The Comeback of the Health and Fitness Specialty Channel?

by Matt Weik

I’ve been thinking about this for a little while now and how the market shifts and changes but in the end, things come back around full circle. Think of it like apparel. You have something trending for a while, it then goes away, but eventually comes back. I see the health and fitness specialty channel the same way.

More and more brands are looking to introduce their line to mass market and various wholesalers. If you look at what happened to EAS, they were one of the biggest brands back in the ‘90s and then moved into mass market. While they thought this was a good idea, it eventually turned into the health and fitness specialty channel retailers ending their relationship with the brand essentially because EAS “whored out” their products into mass and the little guys who supported them from the beginning could no longer compete – so they ditched the brand. As you may know, EAS went out of business in 2018. So, where is this cyclical pattern coming from that I’m speaking of? That’s the meat and potatoes of what I want to discuss.

Don’t Call it a Comeback

We have seen over the last several years, brick and mortar brands closing their doors and folding. While the internet has definitely caused an evolve or die movement for brick and mortar retailers, the movement of brands into mass market can also be to blame.

Here is where I believe things will start turning around. If the mom and pop supplement stores out there can hold on for dear life, I see the health and fitness specialty channel making a comeback (even though they never truly went anywhere). While brick and mortar retailers are going to take a financial hit to the pocket, I can see many of them waving goodbye to many of the brands who are moving into mass market. Why? Because there’s no reason for them to carry the line anymore when they can go down the street and buy it at a fraction of the cost. So, where will they make up their money from dropping these lines? Niche and startups.

Look, everyone and their brother thinks they can start a supplement company these days. And while I don’t believe many startup supplement brands are truly unique, worth the price, or even meet label claims, there will be some who are serious and who want to put out high-quality products to help their customers reach their health and fitness goals. It’s my thinking that as retailers remove some of these “legacy brands” from their stores, they will start backing the smaller brands who (at least for the time being) have no interest in moving into mass market. This can help bring back the health and fitness specialty channel by differentiating themselves from the bigger players in the market.

I think we can all understand why brands are jumping ship and placing their line in mass market locations. It’s all about volume. Are they taking a hit to their margins? Absolutely. But when you can exponentially increase your volume, you’ll easily make all of that money back and then some.

When brands give mass market retailers better discounts, it’s going to force the health and fitness specialty channel to poop or get off the pot. And for many, I’d advise them to think about adding new lines with partners who want to support them and appreciate their business. It doesn’t make much sense to sit on a product that is priced higher than mass market or be forced to lower their margins to the point they are basically selling a line at their cost just to keep their customers happy. Their customers are already going to be shopping at these mass market locations so if they really wanted the brand, they aren’t going to go out of their way to visit a mom and pop location when the mass location is already on their weekly list of places to go shopping.

Mass Movement Causing Internal Conflict for Supplement Brands

I’ve seen first-hand when I worked for a supplement company what happens when a brand takes the same products in the health and fitness specialty channel and puts them into the mass channel. There’s a lot of butting heads that will happen internally between sales teams. While the mass market team will brush it off their shoulders, it’s the health and fitness specialty channel sales team that will be taking the daily blows from this move.

When supplement brands put their products into mass, they are generally heavily discounting the products basically to the point where the price they are selling the products to consumers for is the same pricing the health and fitness specialty channel is buying the product for. At the end of the day, that mom and pop corner supplement store could basically drive to their local mass location and purchase the product there to resell versus buying from the actual supplement company. As you can tell, this causes much conflict with the smaller retailers as there’s no reason for them to carry the brand anymore if they can’t compete with mass locations in the same complex or down the street.

Sales teams start arguing and the health and fitness specialty channel team complains that their sales numbers are down due to mass stealing the business. Now, from a brand perspective, they are willing to allow it as their volume and sales will go up from making the move and at the end of the day, it’s the same company so regardless of where the sales come from it help with their overall growth. Clearly, this isn’t something the health and fitness specialty channel sales team wants to hear.

A Word of Advice for Small Supplement Brands

If you want to grow your business, make retailers in the health and fitness specialty channel feel appreciated. For the last several years they have basically been pooped on by bigger brands discounting their line out to wholesalers and mass locations to move more volume and increase their sales. I can’t blame them for wanting to grow their business by increasing their numbers but at the end of the day, brick and mortar retailers are looking to spend their money, so why not have them spend it with you.

Set up in-store demos and have samples that retailers can give out. This will also differentiate yourself from the brands that moved to mass. In mass and even wholesalers, no one is going to walk around and be giving out supplement samples when they sell thousands of other products every day. Make your move and take your line (which is hopefully different from the other brands out there) and go after those mom and pop corner locations.

Make your margins but also be sure to give retailers the best possible opportunity to make money selling your brand. Provide them with the POS (point of sale) materials they need. Drop off boxes of swag for them to hand out. Those brands who went mass aren’t going to be doing that in the mass locations so take advantage of your marketing materials and create a buzz, hype, and community surrounding your brand.

By supporting these smaller accounts, you’re going to help turn around the health and fitness specialty channel. The hardcore products that won’t be sold in mass and wholesale accounts will quickly become the bread and butter of supplement stores. And if brick and mortar locations can enter into the digital online world and sell their products online (while maintaining their physical location), they will have another avenue of making money. In addition, they need to be competitively priced against the internet to keep customers walking through the door.

The one thing that mom and pop locations have that customers won’t get online is a fantastic customer experience. They are being serviced by real people who answer questions, help them with their buying decision, and can actually communicate with them to build loyalty.

In the end, supporting the little guys will help bring back the health and fitness specialty channel and by bringing in new lines it will help supplement the loss they may be facing by brands moving into mass. At the end of the day, innovation and differentiation can only help brands as well as the health and fitness specialty channel. I hope I’m right with my thinking as I’d hate to see the small guys go out of business due to brands jumping into a new channel.

 

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