supermarket
Today's Supermarket Green Analysis
Pricing Your Organics - How to Condition Your Customer
November 7, 2007
According to the Rodale Institute, publisher of the New Farm Organic Price Report, "any farmer considering adoption of a new farming system like organic should go in with his or her eyes wide open." SMGN agrees and thinks grocers need to do the same.
Part of educating your consumer is convincing them that even though they are paying more they are actually getting a great deal. It's not magic. It's science.
Learn from gas prices. Every station has a large sign featuring what? THE PRICE. In 2001 when prices crept above the dollar barrier in Tallahassee, Florida drivers would flee to Thomasville, Georgia for a less taxed tank at 97 cents like a Poseidon survivor taking in a final gasp of air. This morning oil hit $98 per barrel and Floridians are thinking mid threes are ok. Just don't let it go to four.
Use price as a selling feature. If you want to sell organic put up a new shelf with a 500% mark up in a conspicuous place for one month. No one will buy it, of course. But this concept will work in a discount chain just as well as in higher demographies. Next let the price down to a comfortable 125%.
Perception is everything. Start with your wines. They won't oxidize for about twenty five years. You can afford an exquisite presentation. You won't have to spend any time restocking for thirty days. Then when you put it on sale, and leave it on sale - be sure you've got plenty of reinforcements.
Fruits and veggies will be treated differently. As an example, according to the United States Department of Agriculture (USDA) statistics, strawberries in major markets for the week of Nov. 6th appear as follows ...
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The solution is obvious. In the case of perishables what is needed is a very small basket of certified organics placed in the midst of conventional items. Here the science of shifting perception needs to be treated like the frog in the boiling pot.
Again, thinking in terms of a lower demographic store, the awareness is tickled by the presence of the basket. That's all it takes. You then slowly raise the price not of the organics, but of the conventionals. By contrast it will seem like a great deal.
A slow introduction of rising prices on conventionl fruits and vegetables of about four months with a slower rise in price of the organic allows the conventional to approach the organic price.
Meanwhile, prices of organic will start to decline. According to the Organic Trade Association, "Organic farming is practiced in approximately 100 countries throughout the world, with more than 24 million hectares (59 million acres) now under organic management."
This means an increase in supply. Demand, will increase with it, of course, but if grocers plan the timing of their "price perception shifts" well, then there should be something almost like "controlled growth."
It's not as though conventional farm land isn't available for conversion to organic. And there is plenty of that. It only stands to increase the bottom line for both farmers and their ultimate consumers.
Grocers should establish relationships with farmers who are ready to apportion land for this purpose before the fact. Planning ahead for green is not something that should be exlusive to high end markets.
Jeff Overbeck, freelance writer