BrainTrust Query: Perishables Keep Many Retailers from Perishing
Through a special arrangement, presented here for discussion is a summary of a current article from the Mark Heckman Consulting blog.
Nothing defines a traditional supermarket chain better than their perishable departments. Survey after survey tells us that superior meat, produce and bakery offerings are consistent reasons why shoppers continue to patronize supermarkets.
Beyond proven increases in average basket size for shoppers that buy two or more perishable items in your store, perishables has become one of the few
advantages that traditional retailers can leverage against increasing competition from the fast growing "price" oriented merchants such as Aldi, Dollar Stores and, of course, Walmart.
I reached out to Jim Richter, EVP of sales for Wilcox Fresh to glean some best practices for elevating the produce department. Jim is a former VP of produce and former colleague of mine at Marsh Supermarkets and Randalls Foods. The following is his list:
Sales-driven approach: Use massive promotional displays (up to four displays in the department) that reflect the season and change weekly in the front area of the produce department;
Differentiate with unique offerings: Develop a strategy that offers key produce items one size larger and one grade higher than the competition;
Stand for something special: "Triple inspected produce" describes your process to insure product quality. This necessitates and reflects that only produce that is inspected at the grower/shipper, then at your distribution center, and finally by the produce professional at your store, passes the muster and reaches your display case;
Train and certify your perishable associates: Invite shoppers to use them as a resource for product selection, product preservation and meal solutions ideas;
Create a homegrown program: Highlight locally grown produce in season and have growers meet with customers in the store;
Meal planning: Consistently set produce display tables to include sections for meal planning and different types of cuisine (Italian, Asian, etc.);
In-department signage: Tell stories with in-department signage by highlighting such things as the count of organic produce items carried and specific homegrown produce currently available. Showcase your grower partners with a brief story about their farms, family history and their community ties;
Offer a freshness guarantee: Make it bold, widely known and consistently reinforced at store level.
We found that touting two or three of these attributes throughout all available media, all the time, and periodically promoting two or three others as seasons and events dictated, developed an image that shoppers remembered and respected.
Instead of squeezing every last cent of margin out of the fresh departments, train your focus on investing in sustainable points of difference, knowing that even though at a slightly lower margin, these departments serve as a magnet for shoppers who value these investments and reward retailers for doing so.
Discussion Questions
What’s unique about the marketing and merchandising of perishables versus other categories for grocers? What do you think are the more proven and innovative approaches to maximize perishables mentioned in the article? Is there another you would add?
All excellent points. A freshness guarantee would be most important to many shoppers. Nothing worse than bananas that turn brown in a day, or fish that goes bad just as you’re pulling into your driveway at home.
Only thing I’d add is being relentless with your suppliers to make sure product is fresh and high quality. Bottom-feeding for low price with suppliers doesn’t work with perishables.
I have another take on perishables in the grocery store. And it comes from my package design/visual engagement experience.
Perishables are part of the store’s unique experience. These sections typically stand out from the rows of boxes, cans and bottles throughout the store. A produce section can become a landscape of color and interest. The meat department can display menus that inspire. Cans and boxes and bottles can’t do that.
In a sense the perishables are the scenic highway for the shopper. It’s up to the retailer to make it worth stopping for the view and the purchase.
This is the most basic of basics—but I see it violated regularly. Keep your produce departments (and all other fresh departments) scrupulously CLEAN.
Having grown up in the meat and produce departments of my local grocery store as a teenage part-timer, I know how hard this can be. But it amazes me when my local supermarket presents an unkempt appearance at the end of the day when the “what’s for dinner tonight?” rush is on.
It appears to be due to reduced staff hours. The produce, and especially the meat, people don’t want to work past 5:00pm it seems—or perhaps the store just doesn’t want to pay them. But it looks horrible and the lack of service drives me across the street to the competition regularly.
I’d like to add one more: audit your stores! Have district managers pay unscheduled visits to their respective stores to make sure this all important category is always in tip top shape. Forward-looking programs like training are great, but you do need to ensure that in-store execution is delivering on the promise of fresh produce (and if not, you need ways to track and address it reliably).
This is a pretty solid list, from the perspective of marketing and merchandising produce in-store.
I believe there’s an operational component that should be addressed in concert with all of this: inventory management and re-ordering. This is a very hard discipline in produce, and not much easier in meat, fish, and bakery.
In the end, however, item availability must underscore all of the disciplines listed here. This is how shoppers will ultimately rate their success on each trip.
As in the movie The Graduate, where Mr. Maguire had one word for Ben—Plastics. I have ONE WORD for retailers and that is Consumables. Food is the ultimate of Consumables. It drives traffic, has high turns, and leads to great GMROII. Specialty food can be highly profitable as well.
The key here is creating those “substantial points of difference” throughout the year and seasonally rather than trying to carry all things for all people. One client made the point very well—she wants to sell “addictive foods.” I’ll add that this needs to be an emotional addiction first, and if there is a physical addiction such as caffeine—well, so much the better.
Fresh foods have driven the gross margin of stores since the Dawn of Time. The trouble is that center store still drives >50% of the revenue in most traditional format grocery stores. Here’s another tried-and-true approach to driving fresh foods business: SAMPLE THE FOOD! Relentlessly. Consistently. Hold on-the-floor cooking classes and sample the foods that people normally don’t know how to prepare (scallops, etc.).
Perishable products typically can’t “speak for themselves” as much as other packaged goods products in grocery can, due to their lack of packaging. In addition, in my work with the potato, onion, beef and pork categories, I’ve consistently found that the #1 request from shoppers is for new recipes and preparation ideas. Grocers can set themselves apart with departments full of meal inspirations, delivered both digitally as well as via tried-and-true tools like recipe cards. Who wouldn’t want to shop at a store where the produce associate offered a warm greeting, product information and closed the sale by handing you a recipe card?
Superior refrigeration and quality preservation along the supply chain can be a key differentiator for perishables. In India, FDI in retail has been permitted to reduce wastage of perishables along the supply chain, from the farmers to the consumers.
Consumers need to purchase perishables frequently, and retailers need to dispose perishables nearing expiry quickly with attractive pricing. Therefore, personalized relationship with shoppers can become a differentiator by helping in customized promotions.
Shoppers will always frequent the grocery stores that have the best produce, meat and bakery items. The boxed and canned goods, after all, are going to be the same wherever one shops.
I think grocery stores that have jumped on the “local” and/or “organic” bandwagons in their produce departments are truly differentiating themselves, because even meat and bakery items are all similar across stores, as is the typical produce shipped in from afar.
And if a grocery store can add some fun recipes or information on cooking with organic and/or local produce (using the produce that is in season, at its peak times) then they are adding even more value for shoppers, and probably selling more of these items. That is the sort of experience one gets at a farmers’ market, which are so popular in many parts of the country.