Is Costco the New Whole Foods?
Organic food no longer has to use up your “whole paycheck” – it seems Costco has finally toppled the king of organics. Not only has the wholesaler been outselling other conventional retailers in organics for three years, but in 2015, it officially surpassed Whole Foods in organic food sales, reporting a whopping $4 billion as compared to Whole Foods’ $3.5 billion.
The recent sales victory was a turning point for the development of inexpensive organic food: Whole Foods has been reporting difficulties of late, closing nine stores after its sixth straight quarter of same-store declines, a period the Chicago Tribune has called the store’s “worst sales slump in more than a decade.”
Meanwhile, Costco and other retailers like Trader Joe’s have been growing their organic offerings and attracting customers with lower prices. Blogger Whole New Mom writes that she was surprised when, after transitioning to an organic, whole foods diet, her “grocery bills didn’t actually change much,” and via a price analysis, she found that over 90 percent of organic and whole food items were less expensive at Costco, “and in many cases, the price difference was dramatic.”
But Costco’s victory didn’t happen overnight: the wholesaler has actually been working toward this goal for more than five years, according to Heather Shavey, assistant vice president and general merchandise manager at Costco, who told Well + Good that the company decided to invest in organics when many other retailers “thought it was a fad that would pass.”
Instead, Costco took an interest in not only expanding its own organic offerings but also in the organic landscape itself. Currently, less than one percent of farmland in the U.S. is certified organic, and with a minimal 2.5 percent annual growth, the market can’t sustain increasing demand for organic food, which has averaged a ten percent annual growth over the past five years.
Costco was going to have a hard time keeping up with the demand for organics unless it made some changes to these statistics.
“As the largest U.S. retailer of organics, Costco is in a good position to address the supply shortage,” Ronnie Cummins, the international director of the Organic Consumers Association, a nonprofit group that advocates for sustainable food production and consumption, told The Huffington Post, and this is exactly what the retailer did.
In April of last year, Costco launched a program to lend money to farmers to purchase new land and equipment in exchange for “first dibs” on organic produce. The store has even purchased its own cattle and contracted with owners of organic fields in Nebraska to raise them.
Through these and other efforts, Costco is not only making organic food more affordable, it’s also ensuring that we have enough organic food to meet ever-growing demand – it’s no wonder the wholesaler has become America’s favorite place to buy organic food.
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