Are Organic Products Worth the Shelf Space?

One of the greatest challenges of any retailer is to find enough shelf space for every product that customers want and product reps offer. With such competition for precious shelf space, savvy retailers frequently ask themselves whether certain products are worth placing prominently or at all.

One of the categories that has become trendy across the board are organic and natural products. It seems that every product category has an organic alternative to compete for shelf space with traditional products.

But, are organic and natural products actually generating revenue?

The answer can be found by digging into data of product categories to see how natural and organic product offerings are performing relative to the category as a whole. Progressive Grocer found that for the year ending January 23, 2016, total food sales were up 1.9% in dollars and down .1% in units.

However, if you remove natural and organic products from the mix, total food sales are up 1.2% in dollars and down .5% in units; despite organic products making up only 7.7% of total food sales. The numbers get even more compelling as you drill into specific categories. Drilling down into frozen food, we can see that dollar sales are up 1.6% in the category; but if we remove natural and organic products, the growth on all other products is only .5%.

Progressive Grocer points to the growing popularity of organic, non-GMO, and plant-based foods as primary drivers of this segment’s growth — but not all organic products are guaranteed to be winners. Popularity of certain items is sure to vary depending on a retailer’s customer base, region, demographics, and other differentiating factors. In fact, there are many consumer resources that list organic foods that consumers should avoid spending money on, and thus may not be worth the investment in capital and shelf placement for retailers.

By leveraging Salient Management Company solutions to carefully monitor the contribution that natural and organic products are making to your bottom line, valuable organic alternatives can be expanded and low-performing products can be discontinued. Organic products clearly hold tremendous potential for grocers, however, the need to view granular details about the performance of these products is vital to ensuring success as this segment continues to gain traction and popularity.

Contact Salient to learn more about how our solutions can help you stay a step ahead of emerging trends in retail.

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