Rainbow Blossom
Founded: 1977 by Bob Auerbachs
Sector: Natural Food Markets
Business Status: Success
Location: Louisville, Kentucky
Website: www.rainbowblossom.com
Status 1991:
For retail-food stores competing in areas with large supermarkets, parking is a deciding factor in choosing location. Nancy and Rob [Bob] Auerbach learned this lesson the hard way ... [their] store survived, helped along by the Auerbach's catering service and the popularity of the cafe; however, Nancy says, "It was a wonderful, wonderful place but it just never supported itself." (...) In 1981 the Auerbachs closed the cafe and moved off the beaten track, not far away from downtown but on a side street with plenty of parking. What the store lost in foot traffic it picked up from offering plenty of additional rking'' (Bennett 1991, p.244) [1].
Bob Auerbach opened a 1,000-square-foot natural food store with a 1,500 square-foot restaurant in 1976. By 1983 the store had moved to a 6,000-square-foot building making Rainbow Blossom the largest natural-food store in the Louisville area. Month on month, sales increased by 24 per cent during the first month in the new store. Throughout this period Auerbach saw the store gain a loyal customer base, stating in 1988; ''for years we were on people''s occasional shopping trip, now we're on their regular shopping trip. Our typical customer is a 36-year-old housewife shopping for her family (...) A lot of people are coming by saying, "I've seen you for 10 years, all of a sudden I'm interested in what you have''.
Rainbow Blossom's product lines included prepared foods such as sandwiches, soups and pasta, and chilled foods that were not available at most grocery stores, such as dairy products derived from soybeans. Near the entrance the store had a beehive with 6,000 insects which was kept for fun, but also helped draw attention to honey products within the store. The store also sold cosmetics, books, videotapes, vitamins, herbs, pet food, cookies, greeting cards and candles [2].
Founder:
Auerbach learned about natural foods made without preservatives or chemicals during the 1970's in Colorado and California. When he returned home to Louisville, Auerbach could not find a store that sold natural foods, leading to the creation of Rainbow Blossom[5]. In a 1997 interview Auerbach stated that
Rainbow Blossom was 10 years ahead of its time, and that if he had done a marketing study he would not have opened the store. Auerbach also divided his
time between two other businesses; Lucky Numbers, a toy design, manufacturing and distribution business, and K & A Design Group which designs toys, and
licenses the manufacturing rights. Auerbach was president of both companies[6].
Status 2010:
By 1996, Auerbach had two stores in Louisville and a store in Lexington 75 miles away. The Lexington store was selected due to its location in a busy shopping centre, which suited Auerbach's plans to be situated on the ''weekly shopping loop''. Auerbach expected the new store to have sales of $1
million during the first year[3]. Having over 10,000 square feet across three stores improved the company's volume-buying status, which helped to maintain
profit margins. Auerbach found that by keeping prices within a threshold of approximately 15 percent above the typical rate in supermarkets, he would be
less likely to lose customers to supermarkets.
Awareness, accessibility and acceptance of natural products has grown significantly since Rainbow Blossom began, with supermarkets and drugstores carrying vitamins, supplements and natural foods. In 1997 it was estimated that sales across the three stores were within a range of $3 million to $ 5 million annually. One way Auerbach aimed to differentiate Rainbow Blossom from supermarkets and other stores was through customer service
based on knowledge about health issues and the products sold. The company employs a director of education who arranges seminars, and talks with outside
experts. To be eligible for raises and promotions, employees have to complete a curriculum established by the director of education [4].
In 1998 the Lexington store moved to a larger building. The increased selling space allowed for the addition of a fresh produce section, a salad bar, and the option to expand other categories, including deli food, produce, dairy and frozen foods[7]. The store opened a cafe serving coffee, fresh sushi, wheatgrass juice and other organic fare. Gaining enough room for in-store food service was part of a deliberate strategy to create more traffic for the store as a whole. Within 1 year Auerbach reported that sales had doubled, with an average of 700 to 800 customers per day[8].
Founder Bob Auerbach's daughter Summer Auerbach got involved with the business in 2004 after he was diagnosed with non-Hodgkin's lymphoma. Summer Auerbach had recently received a degree in Business and International Studies, and was ready to join AmeriCorps in California, however she agreed to return home to help out for a few months.
