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12.13.2002

“HartBeat” is The Hartman Group's FREE online newsletter, providing insight, analysis, information and strategy to give business leaders the knowledge and vision to build sustainable brands.

For more Hartman Group articles on THE ORGANIC CONSUMER...

NATURAL SENSIBILITY

The True Effects of Regulation on Organic Consumers

Wellness Myth #2: The Organic Consumer Is Limited to a Specific, Well-Defined Demographic

HARTBEAT

The Gateway to Organics

The Organic Consumer May Not Be Who You Think It Is

This issue of HartBeat is excerpted from the latest Hartman Group report, Hartman Organic Research Review.

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Hanging On To Your Organic Consumers

Consumer Mix
Part of understanding how consumers shop for organic products is to analyze the consumer mix within the specific retail outlets. This analysis helps clarify which consumer, from the core to the periphery, frequent specific channels. While mid-level wellness consumers make up the majority of customers in any channel, focusing on either end of the wellness continuum helps accentuate the differences in the customer base for different retail outlets. Within the organic product market the differences between the FDM channels and HFS channels are striking. Each channel in the figure below totals to 100, breaking out the organic shoppers by core, mid-level and periphery.

Opportunity Gap
The next level of analysis provides an assessment of the opportunity gap that exists within specific retail chains because of lost potential sales of organic products. To estimate the missed potential sales of organic products, we compare the number of consumers who purchase organic products from a particular channel to the number who could potentially purchase their organic products from that channel. The latter number includes shoppers of the channel who do not purchase their organic products in that channel. For example, to estimate the lost potential sales of organic products in the grocery store channel, we first identify consumers who purchase organics and who shop for wellness products in the grocery store channel, whether or not they actually purchase them in the grocery channel. Next, we determine which of these grocery store customers choose to purchase their organic products in the grocery channel. The ratio of these two numbers yields the percentage of organic, grocery store shoppers who also purchase their organic products in the grocery channel, a measure of retention.

We have summarized the results for each channel in the figure below, which shows wide disparities between different distribution channels regarding their effectiveness at retaining potential sales of organic products.

Farmers' markets retain 55% of consumers for organic products, which is the highest retention rate of all channels. Of course, this is logical because organic produce is often a destination product for farmers' markets. The drugstore channel registers the worst performance, retaining just 2% of potential organic consumers. This contrast should be taken with a caveat: the poor performance of drugstores as well as vitamin stores, club stores, and mass discount stores is partly attributable to the limited distribution of organic products through these channels. Organic consumers may well go elsewhere because the products are not available in these channels.

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