Sales, sales, sales. Grocery stores are literary about driving sales. The root syllable is “gross” (as in selling in gross volume), which evolved to “gross-er,” or “grocer.” Of course, there’s more in this little semantics detour. Grocers, and produce departments within, survive and thrive on volume. You’ve heard many in our business quip, “Sales covers many ills.” The more the sales, the more likely a grocer can break even and turn a profit. And profits, of course, crank other mechanisms. It enables the grocery chain to remodel or build new stores, which in turn generates more sales. It all boils down to keeping shelves stocked, the lights on, employees paid and stockholders satisfied.
Former Ford and Chrysler president Lee Iacocca once said, “When the product is right, you don’t have to be a great marketer.” Which then raises the question for those of us in the fresh produce game: What exactly makes one product more “right” than another?
A fair question, right? I learned a long time ago that how and what you merchandise make all the difference in the world. We discovered that just about any item we placed right next to the head lettuce (the heart of yesteryear’s wet rack and still a solid item) that that item sales nearly always doubled, or more. Hitching your wagon to a star, right? The right item placed in a high-visible position not only sells, but also generates multiple “turns,” or inventory turns, every day.
Related: Rounding the produce bases
The best sales mantra in the produce business? “A fast nickel is better than a slow dime.”
Meaning, even if you promote a value-priced, lower-gross profit item, you will sell enough of that item (due to the item’s popularity) and generate more total gross profit dollars than if you devoted that space to a lesser-attractive, high-priced or high-gross percentage item, which moves fewer units. For example, I once visited a store and the produce manager had merchandised an entire endcap of butternut squash. He proudly said when I questioned the uncommon merchandising that “this item has a gross profit of 65%!”
I squinted slightly. “And how many cases do you sell each day?” I asked.
“Uh, cases? About two or so a week, I suppose,” the manager said.
I advised him to consider the logic. “Sixty-five percent of nothing is still nothing.” I explained further, pointing out that, in comparison, an endcap of, say, 5-pound Idaho potatoes would likely not come near to the eye-popping, high-gross percentage as the squash in this case. “But merchandise this volume potato item in front of your customers and you’ll easily turn that display several times a day — more, if it’s a weekend spillover. A fast nickel is better than a slow dime. Get it?”
It’s a sound, logical argument you’ll win every time. Take a popular item with high potential and mass appeal, with an enticing price point, in a prominent location, merchandised neat and fresh. Then, observe the sales spike. Depending on the time of year, you can probably identify these familiar favorites without too much trouble. Using your “customer eyes,” envision these quality, higher-value items, and push these for all they’re worth. In the long game, it will put more far gross profit dollars in the till.
Anyway, that’s my nickel’s worth for today.