Organic Foods - A Grocery Opportunity

By Russ Ward

According to the Organic Trade Association, sales of additive-free products has increased 11.5% in 2013 and the group expects 12% growth in 2014. This increase in sales may represent a growing class of shoppers that will pay a little more at the cash register for food that they feel is grown or produced in a healthier and more sustainable way.

This article is not about joining in on the battle over whether organic is better for you or just a waste of the consumer’s dollars, there are plenty of articles, from dozens of sources, that argue the point in perpetuum. All sides seem to be lobbing sets of statistical hand grenades in a war over organic food. In the perspective of this article that battle is not important, however, the perspective of the customer is important and the trend seems to be indicating that customers want organic and natural products. Factually, it is true that organic sales are increasing so grocers need to ignore the arguments on both sides and be able to market to this burgeoning class of buyers. Walmart certainly believes that organic sales will be greater than a small cadre of granola crunching hippies left over from the 60’s as they have joined forces with Wild Oats and have agreed to carry their organic offerings. So how can supermarkets and grocers demonstrate that they are hip to the newest fad to hit the grocery store and turn eco-shoppers into their newest customers?

First, grocers need to examine and understand their market. Research may be needed to grasp the ever changing mindset of the shopper in their targeted location. In some circumstances, it would not be prudent to expand to an organic line of offerings, but in other locations, supermarkets may be sending shoppers away by not carrying organic foods. Know your customers.

Second, think of placement and advertising. If you have decided that healthy is in, then grocers need to consider displaying healthier offerings in a separate aisle or area of the store. It needs to be a prominent area and on the way to the staples. Don’t hide this rollout from your everyday customers. Also, make a big splash with press releases touting your new line and don’t forget to advertise. Use soft, warm tones in all of the signage, shelf information and advertising materials. This maybe a difficult break from the traditional grocery store advertising, where most advertisements published by grocers look more like the funny papers. Instead, think of clean, concise, friendly, muted and natural colors and soft fonts that give ease and comfort to the target demographic. The advertisements need to be geared for the sophisticated shopper.  If you are going organic, this will be worth the effort.

Also, to help with the rollout, you can invite a local civic organization or group that picks up trash or other innocuous action to stand in the new organic section and hand them a big check. Just remember to shake their hands and smile for the cameras. I am not talking about inviting Green Peace, just your local Girl Scout troop will do. Make sure the whole troop is there, in uniform, with parents and the media.    

Third, think about what you are putting on the shelves. Stock your organic or natural section with unique items that you can’t find in your area. This is very important, especially if your view is that organic foods are subject to the Veblen effect, where a product is valued not because of price but because it seems special or luxurious. Economists and business owners that have this view of organic foods expect the sales to decrease as the price decreases in opposition to the normal supply and demand model. And besides if Walmart really is rolling out a new organic selection, why try to beat them on price. If they are going cheap on organic foods, then you may want to think unique. Special niche producers may be a better option. Even if you have to charge more for the product if it is hard to get, consumers may want to spend more and if they come in for your organic offerings they will leave with recyclable bags of other items.

Thinking of recyclable bags, lastly, what is the image of your store? Are you viewed as being sensitive to the ecological perspective? Are reusable shopping bags available and do you give shoppers a price break if they use their own bags (even if you are not required by law)? Do you find outside of the box solutions that can be touted as environment friendly, like electronic shelf labels? Going to a paperless or vinyl-less shopping experience may tip the scales in the minds of consumers. After all, although not a popular selling point, electronic shelf labels (ESL) require less plastics, paper, ink, chemicals and energy and they can make pricing more responsive to the consumer by giving more accurate information. They can also last up to ten years before a battery replacement. You can easily position yourself as friendly to the environment with ESL’s. When you decide on a new program like reusable bags or ESL’s, let people know it is a way your organization is trying to be eco-friendly.             

The important thing is that as the organic food market continues to grow and consumers continue to become more aware of sustainable alternatives, grocers need to be able to tell (through public relations, press releases and advertisements) and show (through in store innovations like ESL’s, product choice and displays) that you are serious about protecting the environment.