Get 'em On the Comeback!

Written by Brian Hicks
Posted May 3, 2006

Last week, during the opening session of the LOHAS (Lifestyles of Health and Sustainability) conference in Santa Monica, NBC personality, Dr. James Rouse instructed a wide-eyed crowd of cultural creatives to stand up and get in tree pose. All in attendance were clearly familiar with yoga poses as each and every individual in the room quickly assumed the position.

Now opening a meeting by requesting the audience get into a yoga pose is, to say the least, unorthodox. How many times have you experienced this in a meeting or conference session? I'm guessing never. But it's this very attitude - doing things a bit differently and inventing unconventional business practices, that has allowed this movement to gain some serious ground since it hinged itself to this appropriate LOHAS label.

I'm not saying pre-session yoga practices produce a successful operation. But the 'nothing is off limits' approach has proven to be a major catalyst in creating a market that's now worth more than $228 billion.

And the publicly-traded companies that operate within this market are cleaning up.

Take a look at just a few of the top performers in the past two years:

And the list goes on and on. But there are actually a lot more coming!

Over the last couple of years, Green Chip investors have definitely profited from this market segment. But as the health and sustainability movement continues to pick up steam, we must be cautious of how these newer LOHAS companies intend to approach LOHAS consumers. Because operating within this world of cultural creatives requires an approach that does not necessarily parallel that of the conventional business model. And if these companies don't fully understand the LOHAS market - they will fall flat on their faces. Here's why...

Sour On Sweatshops

LOHAS consumers represent roughly one in four consumers with strong environmental and social values who base many of their purchasing decisions accordingly. And the most successful LOHAS companies operating today have embraced this lifestyle in order to perfect their operations and achieve significant market penetration.

Look at Planet Organic (POH.V) for instance.

Walk into any Planet Organic store, and not only will you find organic food - you'll also find fair trade coffee, Yoga DVDs and a company that's purchasing renewable energy to run some of its operations.

The LOHAS consumer's needs are all-encompassing. And they don't budge.

You can't sell fair trade coffee to a LOHAS consumer in a store that carries shoes made in Taiwanese sweatshops and expect to succeed. It won't happen.

The LOHAS consumer is well-informed and extremely loyal to any company that understands this is not just another random market segment, but rather a fully-integrated lifestyle with a multitude of demands.

Companies that have embraced all or at least a good portion of these demands have a proven and successful track record. And that has led to a number of non-LOHAS businesses now seeking to gain a piece of this market as well.

In fact, even Wal-Mart, the world's largest retailer, has recently ramped up its organic offerings.

But while this is good news for organic food growers and manufacturers - don't expect to see the LOHAS segment rushing over to the local Wal-Mart in their hybrids any time soon.

Keeping It Real!

At the LOHAS conference, authenticity was the 'buzz' word of the week. AOL co-founder, Steve Case told the crowd on Friday that in order for the LOHAS business model to work - you must pay close attention to authenticity.

And this is an obstacle that Wal-Mart will not be able to overcome anytime soon.

Don't forget - LOHAS demands require careful attention.

So as Wal-Mart soon becomes the largest supplier of many organic products, it won't be able to draw the LOHAS consumer to their stores for the simple reason that Wal-Mart does not meet the full spectrum of LOHAS demands.

And while some speculate that Wal-Mart's entry into this market could take market share away from the likes of Whole Foods Markets and Wild Oats - it could actually work out in favor of the LOHAS retailers.

Get 'em On the Comeback!

Many Wal-Mart customers will soon discover these new organic options for the first time. When they do, they'll learn about a whole new world. And if they embrace this world - Wal-Mart's organic offerings could easily serve as a gateway to bigger and better LOHAS offerings.

This certainly wouldn't be the first time this has happened.

In fact, in an effort to provide a crossover for conventional consumers to organic consumers, organic retailer, Wild Oats Markets (OATS:Nasdaq) initiated a similar approach last year with its 'store-within-a-store' boutique in New England.

Essentially, this is a specialty boutique that operates as a holistic health center where customers can find nutritional vitamins and supplements, homeopathic remedies and natural and organic body care products.

Last fall, the company opened its second 'store-within-a-store' boutique with food retail giant, 'Stop & Shop' in Fairfield Connecticut.

The 'store-within-a-store' concept is really based on nothing more than converting non-LOHAS consumers to organic and natural products by bringing the LOHAS products directly to the consumer.

For instance, take a parent who may be a prime candidate for LOHAS conversion. This parent could be a typical American parent who is interested in trying all these natural and organic products he has heard so much about. Unfortunately, this parent, like most parents, is also extremely busy and just doesn't have the time to visit a conventional supermarket for some things and an organic and natural retailer for others.

This kind of scenario is nothing out of the ordinary.

So rather than wait for this possible LOHAS convert to eventually make his way to the natural and organic food store, Wild Oats is bringing a little taste of this world right to the front door of his world.

It's actually a pretty smart...and time-tested strategy.

For years, many food and cosmetics companies have spent millions on marketing efforts that revolve around offering consumers product samples. And these types of efforts continue because they often prove successful - not only for an immediate sale - but for long-term loyalty as well.

Now that Wal-Mart plans to offer up its own line of organic goods to consumers, all the LOHAS retailer has to do is wait to cash in on the conversion comeback!

To learn more about the LOHAS movement, and the enormous purchasing power that surrounds it, visit Green Chip Stocks now.

Until next time...

Jeff Siegel
Managing Editor, Green Chip Stocks