Research Background
Organic Food Products at Conventional Retail
Outlets
Currently, consumers in the United States buy more organic
products in traditional supermarkets than in other outlets
(TABS 2012). At the same time, traditional supermarkets
are increasingly promoting organic products through various
in-store marketing programs (e.g., increasing variety,
displays). Because organics have higher gross margins—
30% to 50% versus 20% to 25% for conventional products
(Oberholtzer, Green, and Lopez 2006; Roheim and D'Silva
2009) —promoting them should enhance total category
profits and store revenues. However, academic literature
has yet to verify such performance effects of marketing
actions for organics because it has focused instead on other
supply-side and demand-side issues (Thompson 1998).
On the supply side, Dimitri and Oberholtzer (2009) find
that organic fanners sometimes struggle to provide sufficient
supply to keep up with the rapid growth in demand,
and Ciu (2008) reports that some farmers have struggled to
obtain the necessary certification to market produce as
organic. Finally, Tondel and Woods (2006) find that organic
supply is becoming more competitive and efficient, lowering
prices throughout the supply chain.