Progressive Grocer

JUN 2016

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144 | Progressive Grocer | Ahead of What's Next | June 2016 Grocery Natural/Organic Beyond the Perimeter Most shoppers begin their quest for better health in the store's perimeter departments, with 66 percent eating more health- fully than before. Tis is because perimeter products have simple, easy-to-understand ingredients that can be trusted, including organic ingredients, which are non-GMO and don't contain herbicides or pesticides. It's critical that retailers place additional emphasis on merchandising a robust natural and organic assort- ment in produce, dairy, meat and seafood. Natural and organic products have tremendous synergy throughout the entire store. Shoppers are willing to pay a premium for a product that meets all of their needs as well as the needs of their families. Sixty percent of consumers now choose quality over price. Natural and organic shoppers are more inclined to purchase similar high-quality products in other departments. As a result, the natural and organic shopper typically has a much higher overall market basket. For example, a shopper purchasing whole grain organic bread is more likely to purchase a premium organic spread, organic produce, organic soup, etc. News stories claim that organic products are higher in price. Tis isn't always true when you consider their health benefts. For this rea- son, it's important that shoppers be able to compare organic and nonor- ganic products side by side. For example: Organic whole grain bread merchandised next to conventional premium bread will make it easy for shoppers to choose the prod- uct that best meets their needs, even with a 30-cent price diference. Shoppers will easily trade up to the healthier alternative when you make it easy for them to appreciate the diference between the products. Shoppers will gladly pay a few cents more for products that best meet their needs. Tis is especially true when the organic alternative keeps them feeling full longer. Efective merchandising is the best way to capitalize on this important trend. Savvy retailers need to merchandise natural and organic products next to their nonorganic counterparts across all categories. Laser Focus Center store has a large variety of natural and organic products for shoppers to choose from in almost every category. Grocery is the largest depart- ment: about 50 percent of total store sales, up 1.8 percent. Natural repre- sents 6.2 percent of grocery, up 9.4 percent, and organic is up 19 percent. Canned goods, representing about 50 percent of total grocery sales, are up 2.7 percent. Natural is up 7.4 per- cent, and organic is up 20.7 percent. Mexican food, the only category out- performing total grocery as a whole, is up 2.9 percent. Almost every other category is either declining or fat. In contrast, natural and organic categories are all growing, dramati- cally outpacing total grocery. Shelf- stable fruit, for example, is up 40.9 percent in natural and 50 percent in organic, compared with 0.8 percent in total grocery. Total grocery sales, in the absence of natural and organic products, are declining in two-thirds of the canned goods categories. Put another way, the small sliver of sales that represent natural and organic products is responsible for all of the growth in these categories. Te sales increases are even more dramatic as you drill down to the subcategory level. For example, ready- to-serve soup is down 5 percent in liquid soup, while it's up 10.4 percent in natural and 21.4 percent in organic. The natural and organic canned food categories with the highest sales growth all have a tremendous synergy with their corresponding perimeter departments.

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