Organic trend at retail noted by Cornell University survey
Organic trend at retail noted by Cornell University survey
HOUSTON -- More shoppers are looking for organic produce as well as locally produced fruits and vegetables, according to consumer attitudes research conducted by Cornell University researchers and presented during a workshop at the Produce Marketing Association convention, here.
Researchers conducted in-depth interviews with 544 shoppers in four markets across the United States, inquiring about food safety and organic produce. They also surveyed a variety of retailers, asking them to predict the responses of these customers.
For the most part, retailers know their customers fairly well. In fact, in the few areas where they had not predicted accurately, a panel of retailers at the seminar suggested that customers don't always do what they claim they do. A prime example of this was a question dealing with whether consumers are confused about the value of organic produce. The research showed that, in general, consumers believe they are well aware of the value of organic produce, believing it is superior to conventional produce, and they said they are not confused about this.
But when the retailers were polled about whether they think consumers are confused, a very high percentage of retailers said they do believe that consumers aren't clear about the difference or lack of difference between conventional and organic produce. During the panel discussion, Cornell's Edward McLaughlin asked the retailers why there is a disconnect.
Michael O'Brien, vice president of produce for Schnuck's Markets in St. Louis, said, "We answered that way because they are confused and we know they are confused."
He added that consumers can say whatever they want when being interviewed, but they vote with their pocketbooks every day and basically they vote not to buy organic produce. By inference, he was saying that the average consumer is confused because their opinions about organic produce do not match their buying habits or their knowledge.
Another question revealed that consumers expect their low-cost retail operators to carry a full line of organic products. Again, Mr. O'Brien said that consumers do not understand the costs associated with producing, buying and selling organic produce. He said that Schnuck's has a shrink factor of 30-40 percent on organic produce, compared to about 5 percent for the rest of the store. This shrink has to be factored in and is one of the major reasons that organic produce is significantly higher priced than conventional produce.
Fellow panelist Mike Agostini of Wal-Mart indicated that he sees similar shrink numbers at Wal-Mart. The third panelist, Don Harris, who was representing Wild Oats, which mostly sells organic produce, said that the company's shrink is much lower.
Another conundrum for retailers has to do with where they should merchandise their organic produce. The Cornell research showed that consumers who regularly buy organic produce like it to be marketed in a separate section within the store. Of the consumers survey by Cornell, almost 30 percent identified themselves as regular organic shoppers.
Mr. O'Brien said that while the regular organic shoppers want a special section, the conventional shoppers who occasionally buy organic do not. And the supermarket chain has discovered that the best way to increase sales is to integrate organic produce into the entire produce department. While integrating it might seem like the retailer is out of touch with its organic shopper, in reality it is an effort to increase sales.
Mr. Agostini said that organic sales comprise about 1.5-2 percent of Wal- Mart's produce sales. Mr. O'Brien said that organic produce sales range from 2 percent to 7 percent in his stores, with 4.5 percent being the average. Of course, the figures from Wild Oats paint a different picture, as it has an organics-first policy but stocks conventional produce when organic is not available or is not feasible economically. At Wild Oats, organic fruits and vegetables make up 72 percent of produce department sales.
Another topic discussed was locally grown produce. All three retailers agreed that buying local is a national trend that has traction. The vast majority of consumers believe that local produce is safer, and the retailers know that they hold this belief.
The retailers said that defining what local means depends upon the location of the store and the beliefs of the shoppers of that store. There was a general consensus that "local" might even mean the state that borders the store's location.
Just as consumers have a special place on their shopping list for local produce, they are a bit skeptical of foreign-grown product -- or at least they are when talking to researchers. The panelists agreed that it is truly the consumer who decides which items a retailer carries. Some consumers might say they don't want summer fruit in the dead of winter, as one consumer told Cornell researchers Debra Perosio and Kristen Park. But if the sales weren't there, retailers would stop carrying those items. Sales figures show that there is enough business to warrant carrying fruits and vegetables whenever they are available.
After listening to the presentation by the Cornell researchers, Mr. Harris opined that the produce industry must do a better job of communicating with its consuming public. He said that in many cases, "we have an education issue." It is well documented that many consumers do not understand the fresh produce supply chain. He said that consumers are especially uninformed when it comes to food-safety issues, and it is incumbent upon the entire food industry to bridge this informational gap.
Mr. O'Brien said that food-safety concerns are largely fueled by reports of recalls and problems.
