By John Youger & Andrew Elliot
Organic and sustainable products are hot. But retailers and manufacturers need to do much more than slap the word natural on product to win over this new breed of shopper — and tap into a legitimate growth area.
Everyone knows that natural, organic, and sustainable goods have become a big business. With organic sales hitting $35.1 billion in 2013 — an 11.5% increase from the previous year — supermarkets have now emerged as the go-to source for 70% of US households buying organic, according to the Organic Trade Association. The days of finding one-off natural food co-ops and off-the-grid country markets for grass-fed beef or almond milk hand cream are over. Today it’s as close as the nearest convenience store.
How mainstream has it become? Earlier this year, Walmart teamed with Wild Oats to introduce a line of organic products priced at least 25% below other national brands, while Target debuted “Made to Matter—Handpicked by Target,” a collection of goods from 17 organic, natural, and sustainable brands made especially for the retail giant.
“Our guests are looking for products they can feel good bringing home without sacrificing price and performance,” said Kathee Tesija, Target’s executive vice president of merchandising and supply chain, in an April press release. “We’re taking the guesswork out of buying better-for-you products by bringing together 17 trusted brands.”
Tesija’s comment hints at the Wild West-like natural/organic environment, as major retailers and large consumer product companies have embraced the trend. While healthy eaters and environmentally conscious shoppers appreciate more options that reflect their values, the sheer abundance can confuse and overwhelm.
Consider toothpaste. In the old days, the choice was essentially Crest or Colgate. Now, if you visit Whole Foods, you’re faced with 30 or more natural toothpastes with ingredients such as green tea extract, licorice root, and eucalyptus oil.
Then there’s the ambiguity around “natural” labeling. While the federal government has a strict definition of what constitutes an “organic” product, “natural” is a different story. Essentially, the word is meaningless. Even though many consumers think something labeled natural is healthy or environmentally friendly, that’s not necessarily the case.
In fact, the confusion has gotten so bad that Consumer Reports launched a recent campaign to ban the term. “Let’s clean up the green noise in the food label marketplace so Americans can get what they want: truthful labels that represent important and better food production systems,” said Urvashi Rangan, the executive director of the Consumer Reports Food Safety and Sustainability Center, in a June announcement.
Indeed, if retailers and CPG producers want to succeed in the next phase of the sustainable goods boom — let’s call it Green 2.0 — they’ll need to do much more than just slap the word natural on a box of cereal and hope for the best. Here are four ideas to help retailers and manufacturers thrive in this important still-emerging marketplace.
1. Take the lead
With the US Food and Drug Administration refusing to set strict parameters on the term natural, retailers may need to step in. Meijer, for instance, has established its own set of rules for items that carry the natural label in its stores, such as no GMOs (genetically modified organisms), no high fructose corn syrup, and no artificial food coloring, flavoring, and preservatives. Consumers place a lot of trust in retailers, and programs such as Target’s Made to Matter put that credibility to good use by identifying truly healthy and sustainable products and curating their product offerings — and explaining the story behind their choices.
2. Seize the moment
A major life change—an illness, the birth of child, turning 40 years old—often leads consumers to shift from traditional products to organic. Retailers should keep these “moments of receptivity” in mind when arranging inventory, perhaps putting a set of green items in the baby section to appeal to new parents who are suddenly willing to try plant-based baby wipes to protect their little one’s delicate skin. This is a fertile opportunity when consumes are open to consider new brands.
3. Find inspiration in the leaders
Whole Foods has seen its revenue double and its profits triple since 2007, according to Fortune magazine, and the energy and excitement of the chain’s stores — with their unique amenities and dizzying variety of products — have played an important part in that success. As other retailers move into the natural, organic and sustainable category, they may need to offer similar enriching experiences to attract customers who are growing accustomed to curated collections of unique and alternative products.
4. Cater to quick-trip shoppers
More shoppers are buying just a few items at a time when they visit grocery stores. This decline of price-driven stock-up trips provides an opportunity for retailers eager to persuade shoppers to switch to higher-margin organic and natural products. Quick errands are often tailored to individuals. A mother, for instance, might be more willing to buy a loaf of organic bread if she’s purchasing just a few supplies to make her 8-year-old’s school lunch the next day than if she were loading up for the entire family.
Natural and organic products offer higher margins and appeal to an engaged consumer base that’s seeking guidance in understanding their choices of not just what they put in their bodies, but, increasingly, what they put on them as well (lotions, detergents, etc.). If you haven’t already, take the time to visit Trader Joe's and Whole Foods and study the way they’re building loyal relationships with customers. Then you should seek ways you can do the same with your brand.