INTERNET, MAIL-ORDER SALES OF SUPPLEMENTS GAUGED

The selling of nutritional supplements via mail order and the Internet is now a mere blip on supermarket retailers' radar.But that could change, industry observers say, as consumers become more educated about vitamins, minerals and herbs and develop the confidence to shop for these products wherever, or however, it is most convenient.According to Hartman & New Hope, Bellevue, Wash., a market research

The selling of nutritional supplements via mail order and the Internet is now a mere blip on supermarket retailers' radar.

But that could change, industry observers say, as consumers become more educated about vitamins, minerals and herbs and develop the confidence to shop for these products wherever, or however, it is most convenient.

According to Hartman & New Hope, Bellevue, Wash., a market research firm that tracks the natural-products industry, catalog and direct-mail outfits that sell vitamins, minerals and herbs are actually outdoing supermarkets in terms of dollar sales.

Among its monthly sample of almost 18,000 individuals "representative of the U.S. population," Hartman & New Hope found consumers purchased $99.1 million worth of supplements through direct mail and catalogs in August, the last month for which data are available. By contrast, supermarkets generated $86.2 million in supplement revenue. (Total sales were $778 million.)

According to Hartman & New Hope's August figures, however, direct-mail and catalog dollar sales actually fell by 4% from the month prior, while supermarket sales rose by a very slight 0.8%.

"I see only minimal impact on sales made over the Internet or by mail order," said Jimmy Thompson, director of health and beauty care and general merchandise at W. Lee Flowers, a Lake City, S.C., distributor that services 54 IGAs in the Carolinas.

"I do not think mail order or the Internet are affecting sales yet," agreed Mike Meyer, general-merchandise and HBC director at Homeland Stores, Oklahoma City. "But, yes, [they may] at some point in time as consumers get more into these products."

Indeed, nutritional-supplement proponents stress consumer education is the key to sustaining growth in the category across all retail venues and to expanding formats, like mail order, that demand self-reliance of shoppers. The educated shopper, the argument goes, is an unintimidated shopper; she knows what she wants and will more freely part with her money to get it.

Noteworthy is the fact that, in August at least, the average supplement purchase in a supermarket totaled $6.77, compared with $13.53 through direct mail or a catalog, according to Hartman & New Hope.

"As people become more educated, they become more confident and they will go other places. It's going to depend on more consumer knowledge before [mail order and the Internet are] a factor," said J.B. Pratt, owner of Pratt Discount Foods, Shawnee, Okla. "I look at it as a kind of down-the-road phenomenon."

Jonathan Ziegler, a San Francisco-based analyst for Salomon Smith Barney, New York, said he believed mail-order pharmacy operations have significant growth potential, noting that American Stores Co. and Fred Meyer Inc., among others, already have mail-order pharmacy services. "I'm convinced that if you have a mail-order business established for pharmacy, what is to stop you from, say, developing a catalog [for vitamins and supplements]."

Gregory Miller, a spokesman for General Nutrition Cos., Pittsburgh, said GNC had a catalog division but discontinued it because "it seemed, at that point, to be underperforming."

Regarding a possible revival of GNC's mail-order service, and the option of selling products on its Web site, Miller said, "Both are under consideration. It strikes me that there is a fair amount of crossover potential."

Only $218,000 worth of vitamins, minerals and herbs were sold over the Internet to Hartman & New Hope's sample participants in the month of August -- average purchase price: $7.80 -- which translates into essentially 0% of total sales.

For Wild Oats Markets, its natural health and beauty care, or Natural Living, departments, which include nutritional supplements, are the fastest-growing and most profitable part of its business, said Michael Gilliland, chief executive officer, at SN's recent Food Retailing Summit in Palm Beach, Fla. The Boulder, Colo.-based retailer, which last month began selling products on its Web site, wildoats.com, is counting on Natural Living to do brisk on-line business, Gilliland said.

"Where we're going to make our money is in the Natural Living category," he said.

Retailers insist that regardless of whether Internet sales of nutritional supplements take off, consumers aren't about to abandon traditional bricks-and-mortar stores.

"Internet aside, people are always going to walk into a store and do their shopping where it's convenient," said Miller.

Bill Mansfield, vice president of general merchandise at Marsh Supermarkets, Indianapolis, said, "Supermarkets are seeing that customer very frequently through the week, and if we carry that product the customer wants, it's very natural that we'll get that sale, and we'll probably offer it at a better price."