As many produce managers already know, operating a department that equally supports conventional and organic items can be double the work.
The remark I hear from many retail team members is this: “It is like having two jobs and running two separate departments.”
Many retail executives, operational leaders and support team members feel the same way. Ensuring a strong balance for conventional and organic across placement, pricing and promotion is not an easy endeavor. Here are some quick tips to consider when your goal is to support conventional while advocating for organic.
Assortment
Keep your conventional and organic assortments working in tandem. Determine which primary items can afford duplication in both conventional and organic options. Most of the top-tier conventional and organic categories will require item duplication to support the high customer demand.
Many secondary and tertiary items, however, can avoid item duplication without impacting the customer's shopping list. With these items you can choose whether to carry conventional or organic.
There are many secondary categories that could be offered as organic exclusively without jeopardizing the conventional category. From my own experience, converting the carrot and mushroom categories over to 100% organic improved sales dollars, increased unit movement and reduced shrink.
Tertiary items present a similar opportunity. Do you need both conventional and organic leeks and anise? Do you need both conventional and organic kale? Maybe organic is the answer.
Once your assortment of conventional and organic is defined, you can begin to drive consumer traffic with high-penetration, primary conventional items and yet maintain the important and growing incremental organic sales.
Advertising
Advertising and promoting conventional items to drive primary customer traffic is a must. Remembering to advertise and promote the rapidly growing organic category is equally important.
Here are some happy compromises that will help you support winning with conventional while keeping up momentum in the booming organic category.
Side by side
Consider combining conventional and organic in the same promotion. The folks at Kroger always include the organic duplicate of their feature item(s). The example below shows organic personal watermelon, organic mangoes and organic avocados featured alongside their conventional counterparts.
Not only does this keep conventional and organic categories together on the front page for best exposure, but it also allows for critical in-store signage to be displayed in both merchandising areas of the department.
We all know that “ad” signage in the stores sells more product, including organic product!
Turn in the promo spotlight
Rotating your front-page feature promo box with an occasional organic item can also help bolster the organic category while continuing to move conventional counterparts. This can be done by hosting composite pricing on both items.
My favorite example occurs every strawberry season when conventional berry supply volumes are not quite ready to host a 99-cent sale. The timing is better suited for hosting a 2 for $3 or $1.99 organic strawberry promotion. This allows you to be competitively priced, generate some solid sales dollars and move some units before prime berry season hits later on.
It also allows you to composite price the retails of both organic and conventional strawberries, making some important extra margin dollars on the lower-cost conventional berries.
Merchandising efforts for a dual strawberry promotion like this would lean towards building larger displays of conventional strawberries in high-traffic areas while keeping the organic strawberry displays smaller and in line with the ratio of your organic percent of business.
Tell the organic story well
Make sure that the customer is informed about the attributes of organic fruits and veggies. USDA Organic signage and educational point-of-sale materials can help convey the value proposition.
Educating the store team on organic is also a must. Team members need to be able to explain to customers that organic produce operations agree to follow certain farming practices and are regularly inspected to ensure compliance. Organic produce cannot be grown with synthetic fertilizers, synthetic pesticides or sewage sludge, for example. Genetic engineering and irradiation also are not allowed.
A well-signed organic merchandising area and an informed store team make customer education effective and prosperous.
Merchandising decisions
It's the age-old question in organic merchandising: integrate or segregate? Based on my experience, making a large statement with organic in one centralized destination location proved highest performance results. I prefer organic items segregated together when merchandising within the core department.
Creating a one-stop-shop for organic customers allows the retailer to heavily market the category with organic signage, organic shelf strips and eye-catching organic branded fixtures.
When it comes to satellite merchandising throughout the store, integration of organic items is the way to go. Front entrance lobby displays of organic categories merchandised next to high-velocity conventional items works very well. It is kind of like composite merchandising, especially when you can offer two versions of the same item to different customers.
Imagine a large display of promotional conventional grapes with a side stack of promotional organic grapes next to them … It's a win-win for both customer and retailer.
Pricing parity or differentiation?
My strategy on organic retail pricing is the “fast nickel” approach. A competitive organic retail pricing structure permits best possible product turns and movement. It also helps transition conventional shoppers over to trying organic while keeping items moving and fresh.
Slightly lower margins that drive substantially higher movement and less food waste help strengthen the organic category bottom line.
Years ago, the delta between conventional and organic retail pricing of like items was very large. Today, customers can make quick purchasing decisions on organic items due to a much closer pricing parity to conventional than ever before.
Organic availability continues to increase, driving costs down and consumer purchasing up.
Listen to your shoppers
The voice of the customer never lies. Listen to what they are telling you by analyzing organic category growth opportunities. Back in the year 1996, customers were not easily convinced that they wanted to purchase organic fruits and veggies. Twenty-five years later, a surge in organic item availability and comparable retail prices have given customers the chance to explore both options.
Many customers are now enjoying the opportunity to decide which category fits their lifestyle best. As they adjust, so should every retailer.
We need to continue fine-tuning ways that both conventional and organic categories can live together in harmony.
Balancing the support for conventional mainstream items while enjoying many customers transitioning over to organic items can be a lucrative transformation for your business if you play your cards right!
Scott Schuette is a produce retail veteran of more than 35 years and was most recently the vice president of produce and floral for Fresh Thyme Market. He has been named Produce Retailer of the Year and Specialty Food Retailer of the Year over the course of his decades of service to the fresh produce industry.