How to succeed in organic retail – “go massive”

“If you are a supermarket in Denmark you need to be organic – it’s 10% of the food and drink market after all.” So says Torde Nederland, a senior director at Danish retailer Fotex (part of the Dansk Supermarket Group and owner of Netto).

Nederland was the guest speaker at yesterday’s Organic Trade Board (OTB) ‘#GrowOrganic17’ event, where he told organic industry stakeholders about how, two years ago, Fotex set about “tapping the full potential of organic”.

First, he wanted to make one thing absolutely clear: “We didn’t do this because we love organic, we did it because we love big baskets.” As in the UK, organic shoppers in Denmark are generally among the highest spenders overall.

Research conducted by Fotex showed that its customers were highly likely to shop for organic but that it was relatively poor at covering customers’ needs in this area. So, the retailer set about “step-changing” its performance in organic.

First, Fotex needed to identify the most promising target audience. It wasn’t difficult task, said Nederland. “Regular Danes buy 7% organic, but when they have kids it goes up to 15%. So we targeted families with kids”.

“We make sure that when our customers come in they are hit by 10 metres of organic”

Fotex then identified a series of “must-win battles” which it addressed with 14 specific initiatives, including extending range, securing exclusive lines, adopting a ‘normal’ pricing policy, intensifying leaflet and TV spend and gaining press coverage. On range, Fotex committed to an eye-catching ‘one new SKU everyday’ strategy, while on price it pledged to be “cheaper than any supermarket”.

In just one year, Fotex’s strategy has moved it several percentage points up in consumer’ ranking of retailers’ perceived ability to offer an “exciting organic range’.

So, what advice does Nederland have for UK supermarkets looking to increase their organic sales? “If you want to achieve a step change in organic sales growth you’ve got to go massive. We make sure that when our customers come in they are hit by 10 metres of organic.”

He also had some advice on pricing. “Don’t be naïve, price matters. Yes, people will pay extra for organic, but in correlation to the perceived value – not to subsidize your margin.”