When Summer Auerbach returned to Louisville, sales at one store were down 50 percent, with increasing competition from other stores. Summer Auerbach recalled ''my memory of Rainbow Blossom had always been this really high-energy, positive atmosphere that was almost like a gathering place. When I came back, the store felt lifeless to me. Nobody wants to shop at a store that they perceive as going out of business.'' Summer Auerbach took over the store immediately, and adopted a new marketing strategy to attract customers. This involved hosting meet-and-greets with alternative-health practitioners, free yoga lessons, events for diabetics and a farmers' market at the store. In 2005 Summer Auerbach opened a fourth store in New Albany. By 2008 every store saw an increase in sales compared with the previous year, with sales up by 40 percent in one store. Summer Auerbach became Vice President of Operations. Bob Auerbach remained as the owner of the business whilst no longer being involved at an operational level.
By 2009 Rainbow Blossom was in the process of opening its fifth grocery store in Kentucky. It was planned that this store would be the first retail store to
receive the U.S. Green Building Council''s Leadership in Energy and Environmental Design (LEED) certification. Summer Auerbach was also involved discussions regarding the establishment of a business partnership between Rainbow Blossom and local farmers to create a community-supported agriculture project, where customers pay a seasonal fee (approximately $400) for produce boxes throughout the year [9].
Sources:
[1] Bennett, S. J. (1991) ''Ecopreneuring: The Complete Guide to Small Business Opportunities from the Environmental Revolution''. New York, Wiley.
[2] Benmour, E. (1988) Natural Food Store has blossomed, Business First-Louisville, 6th June, Vol 4; No. 44, p.8.
[3] Benmour, E. (1996) Natural Foods to add Lexington store to Louisville pair, Business First-Louisville, 27th May, Vol 12; No. 43, p.4.
[4] Kennedy, R. (1997) Rainbow Blossom sprouts locations and remains healthy with owner''s ''retail is detail'' philosophy at it core, Business First-Louisville, 28th July, Vol 13; No. 51, p.15.
[5] Benmour, E. (1988) Natural Food Store has blossomed, Business First-Louisville, 6th June, Vol 4; No. 44, p.8.
[6] Kennedy, R. (1997) Rainbow Blossom sprouts locations and remains healthy with owner''s ''retail is detail'' philosophy at it core, Business First-Louisville, 28th July, Vol 13; No. 51, p.15.
[7] Boyd, T. (1998) Rainbow Blossom moving to Butler''s Barrow site, Business First-Louisville, 12th October, Vol 15; No. 10, p.3.
[8] Poulton, T. (2000) Rainbow Blossom adds coffee service, Business First-Louisville, 21st April, Vol 16; No. 38, p.4.
[9] Moss, J. (2009) The Poise of Summer, Louisville, 1st February, 60:2, p.26.
Sector: Natural Food Markets
Business Status: Success
Location: Louisville, Kentucky
Website: www.rainbowblossom.com
Status 1991:
For retail-food stores competing in areas with large supermarkets, parking is a deciding factor in choosing location. Nancy and Rob [Bob] Auerbach learned this lesson the hard way ... [their] store survived, helped along by the Auerbach's catering service and the popularity of the cafe; however, Nancy says, "It was a wonderful, wonderful place but it just never supported itself." (...) In 1981 the Auerbachs closed the cafe and moved off the beaten track, not far away from downtown but on a side street with plenty of parking. What the store lost in foot traffic it picked up from offering plenty of additional rking'' (Bennett 1991, p.244) [1].
Bob Auerbach opened a 1,000-square-foot natural food store with a 1,500 square-foot restaurant in 1976. By 1983 the store had moved to a 6,000-square-foot building making Rainbow Blossom the largest natural-food store in the Louisville area. Month on month, sales increased by 24 per cent during the first month in the new store. Throughout this period Auerbach saw the store gain a loyal customer base, stating in 1988; ''for years we were on people''s occasional shopping trip, now we're on their regular shopping trip. Our typical customer is a 36-year-old housewife shopping for her family (...) A lot of people are coming by saying, "I've seen you for 10 years, all of a sudden I'm interested in what you have''.
Rainbow Blossom's product lines included prepared foods such as sandwiches, soups and pasta, and chilled foods that were not available at most grocery stores, such as dairy products derived from soybeans. Near the entrance the store had a beehive with 6,000 insects which was kept for fun, but also helped draw attention to honey products within the store. The store also sold cosmetics, books, videotapes, vitamins, herbs, pet food, cookies, greeting cards and candles [2].
Founder:
Auerbach learned about natural foods made without preservatives or chemicals during the 1970's in Colorado and California. When he returned home to Louisville, Auerbach could not find a store that sold natural foods, leading to the creation of Rainbow Blossom[5]. In a 1997 interview Auerbach stated that
Rainbow Blossom was 10 years ahead of its time, and that if he had done a marketing study he would not have opened the store. Auerbach also divided his
time between two other businesses; Lucky Numbers, a toy design, manufacturing and distribution business, and K & A Design Group which designs toys, and
licenses the manufacturing rights. Auerbach was president of both companies[6].
