More than 30 per cent of the organic produce retailed in the UK is sold by Tesco. The market that is valued at just over £1 billion by the Soil Association has grown again in the last 12 months, and Tesco has slightly increased its slice of the action.
The incorporation of a customer-driven organic offer plays a integral part in Tesco’s overall produce strategy. The new range features new packaging, with colours that it hopes reflect the natural, wholesome qualities that customers seek in organic products.
Jeremy Lindley, Tesco’s head of packaging and design, says: “As well as the tree that customers expect on Tesco Organic products, we now have a blue sky and inviting green field. Organic customers love this new design because the environment is important to them.
“The packaging makes it clear that the product is organic, and states clearly what difference that makes.”
The new design is now on Tesco Organic’s top 50 lines. The transformation of its organic image has been brought about by extensive research of its customers by Tesco.
“For organic customers, price is still a key determinant and it remains one of the main barriers to bringing new customers into the category,” says Christy Van Maanenberg. “I can’t foresee that situation changing.”
The Tesco response to this conundrum was a 20 per cent price cut across all organic lines during a month-long promotion in October last year.
“We were aiming to enhance the flow of organic products through stores and the promotion increased sales in two ways. It gave stores the confidence to order organic products because they could see sales increasing, and it also brought more customers in. We are still seeing the long-term benefits of that now,” says Van Maanenberg.
Produce was just one beneficiary of the organic push, and a co-ordinated effort throughout each store also attracted consumers of organics that had not previously shopped the organic produce shelves.
“We supported the campaign with literature for all organic customers. Regardless of the product they were purchasing, they received information about produce.”
Therefore, a consumer who may only have bought organic milk for their children in the past, was now given additional incentive to purchase organic fruit and vegetables at more accessible prices.
That the price-driven uplift is still showing through in figures six months on, is testament that many of the converts were not put off when prices returned to original points.
“Organic produce will always be sold at a premium,” says Van Maanenberg “But as prices of conventionally grown lines decrease, the price of organics will inevitably have to take into consideration the core product price.”
It is not the premium that is in danger, but the intrinsic value of that premium.
Tesco, says Van Maanenberg, will continue to be a “broad church” and believes that it should maintain an overall portfolio that offers something for all sectors of the consuming community.
“As with every area in store, part of our culture is understanding our customers and what they want. It is an approach that works and it will grow sales.”
It is also the key to growth of the organic category, she adds.
But, if organics are to attract mass appeal, should products be merchandised alongside conventional? Is the pre-determined split of the two for merchandising purposes another obstacle to increasing both profile and uptake?
“That is an interesting one,” says Van Maanenberg. “There are pros and cons to both. Having a dedicated organic area is great for the organic loyalists and fantastic news for in-store disciplines. On the negative side, it is unlikely to bring in too many opportunistic customers. If organic and conventional produce was side by side, the positive aspect is that the opportunistic customers would be more likely to try organics for the first time. But there is also the chance that customers would pick up organics by mistake and end up slightly disgruntled when they see what they have paid after they leave the store.”
Aside from price, consistent stocking and availability are major issues in the organic field and Tesco has gone to great lengths to address both.
The chain moved buying responsibility away from one, dedicated organic buyer and into the hands of category buyers to create a holistic approach. While organics were still merchandised as a separate category in-store, buyers were encouraged to embrace wider trends.
Van Maanenenberg says: “All buyers increased their awareness of organics, which is useful. But ultimately, we feel it’s beneficial to have two people dedicated to organics. So we now have one concentrating on organic fruit and another on salad and vegetables.
“This ensures that organic gets 100 per cent of their focus and there is no distraction from the ‘core’ produce area. The benefit to customers is that we will now be able to react more quickly to their feedback and comments.”
She adds: “We have new fixtures in store and this has made the organic offer more visible. Product is now being merchandised in half-green trays throughout our chain and there are more lines on-shelf. This has made it much easier to maintain store disciplines, as the organic trays are uniform and clearly distinguished. Handling of the product is easier, there is a dedicated area of the produce section in which to merchandise, and from the consumer’s perspective, the organic fixture is now easier to shop too.”
The expansion of Tesco’s organic shelf-space is proving to be good news for domestic producers especially. “More British suppliers have come on board in the last year and as time progresses, we aim to increase the proportion of our organics that is home-grown and reduce imports,” Van Maanenberg says.
This objective is in line with the stated intention for produce as a whole. As ever, Tesco ploughs its own furrow and its straightforward approach is paying dividends on the organic balance sheet.
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