I for one am very happy to see the year 2020 in my rear-view mirror. While the pandemic is not yet under control, we may see the light at the end of the tunnel now that we have vaccine options.
It’s been well documented that while foodservice produce sales have taken a punch in the gut, retail produce sales have seen double-digit sales growth. Experts predict that this will continue in 2021.
Another change has been the growth in online produce sales, which grew to 10.2% of total grocery sales in 2020, up from 3.4% in 2019, according to a new report from grocery e-commerce specialist Mercatus.
The report, produced with research firm Incisiv, projects that online grocery will grow to 21.5% of total U.S. grocery sales by 2025, more than doubling its current share of the overall grocery market. That is a paradigm shift when it comes to grocery purchasing.
Is fresh produce getting our share of the online sales growth? My concern is that if buyers and suppliers don’t get more involved in this new way of selling produce, we will not get that fair share.
It is my belief that – if changes are not made – produce will miss out on potential sales. The reason for this? The brick-and-mortar store is designed to encourage impulse sales, and often the online store environment is not.
A significant percentage of fresh produce purchases made in-store happen on impulse. According to a report by the Food Industry Association (FMI), 60% of shoppers make additional, unplanned produce purchases when shopping in a store.
What this study indicates is that, while shoppers may have fresh fruits and vegetables on their grocery list, they are likely to purchase additional produce items every time they shop at a supermarket in person. It makes sense; it most stores, you walk through the door and into the produce department.
Now think about how the consumer purchases online. They buy from a list. They search for those specific items. If broccoli is on their list, they aren’t exposed to the tomato category, as they would be when they walk the produce department. They don’t stroll by the grape category and pick up that extra bag of grapes.
They miss the smell, touch and visual experience of fresh produce, and they purchase only the items on their list because they are not exposed to the rest of the options in the department.
Without a plan to market to the online consumer, both the buyer and the retailer will miss out on these unplanned impulse sales. We can’t afford to miss that opportunity. It’s important for buyers and sellers to work together to figure this out.
The first step is to understand how the online process works for every retailer.
- Are the pictures that are presented attractive? Both buyer and seller need to make sure that we are showing up at our best.
- Is the assortment what you want the consumer to be exposed to on their online visit? Who makes that decision?
The second step is to understand the marketing offerings for the online providers. There are questions that need to be answered.
- How can I promote the items that I want to promote using the online platform?
- Can impulse items be triggered when a complementary item is searched?
- Can I pay for a promotion that is not available in-store?
- Can suppliers pay for sales based on clicks and purchases?
I have found when investigating many of these online providers that they do not understand the dynamics of fresh produce. Their marketing is based on a consumer-packaged goods mentality. The marketing is based on national brands. Missing are regional players, generic categories, PLU-based produce and private label.
How do we change that? We get involved.
- Buyers and suppliers have a conversation about this important topic. What can we do together to create something new in the future of online produce sales?
- Buyers and suppliers schedule meetings with Instacart and other players to understand their platforms and offer to teach them about the produce industry. This missed opportunity is a miss for the online platforms, too.
Do we replicate the in-store experience online? Let’s not confine ourselves to our own reality.
Is artificial intelligence part of our answer? What if a purchase of broccoli triggered your brand of tomato and asked the customer if they wanted to purchase it? That’s how Amazon does it.
We all want to grow produce consumption. We have the natural product to positively affect America’s health. This is a call to action for the produce industry. Let’s create our own future.
Mike O’Brien, president of O’Brien Innovations, has more than 30 years of retail leadership experience, including 15 years as a vice president of produce. He received the Produce Retailer of the Year award in 2004. His new consulting practice covers retail merchandising and business development, among other areas.
Check out some of Mike's other great columns for PMG at the following links:
What makes a great produce merchandiser — We have a lot of conversation about produce managers, inspectors, buyers and category managers, but perhaps the unsung hero in produce department operations is the produce merchandiser/specialist.
Succession planning for produce managers — A great plan won’t hit your goals without execution at store level. I had a boss once who used to tell me, “Nothing is real until it happens in the store.” To have great execution you need great produce managers.
Winning the war on shrink — Runaway shrink is the nemesis of an otherwise well-run produce operation. It’s almost impossible to hit your targeted numbers if you don’t have a handle on shrink.