Natural route to radiant retail health
Wellness Warehouse is thriving on its organic formula
Wellness Warehouse, which in the past 10 years has become the largest niche health and wellness retailer in the country with more than 26 stores in Gauteng and the Western Cape, plans to open another 30 stores in the next three to four years.
The business was started by the Gomes brothers: Sean, a doctor interested in preventative healthcare who had started specialising in anaesthetics, and Carlos, who had helped grow the family's De La Rey building materials and home improvement business (which has since been sold to Massmart).
Carlos had witnessed at De La Rey how much interest there was in home spas and jacuzzis, and thought there would be an opportunity in retail in the "wellness" sector.
The business is in the right place at the right time to capture the interest of millennials for whom health is a priority. For them, and for many others of all ages, being healthy isn't about taking medication, it's about prevention and a healthy lifestyle. It's not about dieting, it's about eating well. Wellness Warehouse is where you can pick up specialist nutrition "superfoods" - think goji berries and cranberries - food for vegans, ingredients for those on a Paleo or Banting diet, or products free of gluten, dairy or sugar.
Whole Foods model
It also sells eco-friendly cleaning products and natural supplements, as well as skincare products and complementary medicines. Some stores have naturopaths or nutritionists on hand as well as cafes.
When starting the business, the brothers travelled to look at overseas concepts. One of the businesses that captured their attention was Whole Foods - which positions itself as "America's healthiest grocery store", and which Amazon plans to buy for $13.7-billion (about R180-billion).
When the company started a decade ago, wellness in South Africa was a new concept. Traditional pharmacies catered to consumers who were already ill by the time they needed prescription medication. Health shops were independently run and the market fragmented, said Sean.
"Some tended to have that peculiar 'health shop' smell - the scent of incense, herbs and fermented products - and they were rarely well merchandised and not necessarily a place you wanted to spend time and shop," he said.
"You felt like you had to be within that inner circle of knowledge to be comfortable shopping there. It was very intimidating for someone who didn't know about wellness. We wanted to make wellness more accessible and comfortable for people to approach and more fashionable."
The first store was in Kloof Street in Cape Town, which tried to repeat the big-box format of the De La Rey outlets. But the brothers soon realised this format was too large.
The Kloof Street store remains the flagship outlet in the chain. "The first years were challenging. We were on the first floor of a recently refurbished shopping centre with a fledgling brand no one knew about," Sean said.
When diversity doesn't work
"What we've learnt over the years is to remain focused in our category and be the experts within the natural organic specialised health category and be the market leaders. If you go too diverse, you lose your focus."
The chain has had good growth over the last few years, but Sean declined to give detailed figures. Today the group has a smaller-format store of about 150m² and a larger-format store of between 300m² and 600m².
Sean said the family had grown up discussing business around the dinner table.
"I sometimes think about having left medicine, what it would have been like if I had continued," he said.
"Wellness Warehouse was just such an opportunity to get involved in a start-up that combined business with health. Also, working in hospital medicine, people are often already suffering from chronic illness - most of them brought on by poor lifestyle factors. I realised early on that prevention is most definitely better than an attempted cure."
Carlos has "also adopted the lifestyle and become very passionate about the industry".
The business is still majority-owned by the family, although it sold a minority stake to equity company Infinitus Holdings, formerly Leaf Capital.
Sean said Infinitus had contacted them at the right time because there were plans to expand the business rapidly in terms of store numbers and growth. It was previously family-funded and they were looking to balance family investments.
"We'd been funding the business privately, looking to grow the footprint. We were at 16 stores last July and now we have 26 stores and an online presence."
Of the 26 stores, five are in Pretoria, six in Johannesburg and 15 in the Western Cape. Wellness is planning another 30 stores in the next three to four years and the group is working on a franchise model which is in the development phase. It hopes to have its first franchise outlet next year.
Expansion on the cards
Wellness Warehouse has had better than 30% growth since Infinitus invested.
Sean said the family estimated the wellness industry in South Africa was worth R20-billion, "but it's always difficult to say what's included and what's not. That figure is an educated guess, not a statistical number."
He sees opportunity to grow beyond the current offering. And getting more deeply involved, like Whole Foods, in perishables and fresh food - limited quantities are already available at the Kloof Street store - is not off the radar.