Status 2010:
By 1996, Auerbach had two stores in Louisville and a store in Lexington 75 miles away. The Lexington store was selected due to its location in a busy shopping centre, which suited Auerbach's plans to be situated on the ''weekly shopping loop''. Auerbach expected the new store to have sales of $1
million during the first year[3]. Having over 10,000 square feet across three stores improved the company's volume-buying status, which helped to maintain
profit margins. Auerbach found that by keeping prices within a threshold of approximately 15 percent above the typical rate in supermarkets, he would be
less likely to lose customers to supermarkets.
Awareness, accessibility and acceptance of natural products has grown significantly since Rainbow Blossom began, with supermarkets and drugstores carrying vitamins, supplements and natural foods. In 1997 it was estimated that sales across the three stores were within a range of $3 million to $ 5 million annually. One way Auerbach aimed to differentiate Rainbow Blossom from supermarkets and other stores was through customer service
based on knowledge about health issues and the products sold. The company employs a director of education who arranges seminars, and talks with outside
experts. To be eligible for raises and promotions, employees have to complete a curriculum established by the director of education [4].
In 1998 the Lexington store moved to a larger building. The increased selling space allowed for the addition of a fresh produce section, a salad bar, and the option to expand other categories, including deli food, produce, dairy and frozen foods[7]. The store opened a cafe serving coffee, fresh sushi, wheatgrass juice and other organic fare. Gaining enough room for in-store food service was part of a deliberate strategy to create more traffic for the store as a whole. Within 1 year Auerbach reported that sales had doubled, with an average of 700 to 800 customers per day[8].
Founder Bob Auerbach's daughter Summer Auerbach got involved with the business in 2004 after he was diagnosed with non-Hodgkin's lymphoma. Summer Auerbach had recently received a degree in Business and International Studies, and was ready to join AmeriCorps in California, however she agreed to return home to help out for a few months.
When Summer Auerbach returned to Louisville, sales at one store were down 50 percent, with increasing competition from other stores. Summer Auerbach recalled ''my memory of Rainbow Blossom had always been this really high-energy, positive atmosphere that was almost like a gathering place. When I came back, the store felt lifeless to me. Nobody wants to shop at a store that they perceive as going out of business.'' Summer Auerbach took over the store immediately, and adopted a new marketing strategy to attract customers. This involved hosting meet-and-greets with alternative-health practitioners, free yoga lessons, events for diabetics and a farmers' market at the store. In 2005 Summer Auerbach opened a fourth store in New Albany. By 2008 every store saw an increase in sales compared with the previous year, with sales up by 40 percent in one store. Summer Auerbach became Vice President of Operations. Bob Auerbach remained as the owner of the business whilst no longer being involved at an operational level.
By 2009 Rainbow Blossom was in the process of opening its fifth grocery store in Kentucky. It was planned that this store would be the first retail store to
receive the U.S. Green Building Council''s Leadership in Energy and Environmental Design (LEED) certification. Summer Auerbach was also involved discussions regarding the establishment of a business partnership between Rainbow Blossom and local farmers to create a community-supported agriculture project, where customers pay a seasonal fee (approximately $400) for produce boxes throughout the year [9].
Sources:
[1] Bennett, S. J. (1991) ''Ecopreneuring: The Complete Guide to Small Business Opportunities from the Environmental Revolution''. New York, Wiley.
[2] Benmour, E. (1988) Natural Food Store has blossomed, Business First-Louisville, 6th June, Vol 4; No. 44, p.8.
[3] Benmour, E. (1996) Natural Foods to add Lexington store to Louisville pair, Business First-Louisville, 27th May, Vol 12; No. 43, p.4.
[4] Kennedy, R. (1997) Rainbow Blossom sprouts locations and remains healthy with owner''s ''retail is detail'' philosophy at it core, Business First-Louisville, 28th July, Vol 13; No. 51, p.15.
[5] Benmour, E. (1988) Natural Food Store has blossomed, Business First-Louisville, 6th June, Vol 4; No. 44, p.8.
[6] Kennedy, R. (1997) Rainbow Blossom sprouts locations and remains healthy with owner''s ''retail is detail'' philosophy at it core, Business First-Louisville, 28th July, Vol 13; No. 51, p.15.
[7] Boyd, T. (1998) Rainbow Blossom moving to Butler''s Barrow site, Business First-Louisville, 12th October, Vol 15; No. 10, p.3.
[8] Poulton, T. (2000) Rainbow Blossom adds coffee service, Business First-Louisville, 21st April, Vol 16; No. 38, p.4.
[9] Moss, J. (2009) The Poise of Summer, Louisville, 1st February, 60:2, p.26.