Economic Factors Affecting Customer Purchase

¶ … economic factors affecting customer purchase of organic foods at Raley's Supermarkets. What economic factors affect whether Raley's customers buy organic foods, and are there other factors than just economic factors involved? Raley's Supermarkets, a Northern California and Northern Nevada food chain, has always been known for its high quality produce and meats. They carry a variety of organic produce and natural foods, as well, and many shoppers rely on Raley's for fresh food as opposed to the cheapest prices in town.

In a typical Raley's Supermarket, the organic produce is located at the entrance to the produce section, commonly on the side of the section that shares an end cap with the natural foods section. This guides the natural foods shopper directly into the produce section, if they enter after they complete their natural food shopping. The produce section is usually located at the rear of the store, adjacent to the dairy section. The organic produce is grouped together in a series of bins or trays that look attractive and colorful, and there are no large signs announcing this is the organic section, although they are there if the consumer looks close enough. The main difference is that all the organics are located together, while in the rest of the produce section, items are separate, such as tomatoes separate from potatoes and citrus, etc. There are organics sprinkled throughout the department, however, such as organic herbs with the other cut herbs, and organic salad mixes with the other salad greens.

Clearly, organics are popular at Raley's because during visits at peak times, some items, such as fresh wheatgrass in a pot are sold out. This indicates consumers utilize at least some of these organic products, and continually buy them. This also indicates that the buyers for the store know their customers and what products to stock, since these products disappear from the shelves. A group of writers note, "Estimating when consumers will purchase within a given product category is essential to the success of several managerial activities, such as stock replacement, number of open cashiers, size of the store, among other things" (Oliveira-Castro, James, and Foxall 485). While these products are popular, that does not explain what other factors are involved in purchase, but it does indicate that organics are popular in most Raley's Supermarkets.

There is almost always a price difference between organic produce and regular produce, and that does seem to be a prime motivator in purchasing organics for many people. Another group of writers notes, "With the exception of price, traditional economic or demand-theoretic variables such as income, family size, total food expenditure, and expenditures on produce do not seem very important for predicting demand for EIP [Environmentally Identified Products] produce" (Harris, Burress, and Eicher 5). Thus, income may not be part of the economic predictors of organic produce, but the actual price difference between organics and traditional produce may put some buyers off. The authors continue, "[M]ost studies do not seem to support the notion that purchasers of EIPs have higher incomes than non-purchasers. However, high income is nevertheless perceived to be a common characteristic of purchasers of organic produce" (Harris, Burress, and Eicher 8). Thus, shoppers and purchases may think you have to make more money to purchase organic products, but that is not based in actual fact. However, some studies do show that organic purchases do have a higher disposable income than other purchasers (Harris, Burress, and Eicher 9).

Another aspect of organics purchasing may be random. Watching consumers move through the produce aisles, it seems that many stop, look, and take time to pick their produce, while others move through the department quickly, looking for what they normally purchase, what is on sale, or what is on their shopping list. These consumers tend to move quickly, not take time to stop and look, and may not cover all the areas of the produce department. They may pick up salad ingredients, move on down the aisle, and end up in the organic section simply because it is located next to the salad items. It seems some of these purchasers may not realize they are purchasing organic produce, they are just finding the items they need in the quickest amount of time. Male consumers tend to shop this way, and it seems more men end up in the organics without realizing it. Women, on the other hand, tend to spend longer in the entire produce section, and seem to move to the organics section at the beginning of their shopping, as if they are choosing organic produce over traditional produce. Women who choose organics also tend to choose organic salad greens, herbs, and other organic produce spread throughout the department, and they seem to look for the organic label more aggressively.

When asking a male consumer if he knew he had purchased organic produce, he said "no," that he was just getting the items on his shopping list. When the interviewer pointed out that the traditional produce was less costly, he still held on to the organic produce, saying it looked "healthier." It seems some consumers may not even know they are purchasing organic produce because the labels are small and often not noticeable, but when there is a choice, consumers make a marked effort to shop for organic produce and they understand they are paying more for naturally grown produce.

Even in tough economic times, many consumers are willing to spend more on healthy food for their families. Studies indicate, "Consumers who say they are willing to pay more for organic produce than conventional produce range from 49% of the population (Harris Poll, 1989) to 81% (Weaver et al., 1992), and as many as 83% of the American public claim to be willing to pay more for foods grown with fewer chemicals" (Harris, Burress, and Eicher 9). Again, this is often in consumers with more disposable income, but not always. Many families are extremely concerned with the quality of food they put on the table, and they have more faith in organic products and their quality.

There is a limit to how much more consumers will pay for organic produce, however. As organic produce prices rise, consumers tend to buy less of organic products, or switch to traditional products, especially in economic times like the current crisis (Harris, Burress, and Eicher 10). If organics are much higher priced than traditional products, they tend to sell less, but if they are priced relatively close to traditional products, (for example, 10 to 15 cents more per pound), consumers are more likely to buy them.

Raley's stocks more organics than some other lower-priced discount chains, and Raley's shoppers may expect higher quality (and somewhat higher prices) as a result. Raley's markets itself to a more demanding or sophisticated consumer than say a Win-Co or Wal-Mart, and they carry products that more discriminating buyers look for. They also produce a quarterly magazine with recipes, some that feature organic and natural products, and at least a few consumers shop for these items to complete the recipes. Thus, Raley's shoppers expect better quality and some higher prices as a result, and so, they may be more willing to spend extra money on organic produce, where shoppers who frequent other stores might not.

The actual display, as noted, is easy to reach, colorful, and inviting, and the entire produce section is under regular misting from overhead sprayers, so the items never look dirty or dingy, always fresh and wholesome. The organics also seem to have very bright lighting over them, to help bring out the colors of the items, and to make them look more attractive. This also makes it easier to choose the right produce and make sure that it is not blemished or too old. All the produce bins have good lighting, but somehow, the organics seem to be brighter or more attractive, some how.