Retail channels for dietary supplements: Brick-and-mortar sales growing but still outpaced by online sales

November 18, 2019

Online dietary supplement sales continue to skyrocket, but the good news for brick-and-mortar retailers is that their sales are growing, too. These insights and others were provided by market researcher IRI (Information Resources Inc.; Chicago) at the Council for Responsible Nutrition’s (CRN; Washington, DC) 2019 The Conference in Carlsbad, CA, on November 8. The data focuses on retail channels and sales in the United States.

 

Brick-and-Mortar Sales Growing

Brick-and-mortar is still the leading channel for supplement sales, accounting for $18 billion of what IRI estimates to be the total $36 billion supplement market. Online sales account for $10 billion in sales currently. And while online sales growth is outpacing brick-and-mortar sales growth, the good news is that brick-and-mortar channel sales are also growing. IRI’s Bob Sanders, executive vice president, healthcare and home practice leader, who presented the data at the CRN conference, estimates a 4% compound annual growth rate (CAGR) for brick-and-mortar during the five-year period 2019-2024—growth that he called “pretty robust and pretty amazing, to be quite honest.” The CAGR for online sales during that same period, however, is expected to be much higher: 17%, Sanders said.

During the CRN conference, CRN itself presented data from its 2019 CRN Consumer Survey on Dietary Supplements also showing growth in 2019 in most retail channels, including brick-and-mortar and online channels. In brick-and-mortar, CRN’s data showed growing sales in mass merchandisers, drugstores and pharmacies, supermarkets, and specialty vitamin retailers or chain health food stores.

IRI’s data differed slightly in the area of specialty and health food retailers, showing that this brick-and-mortar channel alone saw declining growth compared to grocery, drug, mass (including Walmart), club, and dollar store channels, which all are growing their supplement sales. (Dollar stores, Sanders pointed out, are showing the greatest rate of growth: a whopping 23.6%, compared to the other growing categories, which ranged from 1.4%-6.3% growth rates. “They’re doing really, really well, and that’s really where the growth is,” Sanders said of dollar stores.)

The good news overall is that brick-and-mortar sales overall appear to be growing still, even against concerns over competition from online sales.

“Brick-and-mortar is really surviving,” said Niki Yas, vice president of marketing international for Atrium Innovations Inc., who shared the CRN survey data with conference attendees. “They’re actually growing and staying strong, so don’t ignore the brick-and-mortar outlets for your supplement purchasing.”

 

But Amazon…

But even as brick-and-mortar sales are growing, the fact is that the category is still “struggling” to keep up with online sales growth, IRI’s Sanders said, noting that “e-commerce continues to grow and just continues to fly.” Vitamin and nutrition supplement sales in fact represent the largest sales category in the online consumer healthcare space, he said. “And we don’t really see it stopping,” he added.

Amazon.com is, of course, the largest online seller of supplements. In fact, said Sanders, 73% of all nutritional supplement e-commerce sales are through Amazon.com. The remainder of e-commerce sales are led by vitacost.com, eBay, Puritan Pride's website, and online sites for brick-and-mortar retailers Walmart and Costco.

Sanders said that of the brick-and-mortar retailers now competing in the online market, “Walmart’s done the best job.”

“Brick-and-mortars, in order to survive, are going to have to compete here,” Sanders said of e-commerce.

CRN’s survey confirmed Amazon’s leading position, indicating that 18% of U.S. adult dietary supplement users—1 in 5 supplement users—said they have purchased supplements from Amazon.com in the past year. “It’s no big surprise that everyone’s buying them on Amazon because they’ve made it so impossibly easy,” Yas said. “You can’t resist it.”

 

Pay Attention to All Channels

The key takeaway, said Sanders, is to pay attention to all retail channels, including nontraditional channels like direct mail/catalog, multilevel marketers, specialty grocery stores, and, for CBD companies, cannabis dispensaries. “Consumers will be purchasing products across all outlets,” he said. “So manufacturers absolutely have to have an omnichannel strategy. They have to be mindful of all of the various channels where consumers can purchase things and be mindful also about how you can create relationships with those shoppers in those omnichannel outlets.”