Editor’s Note

As part of our ongoing mission to diversify our editorial offerings into new mediums beyond our tried-and-true print vehicle alone, I’m pleased to present a “short version” of the hot-off-the-press findings of Progressive Grocer’s 2009 Produce Operations Review.

Unlike other category-specific surveys in the marketplace, our exclusive, retailer-driven “annual state of the produce industry” report is among the signature pillars of our brand’s legacy of providing reliable, in-depth industry intelligence.

Carefully compiled from the collective input of a cross section of diverse retailers from around the country, our annual “produce ops review” covers the foremost issues on the minds of the average supermarket produce executive on a daily basis, inclusive of same-store sales performance, leading departmental challenges and labor considerations, among others. As has been the case for roughly 20 years, our annual produce benchmarking study provides comparable estimates for a variety of sales and operational aspects of the average produce department during 2008 and 2009, while also projecting ahead to what is expected to unfold in 2010.

The key take-away of this year’s produce survey finds supermarket produce executives laser-focused on pricing and promotional strategies to lift sales and boost consumer traffic amid a feeble economy that finds value-priced conventional bulk produce taking center stage largely at the expense of organics, pre-cut value-added fruits and veggies, and fresh floral products.

Among the most significant results of this year’s annual produce study: year-to-year net produce department sales rose 2.3 percent, though most likely as a result of new stores that feature larger produce presentations. When asked about produce sales changes from January to June 2009, slightly more than one-third of this year’s respondents had a slightly easier go of it, relatively speaking, with 36.5 percent reporting increases, 41.3 percent reporting decreases, and 22.2 percent on par with prior-year sales, good for a negligible -0.6 percent comparable net decline.

However, while the national economy was originally thought to be on the mend heading toward the last quarter of 2009, produce directors downgraded their outlooks for the balance of the year by a collective -1.2 percent, as a result of one-third (33.3 percent) forecasting same-store increases, 38 percent projecting decreases, and 28.6 percent anticipating no dramatic change in either direction. All told, flat margins, generally weaker overall sales and the abundantly cautious year-end outlook depicts the dimmest near-term outlook for produce department sales in several years of conducting this study.

Beyond the insightful statistical data capably crunched by our resident research director, Debra Chanil, I once again found the most telling aspect of the survey embedded in retailers’ verbatim responses to the open-ended question regarding what they feel their supply chain partners could be doing better. Found below are a few of the direct responses we received this year:

• “Assistance in monitoring food safety and product quality from farm to retail.”

• “Better cost to deliver better price points.”                       

• “Consistency in size/quality.”

• “Help with creativity, promotional focus, consumer focus.”

• “Fresh bananas — not green/overripe.”

• “Better cost for local items.”

• “Fresher product from farm to store, understanding the costing structure of operators, increased promotional opportunities, and private label options for independents.”

• “Tracking numbers on all produce.”
       
• “Innovation with new and/or better-tasting items.”

• “Local, safe and fresh.”

• “More hands-on in retail stores with their respective products.”

• “Ideas from our suppliers to help freshen up the department, including more prepackaged items and longer shelf life.”

• “Share best practices and photos of your most successful customers, such as those that appear in Progressive Grocer.”

• “Help us promote organic.”
                       
• “Provide us with the best cost with premium quality products.”

• “Save some locally grown products for independent operators, and deliver more than once weekly.”
   
• “Smaller quantity wholesale.”
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