We are approaching one full year since the pandemic hit our industry, our nation, our world and our families with the force of many storms. Yet here we all are, nearly one year from the start, staring down what comes next.
In my conversations with retailers across the U.S. and Canada, it is very apparent that cycling the pandemic is not as daunting as it may seem.
Sure, there are expectations that some categories will struggle to maintain positive numbers year over year. However, the sky is bright with regard to other categories that were dramatically and negatively impacted at the beginning of the pandemic.
An aggressive approach can provide the opportunity to close the expected volume and sales gaps. Produce managers prefer to utilize as much floor space as possible to sell – you can call this the merchant effect.
A merchant must be smart and calculating, living right on the edge of success and failure without going over. Here are a few examples of where striking that tricky balance can really pay off.
Sweet corn
Sweet corn certainly drives impulse sales. Going all-out on the category mid-week, however, might not be the prudent move. Save it for the strongest sales period; otherwise that sweet corn display turns sour on the shrink line.
Berries
A well-managed and well-positioned berry patch will drive sales and profit. In fact, from January through June, many retailers report berries as their No. 1 sales category. The reason is rather clear; berries are a high-consumption item, but also are a high-respirating item.
Consumers purchase berries, get them home and use them quickly or lose them. Berries are considered a multiple-purchase-per-week item. Bananas might be the only other item in the department that can claim that distinction.
Citrus
When thinking about categories that would have the biggest return on investment for special treatment in the coming months, select items which can be merchandised at ambient temperature, have a reasonable shelf life, and have high turns now through April. The citrus category is a great example.
Citrus exploded during the pandemic, with 70-80% dollar and volume increases through the end of 2020. Consumers know citrus has high vitamin C and is good for their immunity. Capitalize on that knowledge by using suggestive selling to encourage a broader path to purchase in the ever-expanding citrus category.
Imports
While we are still in the winter season, there is plenty of time to leverage the customer's anticipation of a change of season. Import melons, stone fruit and grapes are all great opportunities to tap into a summer state of mind, which we generally daydream about this time of year.
Being aggressive in these categories can benefit the produce department with additional impulse purchases. Winter is also a great time to promote melons in the fresh cut category.
Herbs
Herbs were one of the categories greatly affected at the beginning of the pandemic as retailers reduced SKUs and in some cases eliminated fresh herbs completely – but only for a short time. As it became evident that consumers were experimenting in the kitchen, herbs quickly returned to the shelf.
Now is the time to be more strategic about selling herbs. It is not too much of a leap to suggest offering multiple sizes of fresh herbs. Cross-merchandise them with items that are complementary and consider featuring them in ad or with suggestive selling on the digital store.
When consumers purchase fresh herbs, the basket size is 30% greater.
Accordion approach
I have not known many, if any, conservative retailers in my life, but there is a time to use this approach to your benefit. A mentor of mine, when I was a young produce manager, used to tell me to play my produce department like an accordion – expand and contract. It was a great lesson and one I used to its fullest benefit.
The words conservative and fresh produce do not seem to belong in the same sentence. As a former buyer on my retail team used to say, “Sell it or smell it.” But there are times with taking a less aggressive or conservative position can benefit the overall performance of the department.
Promotional activity
Consider carefully how many items are needed as a price and volume drivers in the weekly ad to attract customers – whether you're looking to draw people to brick-and-mortar or to your online presence.
By limiting exposure in print and driving in-store engagement with good value items for impulse opportunities, consumers will be less focused on specific items and prices, which will lead to more non-promotional activity.
SKU rationalization
There has been a lot of momentum around SKU rationalization over the past year, and that trend does not seem to be weakening.
The low-hanging fruit has already been harvested in terms of eliminating weaker performing items, but there may still be other categories that deserve to be evaluated to validate selection versus need.
Producers are going through the same process to meet the needs of their retail customers and maximize production.
More changes are coming, as product innovation has not stopped but in fact is expanding. Tightening selection and line extensions where it makes business sense will better prepare retailers for a wave of exciting new item opportunities.
Conservative versus too conservative
The age-old statement in retail is this : “I cannot sell what I do not have.” How many times have we heard that saying? Of course a retailer wants to sell everything they can as often as possible.
The reality, as we know, is the top 20% of the items control 80% of the dollars. A focus on the top-selling items is certainly a winning sales strategy.
If the appropriate attention given to the next top 20% of items, that group can develop into a strong volume and profit center to support the top-selling items, which have less price elasticity at retail.
Time for those ‘crazy' ideas
Quick story – in the late 1990s, when the flat peaches that are also known as the Saturn variety first hit the market, as a merchant I saw an opportunity to create conversation and excitement by offering them in our stores. What I did not expect was that customers would balk at the price.
I underestimated the work it would take to develop this very new product. It was a crazy and costly decision. But the end of the story is that when we introduced conditioned stone fruit in 2000, we brought back Saturn peaches even though there was a lot of pushback from leadership. This time, however, we had the success we had hoped for originally.
The moral of the story is when a crazy idea is presented, think it through, prepare a plan, and take the risk. If it is not successful, do not give up, but instead take account of the lessons learned and look for the next opportunity to be successful.
As we close in on cycling the pandemic, retailers are reviewing sales numbers from last March and trying to figure how they will meet the challenge to protect the sales gains they experienced. Many of the hard item categories such as potatoes, onions and carrots are going to be very difficult to show positive comp sales, both in organic and conventional.
Other categories such as leafy greens, herbs, bulk apples and bulk vegetables are positioned to see strong positive comp sales come mid-March. Why? Because many consumers were initially concerned about the transmissibility of the virus through touching. We learned over time – and since have made countless efforts to communicate to consumers – that bulk produce items are safe to purchase.
So now that consumers are buying more bulk produce items again, pull those crazy ideas for big displays or promotions out of the mothballs.
As consumers are still preparing most meals at home, being creative with the categories which have the most to gain in terms of year-over-year sales lifts can be the difference in driving overall positive comp sales as the second quarter of 2021 approaches.
To look at the nationwide trends on these different categories, out the latest retail sales data at PMA.com.
This column is part of a series by Joe Watson, who spent 30-plus years as the director of produce for Rouses Markets and was named Produce Retailer of the Year in 2014. Joe now serves as a vice president of member engagement for PMA.
Get more insightful commentary from Joe in these recent columns.
Leveraging the year of fruits and vegetables – Every year in January we know that consumers make a concerted effort to eat healthy. But in 2021, there is an additional tailwind for fresh produce marketers and retailers.
Looking back on 2020 and looking ahead to 2021 – For most businesses, this harrowing year has often felt like flying the airplane while building it, and yet so much good has come out of an incredibly turbulent period.
Mentoring in produce and its value to the next generation – It is June 1979, and a 15-year-old boy begins work in the local supermarket of the small town he lives in, like so many generations of kids have done before.