INDUSTRY TRENDS AND OPPORTUNITIES

Typical Specialty Food Store:  The specialty food store industry includes gourmet food stores, natural and organic food stores, health food stores, stores that specialize in meat and seafood, fruit and vegetable markets, and bakeries and candy stores.  Small companies can compete with large companies by providing specialty products and providing superior customer service.  Competition is vast and comes primarily from grocery stores, mass merchandisers like Target and Wal-Mart are also a source of competition. 

• Significant Growth in Specialty Food Sales:  According to Mintel, specialty food sales increased almost 15 percent between 2005 and 2006.  The increased awareness and concern of food quality in regards to health issues has driven this large increase in sales.  The increased availability of specialty foods to a wide range of consumers continues to fuel growth.
• Increased Demand for All-Natural/Organic Products:  According to First Research, sales of natural and organic products has increased over the last several years.  Baby boomers, affluent and health concise, are driving this demand.  Produce, pet products, and baked goods are among the product categories growing the fastest.   
• Special Services:  The primary customers of specialty food stores are affluent will be loyal to and appreciate a business that provides special services like curbside delivery and valet parking.  Such services give an image of exclusivity to the shopping experience.  Additionally, gift baskets allow the business to increase profits on products while spreading awareness to the recipient of the basket.
• Educating Customers:  A knowledgeable staff is an extremely important resource for the specialty food business.  Employees can suggest new products and recipes to their customers, who tend to be more willing to try new things and pay more for quality ingredients.  Providing cooking classes and recipe cards can encourage customers to experiment with new products.    

“Things to Know Before Buying a Specialty Food Store”
The decision to become a business owner is an exciting but intimidating one.  If you are considering buying a specialty food store there are many factors to consider.  The business transaction brokers at Murphy’s not only know the major factors to consider before purchasing a specialty food store but also know how to capitalize on those factors.  Below are a few of the many items to consider:

• What specialty food categories dominate the company’s business?  In order to differentiate themselves from the larger grocery retailers, many specialty food stores concentrate on a particular food category such as meat or wine and cheese. 
• Who is the company’s typical customer?  The typical consumer at a specialty store is a young, affluent adult.  Specialty food stores appeal to both men and women.  On average, the shoppers at specialty food stores will cook at home about three times a week. 
• What has been the effect of the declining economy on the company’s business?  Non-luxury items like food purchases are generally stable despite the economy.  Consumer’s may trade in specialty foods, which tend to mean more expensive than non-specialty foods, for food products found at typical grocery stores during slower economic periods.
• How does the company compete with large retailers, such as grocery stores and mass merchandisers?  Though specialty foods fulfill the needs of a niche market, they face intense competition from grocery stores, mass merchandisers, and restaurants.
• What are the company’s most effective marketing and promotional vehicles?  Generally, the marketing budgets of specialty stores are minimal.  Stores rely on word-of-mouth and grassroots marketing to generate awareness of their products and services.  Companies may use newspapers, coupons, and direct mail to reach their target consumers.  The hosting of special events such as cooking classes and product tasting also assist with increasing consumer awareness.
• How effective is the Internet as a marketing tool for the company?  The internet can serve as a tool for specialty stores to reach out-of-area consumers who are interested in the unique products it provides.
• How important are imported foods to the company’s sales?  The real and perceived quality differences in imported foods leads customers of specialty food stores to prefer them over American produced foods.
• How does seasonal demand affect the company’s sales?  Depending on the companies product mix, specialty stores may experience seasonal sales.
• If the company is a franchise, what terms does the company’s franchise agreement cover?  Franchisees must adhere to operation guidelines set forth by franchisers.  It is important to know what aspects of the business are controlled specifically by the franchiser.  It is also important to be aware of the royalty and franchise fees owed to the franchisor.