Many Retailers Breathed a Sigh of Relief when they learned they wouldn't be required to certify their stores simply for handling and selling organic items. That was in 2002, when the National Organic Program was introduced, and it only required certification for supermarkets that manufactured or repackaged their own organic food.
So why does the number of chains voluntarily seeking certification continue to increase?
“Certification sends a clear message to our customers that Hannaford is committed to upholding the highest organic standards and ensuring the integrity of our organic products,” said Caren Epstein, director of external communications at the 159-store Hannaford Bros. supermarket chain. The Scarborough, Maine-based company was certified organic this year, and has been promoting its status in fliers and media advertising, and on in-store signage and its website.
Cub Foods was certified organic in 2005. “We are proud to join a select group of grocers that have reached this level of quality and freshness,” said Mike Witt, Cub's vice president of merchandising. “We're excited to give our customers the option to buy their organic products where they buy the remainder of their groceries.”
The chain promotes its certification status through its weekly circulars, monthly coupon books and special natural and organic tabs appearing quarterly in its circular.
Other retailers that have voluntarily completed the process of becoming certified include bigg's, a 12-store chain that, like Cub Foods, is part of Supervalu; Knowlan's Super Markets, owner of Festival Foods; Target's SuperTarget chain; and Lund Food Holdings, which operates the Lunds and Byerly's stores.
David Abney, vice president and general manager of Quality Assurance International, which certified all of these retailers, said his organization has fielded a lot of inquiries lately from supermarkets, although not many have actually entered into the process yet. He believes retailers are realizing that certification builds confidence among consumers.
“They want to make sure that last link in the chain maintains its integrity,” he said.
Viella Shipley, director of sales and marketing at California Certified Organic Farmers, another third-party accreditor, said her company has received invitations to participate in a number of industry trade shows, indicating increased retail interest. In addition to the marketing benefits, organic certification allows retailers to use the U.S. Department of Agriculture's organic label on bulk foods they repackage. Those with manufacturing divisions can sell organic ingredients, such as organic sugar, to other companies that want to use them in their own organic products.
“They can use the certification to make it easier to source from them,” she said.
A key driver behind certification is the rate at which conventional supermarkets are expanding their selection of organics. Indeed, mainstream stores have become the primary destination for purchasing organic foods. In a Mintel survey conducted in late 2006, 65% of respondents who purchased organic foods said they did so at supermarkets, vs. 45% at health food stores and 24% at Wal-Mart.
Hannaford's decision to undertake certification was spurred in part by an initiative throughout the Delhaize Group U.S., which includes Hannaford, Sweetbay and Food Lion. The plan focused on expanding the organic product assortment significantly throughout the group, under the Nature's Place private label. There are currently 180 Nature's Place products; 75% carry the USDA Certified Organic mark.
“Sales of organic products have been robust over the past several years, and strong growth continues,” Epstein said. In fact, sales of natural and organic items increased more than 20% in Hannaford stores in 2006, the chain reported in May. Hannaford has offered organic and natural products since the 1980s and currently carries more than 3,500 of these items, representing about 10% of its total inventory in a typical store. A recent survey of Hannaford shoppers found that nearly 80% purchase organic and natural items “at least sometimes” when shopping for groceries.
The Cincinnati chain bigg's launched bigg's Fresh in 2005 and currently has a total of three stores in this “fresh and healthy” format, with another in the process of conversion. It carries more than 200 organic fruits and vegetables. Meanwhile, Cub said it plans to add more organic products to its assortment, especially in produce.
Whether or not retailers are certified, they still have the responsibility of preventing commingling and contamination of organic products, according to the rules of the National Organic Program, and keeping records proving that products have been correctly handled from production through delivery. The process of becoming certified is the same for retailers as for any other organization, including manufacturers and farmers.
“This is a link in the chain that has to comply with the requirements, but isn't required to be certified,” said Abney. “But we think it's important that the last link is certified. Things can happen at the retail level to compromise the chain.”
QAI, one of 95 USDA-accredited certifying agents, said it certifies 66% of all organic products on U.S. store shelves. It launched its retailer certification program in 2003. Retailers pursuing certification must first submit an organic system plan that outlines how the retailer intends to comply with the organic standards, Abney said. This plan receives a desk audit, after which the retailer undergoes on-site inspections at each of its locations. The inspector's report goes through two levels of technical review, and if there are no noncompliance issues, QAI issues the certification. If there are issues, the retailer has a chance to clear them up. Annual certifications and audits are required.
The cost of and the time required for the certification process itself vary by the size of the chain. Abney said it can take four weeks or longer for QAI to certify a retailer, with the average being about eight to 10 weeks. The cost depends on the number of stores and their location, but on average ranges from $400 to $500 per store for a 115- to 120-store chain; regional retail operations pay lower fees than national ones due to the differences in travel time.
Shipley of CCOF, whose cost structure is based on square footage, notes that applications often come from individual departments within conventional supermarkets, such as deli or produce, rather than from the entire store.
“People think it's complicated and expensive,” she said. “But it's not as difficult as you might think.”