"A day doesn't go by when we don't have at least one recall," he said. "We have to keep [food-safety problems] out of the news. The answer is prevention."
Researchers conducted in-depth interviews with 544 shoppers in four markets across the United States, inquiring about food safety and organic produce. They also surveyed a variety of retailers, asking them to predict the responses of these customers.
For the most part, retailers know their customers fairly well. In fact, in the few areas where they had not predicted accurately, a panel of retailers at the seminar suggested that customers don't always do what they claim they do. A prime example of this was a question dealing with whether consumers are confused about the value of organic produce. The research showed that, in general, consumers believe they are well aware of the value of organic produce, believing it is superior to conventional produce, and they said they are not confused about this.
But when the retailers were polled about whether they think consumers are confused, a very high percentage of retailers said they do believe that consumers aren't clear about the difference or lack of difference between conventional and organic produce. During the panel discussion, Cornell's Edward McLaughlin asked the retailers why there is a disconnect.
Michael O'Brien, vice president of produce for Schnuck's Markets in St. Louis, said, "We answered that way because they are confused and we know they are confused."
He added that consumers can say whatever they want when being interviewed, but they vote with their pocketbooks every day and basically they vote not to buy organic produce. By inference, he was saying that the average consumer is confused because their opinions about organic produce do not match their buying habits or their knowledge.
Another question revealed that consumers expect their low-cost retail operators to carry a full line of organic products. Again, Mr. O'Brien said that consumers do not understand the costs associated with producing, buying and selling organic produce. He said that Schnuck's has a shrink factor of 30-40 percent on organic produce, compared to about 5 percent for the rest of the store. This shrink has to be factored in and is one of the major reasons that organic produce is significantly higher priced than conventional produce.
Fellow panelist Mike Agostini of Wal-Mart indicated that he sees similar shrink numbers at Wal-Mart. The third panelist, Don Harris, who was representing Wild Oats, which mostly sells organic produce, said that the company's shrink is much lower.
Another conundrum for retailers has to do with where they should merchandise their organic produce. The Cornell research showed that consumers who regularly buy organic produce like it to be marketed in a separate section within the store. Of the consumers survey by Cornell, almost 30 percent identified themselves as regular organic shoppers.
Mr. O'Brien said that while the regular organic shoppers want a special section, the conventional shoppers who occasionally buy organic do not. And the supermarket chain has discovered that the best way to increase sales is to integrate organic produce into the entire produce department. While integrating it might seem like the retailer is out of touch with its organic shopper, in reality it is an effort to increase sales.
Mr. Agostini said that organic sales comprise about 1.5-2 percent of Wal- Mart's produce sales. Mr. O'Brien said that organic produce sales range from 2 percent to 7 percent in his stores, with 4.5 percent being the average. Of course, the figures from Wild Oats paint a different picture, as it has an organics-first policy but stocks conventional produce when organic is not available or is not feasible economically. At Wild Oats, organic fruits and vegetables make up 72 percent of produce department sales.
Another topic discussed was locally grown produce. All three retailers agreed that buying local is a national trend that has traction. The vast majority of consumers believe that local produce is safer, and the retailers know that they hold this belief.
The retailers said that defining what local means depends upon the location of the store and the beliefs of the shoppers of that store. There was a general consensus that "local" might even mean the state that borders the store's location.
Just as consumers have a special place on their shopping list for local produce, they are a bit skeptical of foreign-grown product -- or at least they are when talking to researchers. The panelists agreed that it is truly the consumer who decides which items a retailer carries. Some consumers might say they don't want summer fruit in the dead of winter, as one consumer told Cornell researchers Debra Perosio and Kristen Park. But if the sales weren't there, retailers would stop carrying those items. Sales figures show that there is enough business to warrant carrying fruits and vegetables whenever they are available.
After listening to the presentation by the Cornell researchers, Mr. Harris opined that the produce industry must do a better job of communicating with its consuming public. He said that in many cases, "we have an education issue." It is well documented that many consumers do not understand the fresh produce supply chain. He said that consumers are especially uninformed when it comes to food-safety issues, and it is incumbent upon the entire food industry to bridge this informational gap.
Mr. O'Brien said that food-safety concerns are largely fueled by reports of recalls and problems.
"A day doesn't go by when we don't have at least one recall," he said. "We have to keep [food-safety problems] out of the news. The answer is prevention."
