources
adjust merchandising strategy to better meet the consumer across a wider spectrum of wants/needs
It’s no longer “uncool” for your supplement brand to be sold at Walmart…something I mentioned in a May 2019 YouTube video before Redcon1 broke the mold…
Final Thoughts
In a “choose your own adventure shopping” world, consumer speak with their actions (and wallets). By 2025, the Nutrition Business Journal predicts that categorical sales will be evenly distributed across e-commerce, mass, and natural/specialty retail. Whether it’s Wal-Mazon or another large retailer, it’s apparent that recent merchandising strategies shows us they want more than entry-level buyers…they want the whole category. The question remains, will being a “Wal-Mazon brand” still have some level of negative (yet always misplaced) connotation in the next 3, 5, 10 years?