From shampoo to superfoods: how drugstores like dm are making up ground with organic foods

Drugstore chains (also known as health and beauty stores, chemists or pharmacies in other countries) are becoming increasingly important as food retailers in Germany, especially in the organic segment. Organic products are not just an ideal fit for their health and values-driven image but also cater to the preferences of many consumers who want the convenience of shopping for various everyday products in one place. But what does the boom in organic products in drugstores mean for supermarkets and specialist organic retailers?

According to a recent consumer survey by market research institute Mafowerk, 42 percent of customers specifically visit drugstore chains because of the food they sell. Especially for young consumers under 40, buying food in a drugstore has long since become a normal part of everyday life. Tea, muesli bars and snacks – produced organically, using modern packaging and at an attractive price – are particularly popular. It’s a development that offers new opportunities – but also raises new issues of competition for supermarkets and organic retailers.

Drugstore chains generally benefit from their carefully curated assortment of products: organic products are not offered in isolation but embedded in a lifestyle-driven shopping experience. The clientele appreciates the ease of access, good value for money, and added value of obtaining exclusive products and innovations often not available in traditional supermarkets or specialist retail stores. Retail researcher Professor Stephan Rüschen is monitoring this development closely: “The drugstore chains are actually enjoying their biggest growth rates with organic articles,” he stresses. Until now, their impact has often been underestimated in market research – “because they generally don’t handle any chilled, frozen or fresh products.” Nevertheless, they are taking a noticeable market share aware from food retailers.

And how will dm exploit this potential in future? “Healthy eating, natural beauty and the responsible handling of resources – these are the issues that will define our future product range. Our customers expect us not just to offer good products but also provide them with orientation. And we are happy to take on this responsibility,” Erbe emphasises.

Nutritional habits influence choice of shops

Alongside attractive prices and a distinct product range composition, another reason for the success of these kinds of drugstore chains is that they strike a chord with altered consumer behaviours. Nowadays, a person’s diet has a huge influence on where they shop. Those who follow healthy, plant-based, sustainable diets specifically look for product ranges that meet these requirements – and increasingly, they are finding them in drugstores. Vegetarians are much more likely (58 percent) to go to drugstores to buy food than flexitarians (42.9 percent).

Limited range – perishable foods?

Although some drugstores do use fridges, these are generally reserved for drinks. When it comes to fresh produce with a short shelf life, on the other hand, there is still a lot to be done. Rüschen believes this is due to physical limitations: “If drugstore chains really want to take something away from the competition for food they have to make space for it – and these stores are not particularly large.” The typical sales floor is around 500 to 600 square metres. A nationwide expansion would only be possible with new and larger sites – “and that would take a very long time.”

Competitive pressure on traditional supermarkets and independent retailers

The growing presence of organic foodstuffs in drugstore chains increases the competitive pressure on traditional supermarkets and independent retail companies – on top of the intense competition from discount stores. Drugstores like dm, Rossmann or Müller are increasingly positioning themselves as vendors of sustainable products and are thus specifically targeting health- and price-conscious consumers. Especially in the high-margin dry goods segment – e.g. muesli, snacks, plant-based drinks or even natural cosmetics – this is giving rise to new competitive relationships.

For traditional and independent food retailers this means that for a long time now, customers who embrace organic food have not been shopping exclusively at supermarkets like Rewe, Edeka etc. Independent food stores in particular are under pressure: As local shops with smaller floor spaces and limited resources, they are having to compete against the growing offerings in drugstores. The entire food retail industry needs to have clear product range strategies: more visibility for sustainability factors at the point of sale as well as a credible positioning about regional provenance, personalised approaches, and special ranges like vegan or gluten-free products. Retailers without a distinctive profile risk becoming irrelevant, especially among a young, values-driven clientele. The independent retail segment especially has an opportunity here to set itself apart from the unvarying product range offered by drugstores and discount shops and appeal to this specific target group in an authentic way with their distinctive profile, regional roots and personal proximity.

But it is particularly in the case of highly standardized non-perishable products like snacks, cereals or baby food that these speciality retailers are coming under pressure, because thanks to their ability to purchase in large volumes and their aggressive pricing policies, drugstores are setting benchmarks that smaller retailers are scarcely able to meet. The especially low prices offered by large retail chains ensure that many customers primarily associate organic food products with good deals – which is why many customers prefer the organic products from drugstores with their good value for money to the branded products available from specialist organic stores.

These speciality retailers can and should therefore distinguish themselves by highlighting other strengths such as product freshness, hand-crafted processing, close relationships with organic farms, expert advice, and a consistently values-driven product range. These aspects cannot be copied at random – but they do need to be communicated much more visibly. Close relations with associations like Naturland and Demeter can also play a vital role by signalling trustworthiness.

There is also a need for clarification about price perception, says Jäckel: “Organic products sometimes seem expensive because conventional products do not disclose their true costs.” She sees clear future opportunities for the specialty retail segment – provided it stands up confidently for the things that set it apart: “Generations Y and Z want authentic values, credible concepts and emotional connection. Product freshness, regional sourcing and transparency are therefore not romanticised values but issues that inform the future.”

What’s left? Opportunities, pressure, and the question of differentiation

For a long time now, drugstore chains have been more than just an add-on and have become an integral part of the organic food market. With their inexpensive own brands, a strong connection to health, and a clear claim to sustainability, they are capturing the spirit of the times – and redistributing market shares.

This means that the traditional food retail and independent retail segments need to differentiate themselves to a greater extent, strategically embed sustainability and exploit regional structures. For speciality organic stores this means making their own core competencies visible, emphasising their role as advice-givers and the freshness of their products, and making the organic philosophy tangible as a frame of mind.

Because if you want to survive in this dynamic environment, you need to offer more than just an organic label. You need a recognisable profile and the courage to stand by it.