The New York Times reports that the economic downturn is having an impact on the sales of natural and organic products:
“It turns out that when times are tough, consumers may be less interested in what type of feed a cow ate before it got chopped up for dinner, or whether carrots were grown without chemical fertilizers — particularly if those products cost twice as much as the conventional stuff … The sales volume of organic products, which had been growing at 20 percent a year in recent years, slowed to a much lower growth rate in the last few months, according to the Nielsen Company, a market research firm. For the four-week period that ended Oct. 4, the volume of organic products sold rose just 4 percent compared with the same period a year earlier.”
And, the Times writes, “If the slowdown continues, it could have broad implications beyond the organic industry, whose success spawned a growing number of products with values-based marketing claims, from fair trade coffee to hormone-free beef to humanely raised chickens. Nearly all of them command a premium price.
“While a group of core customers considers organic or locally produced products a top priority, the growth of recent years was driven by a far larger group of less committed customers. The weak economy is prompting many of them to choose which marketing claim, if any, is really important to them.”
“It turns out that when times are tough, consumers may be less interested in what type of feed a cow ate before it got chopped up for dinner, or whether carrots were grown without chemical fertilizers — particularly if those products cost twice as much as the conventional stuff … The sales volume of organic products, which had been growing at 20 percent a year in recent years, slowed to a much lower growth rate in the last few months, according to the Nielsen Company, a market research firm. For the four-week period that ended Oct. 4, the volume of organic products sold rose just 4 percent compared with the same period a year earlier.”
And, the Times writes, “If the slowdown continues, it could have broad implications beyond the organic industry, whose success spawned a growing number of products with values-based marketing claims, from fair trade coffee to hormone-free beef to humanely raised chickens. Nearly all of them command a premium price.
“While a group of core customers considers organic or locally produced products a top priority, the growth of recent years was driven by a far larger group of less committed customers. The weak economy is prompting many of them to choose which marketing claim, if any, is really important to them.”
- KC's View:
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No big surprise here. It would be a much bigger shock if the economy hadn’t any impact at all on sales in this segment.
That said, I’d pay attention to the point made by both The Hartman Group’s Laurie Demeritt and IRI’s Thom Blishok to the Times - that many customers are not so much dropping their interest in the category as making decision, setting priorities and looking at where tradeoffs are acceptable.
This is where good, credible information sharing by the retailer can make a huge difference in the customer decision-making process. Rather than not being involved in the process and letting third parties help shape the shopper mindset, retailers should be in the thick of it, embracing the situation and the possibilities that it offers to create dialog and connections between the store and the shopper.
