As competition grows in Q-C market, health food stores look to stand out


As competition grows in Q-C market, health food stores look to stand out


Photo: Heritage Natural Foods employee Sara Scherschel of Hampton helps a customer at the register, Wednesday, May 30, 2018, inside the store located at 1317 6th Ave. in Moline. John Schultz, Quad-City Times

Healthy Harvest Urban Farms Co-Owner Chad Summers doesn't think health and natural food stores popping up in the Quad-Cities is simply a trend. He thinks it's the future. 

"Through social media, and what I call the 'hive mind' of social media, we've all been enlightened to what's wrong with our food production and what's wrong with agriculture today as a whole," Summers said. "I think this is the future. It has to go this way because our soil is so depleted. Sustainable, organic growing is the only way to save that." 

After operating a community garden out of East Moline for around four years, this time last year, Summers opened the organic grocery store and cafe Healthy Harvest in Rock Island. Within the same two-month span, two major grocery chains, Natural Grocers and Fresh Thyme Farmers Market, opened across the river in Davenport. 

While Hy-Vee and other local mainstays have housed organic sections for years, both of the new chains brought a wider selection of packaged organic products and produce than previously seen in the Quad-Cities. Over the past year, the new competition has caused a shift in the market, and local family-run health stores continue to adjust, hoping to stand out in the changing economy. 

At the same time, Healthy Harvest is planning to expand in East Moline, with a new grocery store, cafe and indoor farmers market.

'We have to be honest; we have to be credible'

Lori Pennington, co-owner of the longest-lasting local health store in the Quad-Cities, Heritage Natural Foods, knew the day was coming when a big health store chain would move to the area. What she didn't expect was two to open in the same week. 

"It's definitely affected us," she said. "It's not like it's going to put us out of business, but it's definitely affected us." 

Heritage, which celebrated its 50th anniversary last year and has locations in Moline and Davenport, is not the only one hurting after the opening of both Natural Grocers and Fresh Thyme. This winter, the Quad-Cities Food Hub, which was founded seven years ago to support local food production and farmers, closed its doors.

At the time, Operations Manager Liz Hogan cited more local food being sold in the market as a major reason for the closure. 

For Pennington, she can see the positives behind having more healthy options available for consumers. But to stick around for another 50 years, she knows Heritage has to adapt.

"We're going toward more grab-and-go items. And we make our own hummus and smoothies," she said. "And bulk and produce is something we're going to be downsizing because we just can't stay up. Bulk and produce is so time-consuming, especially in downtown Moline." 

While Heritage has struggled to compete with the organic produce offered at chain stores, Pennington said the store stands out because of its strict guidelines for what it sells. The store carries only certified organic products, offers local honey and other items, plus avoids any products with artificial sweeteners and ingredients. 

With more customers looking for healthy options, more stores have begun labeling products as "natural." Pennington argues her store's employees have knowledge that's now invaluable in the market. Employees are regularly trained on new products, ingredients and supplements. The store is lined with cheat sheets, explaining company policies and how certain ingredients are sourced.

"'Natural' used to mean something years ago. 'Whole food' used to mean something. Now it doesn't," she said. "I can't walk into a store and see a product on the shelf and be able to look at it and say this isn't a good product. You have to know the integrity of the company a lot of times. So, how can we help people? When they come in, we can explain this is how this ingredient is extracted. Here's how this company works. We like to guide people and help them find something that works for them."

Owners of Greatest Grains in Davenport did not agree to an interview. 

'Think global, act local'

While Natural Grocers and Fresh Thyme are new to the Q-C market, both companies have missions to work within their stores' communities. 

For Fresh Thyme, Chief Merchandising and Marketing Officer Mark Doiron highlighted the company's charity work in the Quad-Cities, including supporting the River Bend Food Bank, Big Brothers Big Sisters of the Mississippi Valley, Scott County Family YMCA and others. 

At Natural Grocers, CEO Kemper Isely said the company's community involvement includes events and nutrition classes. 

"Most of our stores are staffed with a highly trained nutritional health coach, who offers free one-on-one health coaching, in-store nutrition classes and cooking demos and can answer your questions while in store," he said. "We're not just in business to sell products because they sell. We sell products because they have a purpose in helping people lead a healthy lifestyle, and it's our mission to educate communities." 

Walking inside Davenport's Fresh Thyme feels more familiar to the traditional grocery store shopper, with a mix of organic and non-organic produce, grab-and-go items, pre-packaged foods, plus a beer and wine section. Natural Grocers offers a slightly smaller, but only certified organic produce section, plus isles of pre-packaged, non-GMO organic foods, free-range eggs, pasture-based dairy and more. 

Officials of both companies said they work to offer locally-sourced produce when available. Hy-Vee also offers some local produce.

"We sell local, Midwest grown fruits and vegetables throughout the growing season," Doiron said. "Fresh Thyme has over 80 different direct farms that we procure local product from, along with many co-op distributors of local grown items throughout the entire Midwest." 

A study of 2015 crop production in Iowa — released in 2017 by Iowa State University, the state agriculture department and others — showed while farmers still mostly sell products directly, such as at farmers markets, the sale of produce to wholesale markets has grown. 

"This may be due to growing availability of aggregated markets such as food hubs and produce auctions, in combination with an effort by large-scale buyers to buy more local food in response to consumer demand," the study said. 

But, Tim Johnson, Senior Research and Policy Analyst with the Iowa Farm Bureau, said it can be difficult for local farmers to meet the demands of large chains. 

"You're going to see local farmers, that have the ability, wanting to diversify their crops, so they can go directly to retailers and provide those kinds of products," he said. "Any place they can sell their products is good for them. But it probably more depends on how much that farmer has the ability to produce and how much they are willing to sell." 

But with more customers looking to know where their food comes from, he expects chain stores to continue expanding sales of local food.

"People probably feel more comfortable knowing exactly where their fruits and vegetables came from, that it came just outside the Quad-Cities," Johnson said. "If you have the production and sales all happening in one metro area, you're certainly going to see a large impact on the economy." 

'We're about to flip the local food chain'

While chain stores may not be able to offer locally sourced produce regularly, Summers said Healthy Harvest now banks on it. 

"Stores like Hy-Vee that try to do local, when the supply chain is limited, they source elsewhere and it leaves farmers in limbo with extra crops," he said. "Instead, we find the farmers. We have over 30 producers in eastern Iowa and 1,500 acres between them all, and they'll grow what we need and want." 

Healthy Harvest offers only organic, mostly local produce, which Summers said has allowed the business to grow over the years. By this fall, he plans to open an expanded location in East Moline, in coordination with the major redevelopment project, The Bend. 

The business will open a flagship grocery store on the riverfront, along with a farm-to-table cafe, a bakery and an indoor farmers market. Within a year, he hopes to start East Moline's first co-op, with a processing hub including commercial kitchens. Through the co-op, he hopes farmers will network with and sell products to retailers across five states. 

“We’re creating the infrastructure local farmers have been lacking,” he said.

He wants the Quad-Cities to become a processing hub for locally-sourced foods. And instead of reacting to more competition in the market, Summers' goal is to drive it.