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Deer Horn's First Bodhi Natural Market Location Enjoying Good Start

|Includes: Deer Horn Capital, Inc. (GODYF)

When you visit your local grocery store for a typical shop it all looks pretty simple. You grab what you want from the shelves, pay for your items at the check-out, and take off on your merry way. Behind the scenes, though, long-term planning, shrewd inventory management and industry connections are crucial to ensuring the right products are on the shelves at the right price, thus making your shopping experience a positive one.

With a natural and organic market, there can be even more challenges. But arguably these also result in more satisfaction, both for the store's customers as well as for its management team.

Speaking with Lance Sutherland, president of Bodhi Natural Market, and Graham Clarke, the store's lead purchasing manager, one gains an appreciation for the effort and expertise that goes into making an everyday shopping experience efficient and pleasurable.

Bodhi Natural Market opened its first store on June 13 in Maple Ridge, British Columbia, about half an hour from downtown Vancouver in a rapidly growing bedroom community with a population of approximately 76,000. From day one, the community response has been good.

Sitting outside the first Bodhi store for an hour brings some insight into the type of shopper who comes to a natural and organic market. Sure, there are the Lululemon-clad yoga devotees and men who look like they live at the gym. But seniors, construction workers and young families also make up a good percentage of people walking through the front door. Everyone has to eat, and when a store carries healthy items that you cannot get anywhere else, it is bound to attract attention.

"The most frequent comment I have received," says Clarke, "is that people were having to go to five or six different stores to get a selection of items that are all available at our store. It makes you feel good because you know you are having a positive influence on the community."

Such feedback is among the highest praise a customer can give a purchasing manager, especially one overseeing a store open for just one month. It clearly speaks to the talent of the management team who put it together.

Clarke has been in the natural and organic retailing industry for almost a quarter century and is one of the most respected buyers in Western Canada. He is experienced enough to know that each community is different and can adjust a store's offerings on the fly.

Sutherland, who spends hours on the floor of the new store every day, gets more direct customer feedback than anyone else and sees first-hand what a broad yet carefully tailored product selection achieves. He also knows that shoppers are aware of prices. "It used to be that natural and organic products were considerably more expensive than heavily processed and non-organic choices, but the gap is closing, and in some cases the balance has shifted in favour of the organic side, believe it or not," he says.

Personal experience shopping at the store bears out Sutherland's comment on price. A bag of corn chips priced regularly at $3.69 at Bodhi was selling at $5.29 at one of BC's most well-known large supermarkets not far away. A can of soup made from organic ingredients was $3.69 at Bodhi but $4.29 at the big grocery store. Smaller stores more expensive? Doesn't look that way.

"When you have a superior buying team you can offer very competitive prices while also maintaining good margins," says Sutherland.

What is popular at Bodhi Natural Market? Gardein meat alternatives, sauerkraut and almost anything gluten-free have been flying off the shelves. Grab and go items have proven popular as well, and Sutherland is gradually increasing the number of products in the deli section to see just how many sandwiches, salads and pot-sticker dumplings customers can consume in a day.

As Bodhi is owned 100% by Deer Horn Capital (CSE:DHC), Sutherland can't give out sales numbers until they are actually publicly disclosed by the parent company. But he will say that the store is doing fine and that he is pleased overall with the way things have gone in the first month.

Metrics he can provide include the over 2,000 in-store sign-ups to the Bodhi Natural Market loyalty program in the first month of operation. The coffee bar is also popular, he says, with many customers grabbing a drink and sitting down either before or after they finish filling their shopping baskets.

"Some things we expected, like a high turnover rate for our produce and high chip and ice cream sales during the summer, but others have been somewhat of a surprise, such as the popularity of seaweed and macrobiotic items," Sutherland says. He adds that he has high hopes for the increasing number of Bodhi-branded products the store sells, including an extensive and growing line of organic dried fruits.

Also unexpected has been the interest from large grocery stores. "So far, we have had over a dozen executives from large chains come in and introduce themselves," says Sutherland. "They are not direct competition for us, so I don't mind spending some time with them. What it says to me is that not only is the local consumer talking about us, which we see from the traffic in our store, but the industry knows we are here and is interested in what we are doing. I have seen this type of interest before, but never so quickly or for a new brand. It suggests we are doing something right."

Sutherland says that Bodhi opened during a traditionally weak time of the year for the grocery industry, as families are traveling, people shop at farmers markets and everyone eats out more. Revenue has been on an upward trend since the store opened, and once the summer holidays are over he expects the pace to accelerate.

This is also when Bodhi will begin to market more aggressively, including with flyers in the local newspaper and some clever digital advertising. Interestingly, the flyers won't cost Bodhi a thing, as product vendors cover the cost.

Month two is bringing more refinement of the product line-up, the start of digital advertising, and a variety of in-store events. The flagship is where the team is building the brand and perfecting its model, with an eye to establishing a second store before long. "We've looked at about 12 locations but are holding out for just what we want," states Sutherland.

"Slow and steady wins this race," he says, before adding with a smile, "but we want to move as quickly as we can."