Buying a Health Food Shop

Thanks to BSE and salmonella, food scares have become almost the norm in Britain.

Almost every day, a story appears in at least one newspaper decrying the ill effects of an apparently healthy foodstuff, diet or medical treatment.

Combined with the growing interest many people have in their well-being, this has led to an increasing awareness of the origins of the food we eat and the medicines we take.

There are now over 2,000 health food shops in the UK – and the vast majority, excepting the nationwide chain Holland & Barrett and the London-based Fresh & Wild, are independent ventures.

HEALTH FOOD SECTOR IS GROWING

They are predominantly concentrated in the more affluent parts of the UK, as health food tends to be significantly more expensive than its supermarket equivalent – although it is worth noting that they are in far more diverse areas than before.

Nor are they are exclusive to the cities. Increasing numbers of elderly people are jumping on the health food wagon, and shops are just as likely to be successful in small West Country or Yorkshire towns. Here, of course, tourists are also an important factor.

The majority sell a combination of hard-to-find organic and speciality foods – such as rye bread or carob – together with a selection of homeopathy products.

An increased interest in food intolerances has meant that shops are also beginning to stock gluten-free, wheat-free or dairy-free foods in addition to the typical range.

Given the huge wave of interest in organic food, some businesses have decided to concentrate on this area too, although the supermarkets’ expansion into this area has had an effect.

However, those with a keen interest in health food will always prefer to go to an independent specialist – not just for advice, but also for ethical reasons.

Knowledge is power

Kim Power of Lakey and Co, who is currently selling a number of health shops, explains:

“It’s really important to know your product. People will simply come in and state their problem and expect you to know what to sell them. You need to have a lot of knowledge.”

According to Power, the businesses are quite profitable, having gross profit margins of around 35%-40% - significantly higher than general stores or newsagents.

Shops typically stock around £15,000 worth of goods and turn over up to £150,000 a year for an average sized business of around 700 sq ft.

Clearly, significant profits are achievable given the right market and location.

Power cautions, that those going into the industry need to be well versed in the new EU legislation which restricts the amount of vitamins and minerals a shop can stock.

Health food shops have very large catchment areas.

“People will only travel a mile or so to visit a convenience store,” he says. “But health food stores can see customers travelling up to 15 miles.”

The customer base also tends to be regular and loyal.

Surprisingly, shops are not as expensive as in many sectors, and good provincial locations attract sale prices of around £60,000 - £80,000.

This is mainly because they are usually located in local parades rather than expensive and high-profile streets and shopping centres.

Complementary therapies

Power adds that many health food stores often add to their income stream by renting out rooms above the shop to alternative health practitioners such as reflexologists and aromatherapists.

Clearly, there is an enormous amount of synergy between the two lines of business. These ventures, which attract people from even further afield, can add sales as well by introducing new browsers to your shop.

Inertia sales are a key feature of the sector. Once a customer gets an interest in one aspect of health food, or even a particular product, it’s relatively easy to introduce them to another one.

Certain herbal supplements can lead to other herbal supplements, just as carob could lead to rye bread or protein supplements to creatine.

Power is adamant that the sector is set to grow and grow.

“More and more people are taking supplements and taking an interest in health foods. Also, it is no longer a middle-class fad. The customer base is increasingly across the board, although it remains more female-orientated.”

“Shops are also becoming more diverse and selling vegetarian and vegan products, such as the Linda McCartney range. In some ways, they’re becoming more like general stores for the health-conscious.”