Strawberries Are a Superpower

Operational excellence in the produce department has the power to drive sales and unit growth for grocers, and now is the time to leverage that opportunity.

That's the main takeaway from a powerful presentation by FMI (The Food Industry Association), 210 Analytics LLC, retailers and suppliers attending the Southeast Produce Council's annual Southern Exposure show in Tampa, Fla. The presentation was part of FMI's debut of its 9th annual report, The Power of Produce, in which 1,500 consumers were surveyed on produce planning, shopping and consumption. 

The session was moderated by Rick Stein, VP of Fresh at FMI, and Anne-Marie Roerink, Principal and Founder of 210 Analytics LLC. Panelists included Melissa Thrasher, procurement team leader at Whole Foods Market; John Clear, CFO of 99 Cents Only; and Jon Greco, senior director of produce sourcing at Sysco.

The FMI report identifies latest trends and opportunities when it comes to fresh produce at grocery. 

Performance

While inflation might be moderating, record high consumer debt levels, record low consumer savings rates, student debt repayments and low consumer confidence plagued grocery – and specifically the produce department – in 2023. Unit and volume pressure persisted for departments around the store, but fresh produce was among the strongest-performing departments in traditional grocery, with only small year-on-year unit and pound declines and several months in which volume sales exceeded prior-year levels. Additionally, volume sales remained above pre-pandemic levels.

"But the good news is that we are moving in the right direction," Roerink said. "The even better news is, if you look at inflation that we see in fresh produce, we are actually far, far below average in terms of the price increases that we have seen year over year, or compared to three or four years ago."

Roerink said in terms of dollars, produce has generated $15 billion dollars since 2017, which is astounding, she mentioned. 

"If you look at the 41.1 billion pounds that we are selling in produce today, that is still higher than in 2019, and there is very few departments that can say that they are holding on to those numbers. ... What's very unique about produce is the household penetration. Everybody buys produce at least once. People are coming to stores more often to buy fresh produce. And that is a really, really important thing to be thinking about. Let's continue to impress them, let's continue to drive them to our stores, because we all know impulse power of fresh produce. And the trip is a really, really important part of why produce did better than all those other departments," said Roerink.

She suggests retailers focus on driving up units per trip, since strength in produce is driven predominantly by more trips.

"That's really where we continue to see consumer wanting to save a little bit, buy a little bit less, stretch whatever they're buying, not having any waste. We'll see a lot of those numbers may drop," she said.

Stein of FMI asked Clear about produce sales trends at 99 Cents Only.

"I think that what we are finding in the value channel is that people are still willing to spend money on produce, but they're a lot more discerning of what they're getting for that price," Clear said. "People need to get value for everything they pay for. In the value channel, we don't get a lot of second chances at this. You have one chance to get the value for what someone wants. And A, if you don't fill that value proposition for them, they're usually going to try and go somewhere else. We've seen that pretty regularly."

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Thrasher said Whole Foods Market is seeing shoppers also gravitating toward promotions. 

"They go toward the yellow signs. And we're seeing is that there's been a shift in sales across categories, too, as a result of some of these promotions that we're doing," Thrasher said. "And one of our goals in 2024 is putting a few more items on sale. And then also trying to figure out what works and what doesn't work on a sale. You put celery a sale, you're not always necessarily going to sell more even, so you're trying to figure out more vegetable options."

Consumption 

Berries grew units and pounds in 2023 — resulting in an additional $429 million in 2023. Potatoes, which experienced a 13.5% increase in the average price per pound, contributed the most in new dollar sales on the vegetable side. The top 10 growth produce powerhouses of 2023 were berries, potatoes, melons, lettuce, grapes, tomatoes, cucumbers, celery, pineapple and onions. 

"Berries had an astounding food year, and continues to astound," Roerink said. Several of the top 10 produce growth powerhouses are also booming in pounds, she said. "There's also some of interesting items coming back. Salad kids, peppers, oranges, cherries. ... Think about some of those items. Can we bring those back into the fold, because that might be an interesting pocket of growth."

According to the FMI report, 83% of consumers are making changes to their fresh produce purchases; 35% are buying more on sale, 25% are buying produce that lasts longer for less waste, and 20% are buying cheaper produce. So promotions are really key in driving growth in the department right now.

Clear said that people are shopping more often in more stores and seasonality plays a huge role with promotions.

