Organics Rotting in Bad Economy

  • Shopping at organic foods stores is one thing consumers are cutting back on (Photo by Ken Hammond, courtesy of the USDA)

Watching paychecks shrink and
retirement funds dissolve is making people
change their buying habits. Many are
skipping things like natural foods because
they’re seen as luxuries. But Julie Grant
reports some analysts say this is just a
short term trend:

Transcript

Watching paychecks shrink and
retirement funds dissolve is making people
change their buying habits. Many are
skipping things like natural foods because
they’re seen as luxuries. But Julie Grant
reports some analysts say this is just a
short term trend:

Michelle DeSalvo’s daughter plans to go to college next
year. But her husband might need to take a pay cut just to
keep his job. So they’re trying to save money wherever
possible. That means no more shopping at the natural foods
store.

Michelle DeSalvo: “It’s definitely more expensive. You have
to go to things that are less expensive and natural is
definitely not that.”

Julie Grant: “So what has changed in your shopping habits?”

Michelle DeSalco: “I go to Wal-Mart. (laughs) Yeah, for
food. It’s cheaper.”

Not everyone is rushing to Wal-Mart.

Brenda Fisher says her family is struggling to pay for two
kids in college, and they’re looking for different ways to buy
food. She used to stop at the butcher shop at Whole Foods
– the national, natural foods supermarket. But not anymore.

“So I would buy their meats because their meats are
incredible. So um, I just can’t afford it. I would actually like
to buy a whole cow from a farmer, because they’re cheaper.
And I just have to get the money together.”

Okay, so not everyone wants to buy a cow. But a lot of
people are moving away from things that seem more
expensive – like natural and organic products.

In recent years, those foods have seen huge sales growth.
But as the economy has turned sour, so have their sales.
Whole Foods Store has seen a considerable sales drop at its
stores. And the company’s stock prices plunged more than
70% this year.

Nancy Koehn is professor of the history of retailing and
consumer behavior at the Harvard business school.
She says some people see upscale stores such as Whole
Foods as an indulgence – and that’s not what they’re
wanting.

“I think we will see, we are seeing, a rush away from a lot of
luxury right now.”

Koehn says that’s short term. She says consumers have
been floored by the tanking of the stock market and the
vulnerability of the financial systems. And they’ve done
something we haven’t seen in 25 years: they’ve stopped
buying.

But Koehn says this is just one moment. She says people
will walk back into stores. But they will have revised
priorities for their homes and families.

“There’s no way anyone’s coming out of this moment without
being effected by it. It’s a much more complicated story than
the rush to Wal-Mart.”

Koehn says natural foods stores, like Whole Foods, and
other environmentally-centered companies, are actually in
just the right place for the long term economic trend. When
consumers start buying again, she thinks, many will spend
money in places that are taking care of workers, animals,
and the environment.

“And I think we’re going to see that the same things that built
Whole Foods, that have made the environment and our
interconnectedness so important to people, and moved that
from item number 10 or 20 on people’s lists of important
issues up to the top 2 to 4. Those aren’t going away because
we’re in the trough of a business cycle.”

Koehn expects that many people will spend their holiday
money at big box discount stores. But she says many who
feel they’ve been treated badly in the economic downturn will
go back to the companies they think treat people and the
environment better.

Koehn expects that by early next year, companies that get
behind sustainable products will wind up being the economic
winners.

For The Environment Report, I’m Julie Grant.

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