A Pricey Perception
If there’s one issue that dampens sales, it’s price. In surveys and polls, the perception that organic is a pricey indulgence has continued to dog the category since the very beginning. Nabors said the key is educating consumers — and employees — that organic is not like specialty or gourmet, which is oriented towards the product, but about the way it becomes a product.
“When you sell an organic product for more money, consumers need a better understanding of the value before they will purchase,” he said.
Retailers have been able to convey a value message directly through the introduction of organic private labels. One of the first to hit shelves was Full Circle, introduced in 2000 by Topco Associates. Store brands allowed retailers to close the price gap by providing organic products that were priced more in line with their conventional counterparts. Shoppers who purchase an organic private label typically save an average of 15% over the same branded organic item, according to industry statistics.
As of 2012, store brands make up nearly a quarter of all organic food sales, bringing in more than $1 billion.
At Mustard Seed, shoppers are tutored about all organics through “lots of signs and labels,” a cooking school and in-store classrooms that are also used for formal employee training. Staff guidance ranges from Mustard Seed 101 (the store’s mission and history) to departmental specifics that help employees “promote customer engagement,” said Nabors.
After 10 years, industry promotions and retail efforts like those made by Mustard Seed have helped move organic to its next phase of growth. As families continue to embrace organic, and “Boomers continue to shop for healthy products that slow the aging process,” the category will see even more growth, predicted Jacobowitz.
Read more: Whole Foods to Teach Organics to Kids
The future is far from certain, however. Critics of the NOP say big CPG companies have muscled into organic manufacturing and are prone to interpreting the rules to favor sales over principle. They fear the federal government hasn’t provided adequate resources for research and policing, and that the category has grown so large that it’s lost much of its relevance and is in danger of becoming commoditized.
Retailers may also find they face strategic choices in the way they merchandise and market organic food.
“You’ll either be a Whole Foods at the quality end of the spectrum, or taking on a price position at the other end of the spectrum,” said Jacobowitz.