If you shop at any mass-market store and visit the supplements section, it’s hard to miss that Garden of Life has made its presence known in stores like Walmart, Target, and the like. Many independent retailers have been up in arms over this transition into mass-market and questions regarding Garden of Life’s decision to go this direction keep mounting. Retailers are now faced with the tough decision of whether or not to continue their partnerships with Garden of Life due to this move. Nutrition World, one of Garden of Life’s diamond level retailers (selling over $100,000 a year) had numerous concerns and felt quite betrayed by Garden of Life. It is important to note that 40% of Nutrition World’s Garden of Life sales are probiotics, primarily the Dr. Formulated line, one of the lines now readily available at Walmart at a very discounted price. On Wednesday, April 25, 2018, Nutrition World leadership met with their local sales representative and Kent Keyser, Vice President of Sales, hoping to get some of their questions answered and some resolution.
This move into Walmart has already caused huge issues for independent retailers. There are now approximately 17 SKUs available in mass market, including some products in the MyKind and Dr. Formulated lines at significantly lower prices than MSRP for products almost identical to their current ones. In late February, Garden of Life came to Nutrition World with information concerning brand expansion and when this decision was presented to Nutrition World, they were informed that the dosing would be lower with different packaging for products going mass market. However, this has hardly been the case. While there are product differences, the dosage and packaging changes have been so minuscule. Ed, the owner of Nutrition World, tried explaining conversations he’s had with customers trying to defend the full strength probiotics that only have 10 billion more CFU compared to the “new” products at Walmart that are hardly different but almost half the price. Ed stated, “My frustration is that we have to have efficiency with our protocols and our reputation is diminished because they think we’re ripping them off. They won’t come back to us.”
Why is Garden of Life doing this and what is their plan to continue support for independents in spite of this decision? With all of the hard work Garden of Life put into enforcing MAP and putting all of their time and efforts into their great support programs over the years, then why would they make this move? Why do they value Walmart as a partner when they spent so much time and money trying to protect independents?
To answer the question of why, Kent stated that they are currently reaching 0.5% of the population and about 10% of the population shop in the natural products industry. In 2016, 71% of the American public used supplements. They feel as though they aren’t reaching enough people, and on paper going mass market seems like a fantastic opportunity to provide quality organic supplements and better options. They felt that this required expanded distribution will help with more brand recognition. Chase, the general manager of Nutrition World, feels strongly that Garden of Life will not see an increase in market share from Walmart because they already have the visibility on Amazon. With all signs pointing to the increase of the power of e-commerce, Garden of Life going into mass market retail isn’t the answer because no one at Walmart will be championing their products. Without independent retailers promoting Garden of Life’s products, no one is going to know why they are better than any other product in a mass market retail supplement section. So, by making this move, it is hurting independent’s faith in their company because they now feel undervalued and won’t be cheerleaders for Garden of Life anymore and therefore will likely lead to a decrease in market share in the long run.
Kent stated that they can still show loyalty to the independents in spite of this move. “With the internet (MAP enforcement), we got it right. My objective is to get it right when it comes to leveling the playing field plus giving independents the advantage.” Kent defended Garden of Life’s commitment to independents by saying that out of over 300 products, less than 30 have currently been reworked for expansion into other channels, they would contribute more in coupons, and further increase their education and representative support. However, Nutrition World expressed their frustration. “MSRP is dead. MAP is the new retail and I’m considering your Walmart price to be the new MAP. It’s just a game to do coupons. If we have coupons and a customer isn’t loyal to us, then it’s not going to matter,” stated Chase.
Garden of Life claims awareness that most other brands that have gone mainstream have ultimately limited their support for independents, however, they have assured they will not. Kent stated that they wanted to support their core business, claiming that was the independents, however, the decision to go into Walmart seems contrary to that statement from the viewpoint of the independents. So, what is the resolution to the problem? Kent stated that they do not control retail pricing and that it was far lower than they anticipated and admitted that the playing field is unfair. “We need to have an even playing field for the people who built us,” said Kent. Though they see the problem, their solution is unknown at the current moment but Kent remained confident that they are going to resolve it. They say they still will pour their energy into the natural products retailers. Their reps aren’t going away, their demo support isn’t going away, and they are increasing their coupons for independents. They say they want to give independents the advantage. Independents feel that pricing, however, needs to be fixed in order that the playing field is more leveled. “You cannot forsake your core,” said Ed Jones, owner of Nutrition World.