"Even though people are writing more lists, I think what was very interesting is 89% percent of people are still making impulse or unplanned purchases when they go to the stores," he explained. "So there's still a huge percentage of people who are going to make an impulse purchase. And the way I would take that is, when you write a list, it's like, 'Well, we can buy strawberries or any red berries,' because when we go to the store, it's like, 'What berries are going to be available?' Then strawberries are going to be a superpower, because Mexico and California are growing at the same time. They are going to be a good price, but there still is some opportunity for impulse. 

"And so in the value chain, what we lean into is a partnership with growers. 'What's happening in the fields right now? How can we solve problems for you?' And I think that's a really key aspect of what retailers have been struggling through. Finding where pain points for grower/shippers are, and then leaning in to try to be a problem solver for them. Because in general, basically you solve a problem for a grower/shipper, you're creating an opportunity for your customer."

Opportunities 

Roerink says grocery retailers have "enormous power" in today's marketplace to leverage promotions to pull people to stores and entice them with an impulse purchase because of something that is on sale. Specifically, she cited a data point in which 89% of shoppers make an unplanned produce purchase in the store.

"Promotions have tremendous amount of influence right now," Roerink said. "Are you making sure that everything that you're doing is actually out there? Do people have your app? Do you still send the different flyers out there? What are you doing in terms of your social media communications that are often not focused on price and promotion? And is this the time where we should?"

Roerink encourages retailers to be creative in produce promotions to drive engagement with shoppers; varying types of deals might include "Pick 5" or one-day specials. Retailers should also be leveraging fresh produce to drive digital engagement for the store, she said.

"When we look at the sheet maps of a grocery store, where are the eyes of consumers going? And if you do all the analysis on it, produce is by far where people go. It's a really, really important thing in produce, not just in meat," she said. "So integrate those digital promotions into stuff in the stores to try and get people to download the app and start engaging with you digitally as well. We see loyalty programs starting to pop up. So a lot of creativity to really engage with people on those promotions."

When it comes to e-commerce, one thing retailers need to stay on top of is out-of-stocks. 

"When people come to your store because they've seen something online they're planning to buy, and they do not find what they were looking for, there is no better way to tick of somebody and ruin their shopping experience than to have an out-of-stock, especially on an item that was on sale," Roerink said. "It also has a big financial impact on your produce department. Where 46% say, "Well, I'll just go to buy a different item," more and more, we see that items end up going to a different store, or both stores altogether, or else just buy something frozen or canned. So out-of-stock, as hard as it is, continues to be a big piece of the puzzle for satisfaction and for sales as well."

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According to the FMI report, other critical opportunities for growth include educating consumers on produce occasions and offering shoppers ideas for vegetable and fruit snacking, incorporating vegetables at breakfast, and healthy desserts. For example, 51% of produce shoppers desire tips on innovative ways to incorporate fresh fruit and vegetable snacking. 

Eye-catching displays (featuring programs such as locally grown, sampling, secondary displays, cross-merchandising, introducing lesser known fruit and veg, storytelling, etc.) and promotional in-store signage are also key drivers of purchase now, whether planned or unplanned. Retailers should be working to "wow" shoppers with quality and freshness in the produce department, staffed by associates who are know produce. 

Meeting customers in-store or online with nutrition education is a prime strategy to increase produce consumption. Many consumers associate fresh produce with nutrition and health, leading to higher consumption across various meal occasions when healthy eating is the focus. The report finds that retailers have an opportunity to emphasize health benefits, offer guidance on portion sizes and provide practical tips for seamlessly integrating fresh produce into all meal occasions.

Six in 10 Americans express that fresh produce waste at home is a financial challenge they cannot afford and 51% of shoppers reduce produce purchases to avoid spoilage. Food retailers can be transparent about efforts to reduce food waste from farm to table by highlighting shelf-life programs, community donation initiatives, providing storage advice, offering portion options, and integrating considerations of functionality and environmental impact into packaging decisions.

“Price has not been the predominant driver of purchases in recent years, but rather appearance and ripeness. Now, price is back in play,” Stein said. “Food retailers have the opportunity to educate shoppers on their food waste reduction programs and offer waste reduction tips that allow shoppers to fully benefit from their produce purchases.”

To download the FMI Power of Produce report, click here.