She adds that produce sales have recently gained “as the global pandemic piqued consumer interest in healthier eating habits and home cooking. Increased sales have led to faster inventory turns and reduced shrink in the produce department, making it more important than ever to have produce well stocked and properly rotated.”
Labor, how it can be best employed and the costs involved, fits into executing off best-practice considerations everywhere, but it takes on different dimensions in different markets. In many cases, labor costs have forced tough choices on retailers.
Marc Goldman, produce director for Bronx, N.Y.-based Morton Williams Supermarket, says: “The biggest challenge right now, especially in New York, is the rising minimum wage. It went up $6 over three years.”
The reality is, Morton Williams can’t absorb that cost and make money. So it has reduced labor hours, forcing hard decisions in employee deployment at a time when consumers are more interested in purchasing fresh produce, including new fruit and vegetable varieties, existing items they previously haven’t tried, or value-added products.
“It trickles down to everything, if people want to admit it or not,” observes Goldman. “Someone may have something worthwhile, but my guys don’t have time to unload another truck. I might have an idea about a vegetable or cut-fruit item, but we don’t have time to do this.”
Although produce merchandising often calls to mind massive, colorblocked table and waterfall displays of produce, with presentations of seasonal products such as watermelon and corn merchandised in bins and crates to emphasize harvest freshness, produce departments today take a wide variety of approaches to balancing such factors as attractiveness, ease of shopping and labor costs.
Arlington, Va.-based Lidl, for instance, uses labor in support of a produce merchandising strategy that’s lately been changing, at least to a degree, with the introduction of more packaged and, especially, bagged fresh produce. Lidl assigns a dedicated employee to support a produce section, Ysberand Aukes, Lidl regional VP for New York’s Long Island, said at a recent store opening in Merrick, with a limited selection focused on popular items supported by daily delivery. As such, Lidl drives sales through a limited space and leverages its costs so it can deliver lower prices to customers versus competing grocers.
Lately, the company has been developing new produce merchandising with fixtures that are tiered upwards from bulk to packaged items. The fresh presentation allows Lidl to put more product into the limited produce department confines and present it so that consumers can gather what they need and go quickly, with easy-to-grab packaged product presented at eye level for particularly swift consideration and capture. The merchandising supports a greater assortment, with Lidl introducing such new items as Super Sweet Blackberries to generate additional consumer demand and keep sales volume swift enough to hold down prices.
In addition, bagged and clamshell products help Lidl with shrink caused by spilled bulk items and reduce labor costs at checkout, as packaged produce scans quickly and doesn’t require weighing, noted Aukes.
According to Steve Howard, SVP of merchandising at Good Food Holdings banner Bristol Farms, based in Carson, Calif., packaged produce can allow a grocer to offer shopping convenience, particularly when consumers have confidence in an operation like Howard’s that focuses on high quality and high merchandising standards.
“We have small branded tote bags,” he says. “Certainly, our customers are comfortable grabbing them. They trust the Bristol Farms brand.”
Packaged produce has emerged in response to consumer demand, but also as a way to weigh the balance in the produce department between offering shoppers a more attractive presentation, one that addresses changing shopper priorities, and keeping labor costs reasonable. One qualification is that sustainability concerns may weigh against continued growth for consumers concerned about the environmental impact of plastic packaging.
“Retailers are investing in more packaging options,” Watson notes. “In some cases, that trend is softening a little bit and consumers are more willing to go back to bulk, while other retailers are saying we’re pushing a lot more product into packaged. We’re going to cross a time when especially single-use plastics are going to hit a ceiling.”
Still, packaging does offer a range of advantages that may make it more popular for its labor-saving value and other advantages, such as ease of ordering online versus bulk, where buying by the pound may be difficult and confusing for consumers. In addition, packaging ensures that no one has previously handled produce items whether they’re shopped on the sales floor, or ordered for delivery by personnel of the store or third-party services.
Packaging could become even more attractive, as it can provide critical information on produce nutrition and preparation while also featuring in promotions. Zespri, a New Zealand-based horticultural company and major kiwifruit supplier, is introducing Taste It To Believe It, the first-ever marketing campaign for its SunGold Kiwifruit. The promotion includes a bright stand-alone satellite display of stackable packaged kiwifruit featuring product information, supported by social, email and online video marketing.
Sarah Deaton, Zespri’s shopper marketing manager in the United States, says that the packaging offers suppliers flexibility in messaging and informing consumers about produce items, especially when not everyone is thoroughly informed about qualities and the various ways they can prepare a product. At the same time, Zespri is addressing potential consumer sustainability concerns to ensure that it can focus on the advantages rather than the disadvantages.
Deaton cites research from Cleveland, Ohio-based Freedonia Group indicating that fresh produce packaging demand, including for pouches, bags and rigid plastic containers, will increase 3.7% annually per year through 2024, as evidence that produce shoppers will want packaged fresh produce, particularly as suppliers address environmental concerns.