While Kent was defending Garden of Life’s continued partnership with independents, Chase Ballard interjects with this analogy. He said, “I’m hearing you say this and all I can picture is me going to my wife and saying, ‘Amanda, we’ve been through a lot together. We’ve been together a long time, we’ve had kids together, and we’ve overcome so much, but there’s this other girl. She’s got a lot going on and could do a lot for me. I still want to be with you and act like nothing has changed. We’ll still go on dates, I’ll still love you, and I’m committed to you, but this is too good of an opportunity to pass up, but believe me, this won’t hurt our relationship. It’s just an added bonus for me.” Though a silly analogy, it speaks volumes of truth. Independents feel like they are being cheated on by a long-time partner, but being fed the line that they are still #1 in the hearts of Garden of Life. While Kent appreciated the analogy, he felt that the relationship between Garden of Life and independents is very different than that of a marriage. He stated that they sell their products to many competitors of independents including natural grocery, e-commerce, natural national chains, etc. and now that they’re in another channel, they still intend to give independents the ability to keep consumers coming back.
In spite of Garden of Life’s answers, Nutrition World had many concerns that they needed to voice. The reason that independents are “the core” of Garden of Life’s business is that they spend tons of time educating the customer. Independents are the reason for their brand recognition. There is no one at Walmart who is going to educate customers about why they should take a Garden of Life probiotic over the cheaper ones they will share shelf space with. However, customers can still come to independents and get educated but then go to Walmart and get the same product for half price.
Admittedly, Garden of Life has done many things right for a very long time. In addition to making great products, they’ve dealt with the issue of MAP policy and have been enforcing that incredibly well. Nutrition World was a huge cheerleader for them because of their efforts. However, this move into the mass market is a potentially major blow to fair price competition. In addition to this major blow to independents, their sales reps have gone through so much turmoil in the past few months: not being allowed into Wholefoods, explaining the Nestle acquisition, and now the decision to go mass market has certainly not made their job easy.
Nutrition World feels strongly that Garden of Life could have increased their brand recognition in other ways. Kris, the store’s purchaser, noticed a huge reality that Garden of Life seems to be missing at the moment. A few months ago, she was approached about carrying the new Garden of Life essential oils. She asked the sales representative if these will be in Walmart too and the answer was, “No, market research didn’t support a demand for it.” Kris wittily stated, “Until independents create one.” Kris was clearly pointing to the fact that independents create the demand for these nutritional products on a mass scale. Nutrition World and other retailers like them have spent countless hours investing in this brand and telling their customers how great it is. Now, the independents have to defend themselves from looking greedy because of these ridiculous discounts in major retail stores. “Your support can’t balance out what you’re doing. We’re about ethics and morals first and then making money. Garden of Life will need to learn the hard lesson and it will take 3-6 years for them to see the flaws in this decision but they will lose independent sales along the way,” stated Ed, sternly. What is Garden of Life’s plan to remedy the damage that’s been done to independent retailers? While all the details have not been announced, Kent assured Nutrition World that plans will be forthcoming soon. Garden of Life asked Nutrition World and other independents to give them time to take corrective action. Nutrition World is ready to pull the trigger and take some steps to show that they mean business: cutting non-essential SKUs, not participating in buy-ins, eliminating co-op advertisements, etc. Chase said that it’s all about reminding people that independents built the industry and they have a voice, so they need to use it and hopefully Garden of Life will listen.
*Since this article was written, Garden of Life has been making efforts to display their desire to continually support the independent channel. Select stores are being tested with additional EDLP’s to compete with FDM pricing. Hopefully, these changes will be expanded to the entire channel. Speak with your Garden of Life representative and reference this article for further questions on what they are doing.