As we cycle the beginning of the pandemic, all retail eyes are focused on protecting the strong gains which were achieved over the course of the past twelve months.
It is a daunting task because, in our lifetime, there is no precedent for what has transpired in the past year. In the early days of the pandemic – other than keeping customers and employees safe with enforced protocols so doors could remain open – the primary strategy was to keep the supply chain filled as best possible given the extreme demand from consumers.
Much learned, but some lost
Decisions made in 2020 to fulfill against historic demand meant center store and the fresh meat department took center stage, while fresh produce received strong support from consumers who were finding their kitchen again and cooking more than they had in years.
Fresh produce remained in its primary role of cooking ingredients and side dishes. Prior to the pandemic, fresh held an 84% share of dollars spent on produce.
Early in the crisis, that share dropped to 70%. But by the year’s end, fresh produce was back at 80-81% dollar share – within reach to achieve pre-pandemic levels.
Role of fresh produce
While retailers will all report double-digit gains for in-store sales and triple-digit gains in online sales, one question begs answering: Has fresh produce changed in terms of how consumers view its importance?
Based on recent research, the answer is “not yet.”
The growth trend is not what we’d like it to be; consumption remains stagnant to slightly down, according to the State of the Plate from Produce for Better Health Foundation.
Even with all the efforts made across the industry, we still are not moving the consumption needle.
Be that as it may, we know fresh produce matters to consumers. From a retailer point of view, it is very evident that fresh produce is an image and brand builder; consumers most often choose where they shop based on their experience with fresh produce.
Retailers are absolutely leveraging this fact within their promotional, marketing and communications strategy, and they should continue to do so.
How to capitalize now
Consumers are working their way back to being impulse buyers, but it will still take time and confidence for them to slow down, browse and interact – the classic in-store experience, which retailers are experts at leveraging.
Growing sales through that traditional experience has proved more difficult during COVID-19.
According to a recent IRI report, fresh produce sales attributed to merchandising were 45.5% down for 2020 even as overall fresh produce dollar sales were 11.4% up.
This speaks directly to consumers not interested in buying on impulse as retailers are so accustomed to them doing.
To reengage with shoppers, retailers should begin thinking outside of department footprint again, offering customers attractive deals before they even reach the front door. Last spring and summer there was virtually no merchandising taking place outside of the department footprint.
The next three to four months is the perfect window to regain those consumer engagement opportunities.
Packaged versus bulk
Early in the pandemic, consumers were wary of touching anything which was not wrapped or packaged out of fear of the unknowns about how the virus was transmitted. Retailers adapted their SKU offerings adding more packaging, but also larger packages as consumers were looking to buy larger packs and less frequently.
Fixed-weight and packaged produce saw dollar sales gains of 17.8% in 2020 while random weight or loose produce only saw gains of 3.7% in dollar sales, according to IRI.
As were cycle the pandemic, retailers are poised to recapture some of the demand for loose and bulk produce items with more consumer engagement and impulse purchase planning opportunities.
In-store marketing
In a recent PMA webinar, a retail marketing executive said the fresh produce department should be the No. 1 item in print promotions. Fresh produce has that kind of power today to draw consumers, and it is important to utilize the advertising space for the most impactful items, he said.
If fresh produce is the differentiator for a retailer, it should be clear to internal and external stakeholders.
Not only the produce decision makers but all departments should be part of telling the story, and each department should participate. No different than how the fresh meat department for decades has been the driver for sales for total store; now fresh produce is positioned to do the same.
This is a heady statement but one which just makes sense in the current environment.
Online marketing
It is the online experience which has miles to go. The larger the piece of the total food dollar share that goes to online sales, the bigger the opportunity for fresh produce. There are systemic challenges, from PLU and random weight obstacles, to dull and plain product imagery, to a lack of theater online.
Retailers and their fulfillment partners understand the logistical challenges, but it will take time to come to solutions. In the meantime, produce decision makers are not always involved in the overall online sales strategy. The focus for buyers is with making sure supply is meeting demand.
Perhaps produce leaders should be involved, however, because there are sales opportunities are going unrealized.
How are algorithms influencing which items shoppers see in the first couple of pages if they choose to “browse” the overall store or the produce department specifically? If shoppers don’t see what they’re looking for in the first two or three clicks, many will stop looking.
In brick and mortar, the space at the front of the store is prime real estate and treated accordingly, with some of the best seasonal items and deals presented there first, and the same should be true of the online store. This challenge and others need solutions to improve online engagement.
Anecdote of the month
In my early days as a produce director, I had a plan to have a fresh produce promotion which would get the attention of every other department in our company, a promotion so big and so powerful that no one could ignore produce.
The opportunity came in the middle of the summer doldrums, those days after Fourth of July but before the start of the school year. We needed a big promotion to drive sales, but neither the meat department nor center store had what we felt was a catalyst to drive sales.
So I made the pitch to the advertising team: “Let’s do a 10 Cent Produce Sale.”
Several of them chuckled at first, but then I laid out the plan. The produce department would feature 10 items for 10 cents each for a week. The meat department would feature a key fresh item which customers would want to buy to go with the 10-cent onions, and other departments would follow along.
We would build up in-store display activity as I was confident customers would come in for this amazing promotion.
When the first-ever 10 Cent Produce Sale at our company was complete, we had set produce sales records and had beaten the fresh meat department in sales for the week.
From that day forward, the fresh produce department earned a level of respect in terms of the importance to the total store that we had never enjoyed before.
After that, we executed 10 Cent Produce Sales twice a year for several years, and it never failed when I was in stores visiting that someone would ask, “When is the next 10 Cent Produce Sale?”
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. You can check out the latest retail sales data from PMA here.