Study: Price rules even as organic, local grow

12/27/2012
Mike Hornick

Demand for organic and local farm products ranks high among retail shoppers, but a new study finds most are more willing to pay premiums elsewhere in the store.

The annual PricewaterhouseCoopers LLP study, “Experience Radar 2013: Lessons from the U.S. Grocery Industry,” reflects about 6,000 consumer responses. Six more industries — including pharmaceuticals, airlines and retail banking — were also examined.

The grocery research looked at four shopper types. Combined, they were willing to pay a 4% premium for local and organic product.

That’s compared to 9% for recyclable packaging; 10% for loyalty discount programs; 11% for staff knowledge; and 14% for checkout service.

But in order of demand, local and organic was second only to checkout. For example, 46% overall want organic products.

Nonetheless two of the shopper types were ready to back such preferences with premiums of up to 27% on local and organic and up to 30% on recyclable packaging.

The study represents the types as characters. Experiential Erica is a high-income, health-conscious parent. Mindful Maria is young, urban, ecologically minded and a convenience seeker. They’re driving the local, organic and packaging trends.

But PricewaterhouseCoopers LLP also finds price and convenience remain the top purchase influences on shoppers overall, 37% and 28% respectively. The other shopper types suggest the importance of price. Frugal Fred is middle-aged, low- to mid-income and a bargain hunter. Traditional Terri is in or near retirement with conservative, consistent buying patterns.

The study aims at categorizing shoppers not just by demographics, but by valued features and behavior patterns.

Recommendations and suggestions include informing customers of checkout wait times and best shopping hours; offering checkout via smartphone apps; personalizing loyalty programs; providing ready-to-eat offerings beyond standard deli fare; and creating an emotional connection with shoppers through local, green and organic items.

Though checkout has potential for increasing automation, the study finds three out of four shoppers still want staff help.

Comments (2) Leave a comment 

Why does it always boil down to "an emotional connection with shoppers through local, green and organic items"? Isn't the local, green, organic movement supposed to provide food that's purer, more nutritious and more sustainable?

Perhaps it's time for a reputable market-analysis company like PricewaterhouseCoopers to ask consumers if they think all organic crops and livestock should be tested to ensure they're genuine. Otherwise, the $30-billion per-annum organic industry will continue to run on emotion and nothing else.