Focus on organic produce quality, supplier collaboration to drive retail success

Organic produce sales are on the upswing, but sustaining and increasing activity will not come easy.

Retailers seeking to maximize activity must successfully handle a plethora of merchandising variables, which includes the need to manage pricing and supply issues while ensuring product quality, says Tom Barnes, president and chief executive officer of Category Partners LLC, an Idaho Falls, Idaho-based fresh food industry research and consulting firm.

Having solid relationships with produce suppliers and seeing that stores offer arrays of visually appealing fruits and vegetables is vital as well, he states.

“Retailers looking to boost organic produce purchases should understand a fundamental truth about U.S. consumers: they value choice,” Barnes notes. Category Partners research reveals that about 70% of shoppers typically compare two or more items in deciding what to buy. While shoppers consistently rank cost as either the first or second most important purchasing factor, retailers should not discount appearance, he says.

“Americans buy with their eyes,” Barnes says. “Produce that looks good has a far better chance of making it into the shopper’s basket.” In response, retailers should strategically position organic produce adjacent to or near conventional options, he states, noting that many shoppers are unlikely to pick an organic over a conventional item if a direct comparison is not readily available.

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Additionally, a Category Partners survey found that about two-thirds of consumers are flexible and will choose between organic and non-organic produce in accordance with such elements as price and quality. Eighty-five percent of respondents also indicated that they expect stores to price organic items at least slightly higher than the conventional counterparts.

“While organic pricing doesn’t need to exactly match conventional produce pricing, it should be competitive enough to entice shoppers to opt for the organic option,” Barnes says. “Moreover, the quality and appearance of organic produce must be exceptional to meet consumer expectations and justify the premium price.”

Retailers that implement such strategies “can create a more compelling shopping experience that encourages consumers to choose organic options more frequently,” he states.

“Produce that looks good has a far better chance of making it into the shopper’s basket,” says Barnes. Photo credit: Alamy

A cost conundrum

The higher cost of production, however, is making it more difficult for merchandisers to increase organic sales, Barnes says, noting that growers can pass product development expenses onto retailers.

“Growing organic produce is significantly more expensive than developing conventional selections due to stringent farming practices, certification requirements, and increased labor costs,” he states. “It can be difficult for stores to price organic produce competitively, making it harder to offer products that appeal to budget-conscious consumers.”

Related:Sherry Frey of NielsenIQ analyzes organic consumer trends

The shorter shelf life of organic produce is yet another merchandising challenge. “Organic fruits and vegetables often do not have the same durability as their conventional counterparts,” Barnes says. “This can make it difficult for stores to maintain and display consistently high-quality products, which is crucial for driving repeat purchases.”

Merchants must manage availability issues as well, he says, stating that in comparison to standard fruits and vegetables, fewer varieties of organic produce are available year-round.

“Seasonal limitations and the smaller scale of organic farming operations mean that certain organic items may not be consistently in stock, leading to potential gaps in supply,” Barnes says. “This variability can frustrate consumers and make it harder for retailers to build a reliable organic offering.”

Find a trusted partner

Maintaining strong connections with suppliers, however, will better enable retailers to successfully address inventory and merchandising challenges, Barnes says. 

Related:Retailers discuss challenges, opportunities in organic produce

“Open and transparent communication about costs, quality, and availability is essential for building a resilient and effective organic produce program,” he says. “Retailers who prioritize collaboration and maintain consistent dialogue with suppliers are better positioned to secure high-quality products and manage supply more effectively.”

It is crucial that retailers do not rely solely on price-based purchasing to reduce the prospect of receiving lower-quality products or encountering supply shortages, Barnes says. Merchandisers, he states, are also likely to have better outcomes when committing to long-term associations with key suppliers.

“These partnerships foster trust and ensure that suppliers understand the retailer’s pricing strategies and goals,” Barnes says. “The alignment enables suppliers to offer competitive pricing that supports the retailer’s need to maintain both profitability and consumer appeal. ”By nurturing supplier relationships, “retailers can navigate the complexities of the organic market and deliver consistent, high-quality produce that meets consumer expectations,” he adds.