Kroger Pushes ‘Organics for Everyone’

Discussion
Aug 09, 2007

By George Anderson

Kroger is looking to make it easier for consumers to try organics with a new line of 65 items sold under the company’s Private Selection brand.

The new line, which will carry U.S. Department of Agriculture’s seal for organic foods, will offer alternatives to popular, conventional items such as milk, pasta, snacks, frozen waffles and peanut butter. The company plans to integrate the Private Selection line into mainline shelf sets rather than set it apart in a natural foods section. Kroger has said its organics line, marketed with the tagline "Organics for Everyone," will be priced lower than national and regionally branded organics.

Linda Severin, vice president for corporate brands, told The Associated Press that the Private Selection line "responds to customers who just want to make a smarter food choice and start opening their lives to organic. It’s a way for people to sort of put their toe in the water."

The Private Selection line is not Kroger’s first foray into the world of natural and organic foods. The company also sells 300 items under its Naturally Preferred natural foods and organics line.

Discussion Questions: What was your reaction to how Kroger is marketing and merchandising its Private Selection organics line? Does it require the special expertise or focus of a Whole Foods, Trader Joe’s, etc. to really be a force in organics, or are conventional grocers such as Safeway, Kroger, etc. trusted enough by consumers to succeed in this business? Do you expect more conventional grocers to follow the path of Publix with its GreenWise test and open natural/organic food stores under their own house banner?

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8 Comments on "Kroger Pushes ‘Organics for Everyone’"


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Bernice Hurst
Guest
14 years 9 months ago

It sounds sensible to me in several ways. Own label means that the shoppers who already know and trust Kroger are more likely to try an organic product whether or not they planned to when they entered the store. Similarly, by having the products on the same shelves as other brands selling the same item, their opinion of Kroger will help persuade them. And finally, having the products side by side makes price comparison easier so if the own label is less and all other reasons being equal, they may well decide to try the organic version.

Don’s research result about organics being perceived as lower quality surprises me and that may represent a stumbling block but not if people can be persuaded to try something once and then find they like it. If they try and don’t like it, all the labeling, pricing, branding and merchandising in the world is going to struggle to make them come back for more.

Don Delzell
Guest
Don Delzell
14 years 9 months ago
Recent study of the consumer psychology toward organics strongly indicated a near-mainstream acceptance of the benefits associated with an organic food lifestyle. Two key obstacles were found to greater mainstream penetration for organics. First, the price differential when compared with traditional consumer foods was significant. Although “apples to apples” comparisons are difficult, the average price differential in several stores surveyed between organic and traditional products was as much as 75%. That’s asking the average consumer to spend an extraordinary amount in support of relatively new (and fragile) belief system. Research showed it was too high. Second, the “quality” was perceived as less than traditional products in the same category. A key component to this was the perception that taste value was diminished. In meats for example, the organic cuts were demonstrably lower quality than less expensive traditional cuts of a much higher grade. Kroger entering into the organic market with private label lines is exactly the right thing to do. The mainstream consumer has not identified organics with any given brand, and has already established… Read more »
Jeff Hall
Guest
14 years 9 months ago

Kroger is making a smart strategic play for the broader consumer segment typically not found walking into a Whole Foods or Wild Oats.

The organic foods industry has grown an average of 18% annually for the past decade. Clearly the market demand exists, growing at a faster rate than any other food segment. The timing is perfect for organics to become accessible to everyone, and in this case, Kroger is starting with the staples–milk, pasta, peanut butter, etc.

Whole Foods, Trader Joe’s and others have pioneered consumer awareness of the benefits of organics and now mass appeal grocery brands including Safeway, Meijer and Kroger will leverage this growing consumer trust through their own private label organics, offering greater customer value.

Ed Dennis
Guest
Ed Dennis
14 years 9 months ago

I wonder what this announcement is worth to Whole Foods? I think this should just about do away with the “inhibit competition” argument that the FTC is advancing. Kroger is right, organics have become a large enough market that main stream players have to get involved. I hope that the sub prime problem doesn’t trickle down to the point that the number of consumers that can afford organic shrinks below the point that can support the market. Everyone wants to move the market up, but it’s tough to do this in a declining market. Keeping fingers crossed!

Warren Thayer
Guest
14 years 9 months ago

Good move by Kroger. A bit overdue in my opinion, having watched the success of Safeway’s O Organics line. A private label organic line also makes it easier on the shopper–everything is understood from the get-go by a glance at the label. Brands will hate this, but the shopper doesn’t have to memorize different brand names or go searching for the word “organic” on the label. It’s immediately implicit across the whole line. The growth of organics has been huge, and there’s still a lot of upside yet to come. Price has been a barrier, but that’s coming down. I expect other chains will follow suit, and that Kroger will expand beyond this. You don’t have to be a Trader Joe’s or Whole Foods if your chain has the basic trust of the shoppers. There are a lot of good quality chains out there with this trust, and they should just go for it without further analysis paralysis. I’ve been saying this for at least two years now.

Dick Seesel
Guest
14 years 9 months ago

There is a real business in organics, otherwise Whole Foods and similar chains wouldn’t exist and wouldn’t be growing at a fast pace. It makes perfect sense for the traditional grocery chains like Kroger to capitalize on this trend rather than losing market share to new competitors. It also makes sense for them to take advantage of their broad location network while chains like Whole Foods are still rolling out a national strategy. All the more reason why the FTC objection to Whole Foods’ acquisition of Wild Oats makes no sense, because they are not looking at the broader market for natural and organic foods being captured by traditional grocers and chains like Wal-Mart.

Mark Lilien
Guest
14 years 9 months ago

Kroger Private Selection is a risk. Kroger will learn whether the retail price premium for organics will allow a decent return on the inventory and space investment. What items or categories will Kroger eliminate to make space for Private Selection? When a retailer announces a new merchandise line, they often don’t say what will go away. The real test: will the new line make more money than what went away?

Odonna Mathews
Guest
Odonna Mathews
14 years 8 months ago

Kroger certainly isn’t one of the first supermarkets to offer an organic line of products. They are increasingly found at supermarkets across the country.

Considering the fact that Kroger already has a line of “Naturally Preferred” natural and organics products, the company may be called upon to explain the difference between this line and the new “Organics for Everyone” products. Consumers (and store staffers) may be confused as to the difference in price, selection and location in the store.

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