With shopper traffic and trip frequency down across most retail channels in USA, consumers are carefully evaluating how and where they shop for food to prioritise the “bare necessities,” which mercifully include many fresh produce items.
But as retail produce executives will readily attest, consumers are recoiling from spontaneous purchases of perceived higher-priced fresh foods that often go bad before they’re Consumed.
An argument consumers often offer for not buying more fresh fruits and vegetables is that they’re too expensive. But clearly, it’s an unfounded claim based more on perception than reality, as revealed by recent Nielsen Homescan data finding that among 154 forms of fruits and vegetables, more than half were estimated to cost 25 cents or less per serving. At that cost, consumers can easily meet the recommendation of three servings of fruits and four servings of vegetables daily.
Yet, as the high-prices/tighterfood- budgets/less-volume loop continues, the percentage of fresh produce being sold on promotion seems to have taken center stage for most retailers, many of which are vigorously playing up value-priced, recession- proof conventional products – such as iceberg lettuce, bananas, potatoes, whole carrots, Red Delicious apples, broccoli and tomatoes – whose prices have remained stable compared with centre store fare.
Retailers are also more vigorously touting the aforementioned “produce pantry staples” in their weekly print and Web-based ads in tandem with enhanced in-store efforts to attract cash-strapped consumers to the produce department. Indeed, 95 percent of retail produce executives polled at Indianapolis, Ind.-based Caito Foods’ annual education seminar confirmed with Progressive Grocer that they’re incorporating more produce promotions in the mix alongside more product sampling, one- and two-day special events, 10-for-$10 specials, and specific category-themed selling events, such as “berry fests,” “Florida citrus truckload sales” and “bulk displays of seasonal items.”
Keep Prices Low
As two retail produce executives noted, “The most effective promotions are those that show value on the feature” and “offer deeper discounts on ad items,” sentiments that were echoed by another grocery official, who affirmed that “price-pointed promotions, sampling and ‘hot deals’ are most effective in helping keep interest high in our produce departments,” in spite of gross margins suffering Somewhat.
With more consumers trading down and seeking out good deals in every pocket of the store, it’s all to be expected, according to yet another produce manager, who said, “Keeping lower-priced produce items front and center is key.” Among the best ways to do that, according to other senior retail produce associates in attendance at the regional produce supplier’s annual gathering, is with one or more of the following strategies: in-store sales supported by outdoor displays with products on sale when possible, hotter weekly specials, and positioning lead sale items with 0 percent to 10 percent margins. To counter the impact of rising fuel and wholesale prices, several produce retailers said they had to raise retails by the smallest percent possible to offset the margin loss, while the vast majority of others worked hard during the past year to hold the line on prices by absorbing the hikes.
While economists with the U.S. Department of Agriculture predict more stable food prices over the next few months, they also warn that sticker shock could make a rapid comeback if energy costs once again skyrocket, or if the economy rapidly rebounds, which will in turn apply upward pressure on prices as demand rises for products that consumers have cut back on in the downturn.
In-store promotions highlighting bargain prices are proving to be the strongest magnets to draw value-seeking customers toward the produce aisles, but many grocers are also seeing especially strong results with the tried-and-true categories such as head and leaf lettuce, and navel oranges.
“Greens are bringing customers in, and if they look good, they buy more,” said another produce retailer, who noted that cross-promotions with the meat department are also clicking better than normal, most likely due to higher at-home eating trends, particularly with stalwarts such as mushrooms, onions, carrots and potatoes.