Oliver Wyman, a leading global management consulting firm, recently published a whitepaper entitled A Retailer’s Recipe—Fresh Food and Far Less Shrink, which outlined a concerning perception among today’s fresh produce consumers that supermarket produce departments offer products that simply are not fresh. And this perception extends to the other fresh departments within the store, exemplified by the whitepaper’s opening comment: “Up to one in seven truckloads of fresh food delivered to supermarkets gets thrown away. That shrink represents a huge cost by itself. But it’s just a symptom of deeper problems in grocery aisles everywhere—problems that affect freshness and have a huge impact on the choices that picky customers make.”
And the article continues by describing this less-than-rosy picture: “Walk into just about any metropolitan supermarket in North America and you’ll quickly see superabundance. Fresh peaches piled deep and wide, several varieties of glossy apples, plus strawberries and lettuce and onions, redolent and seductive to shoppers. But the succulent arrays hide far less appetizing truths—truths that are becoming more consequential not only for grocers’ next-quarter profits but also for their long-term success. Eye-catching displays often belie the food’s actual age, an increasing irritant to shoppers who treasure freshness yet find their purchases spoiling all too quickly. Few see the grocers’ side of the freshness story: the trash bins full of baked goods, fruit, seafood, and flowers at or near their expiration dates or rejected by customers.”
MERCHANDISING TIP OF THE WEEK. Here are some interesting—and, in some cases, startling— statistics that we all need to consider:
- “Quality / Freshness” is the top “driver” of a customer’s satisfaction with a produce department. Far more so than “price”.
- More than 80% of consumers have noticed bad produce on display where they shop.
- 58% of consumers have found goods they purchased unsatisfactory when they brought them home.
- Of that 58%, nearly two-thirds adjust their shopping behavior—choosing to buy less produce at that store or taking their grocery business elsewhere.
- Only 17% of shoppers annoyed by the poor freshness of their purchases complain to the store about it.
- Customers who are satisfied with freshness will spend over a third more in the produce department of their primary store compared to those who are not satisfied.
- Customers will spend 8% more of their total grocery spend exclusively with the retailers whose produce they are pleased with.
So, what can we do…
First, recognize that the freshness / shrink problem is shared by all facets of the “seed-to-shelf” team. Caito Foods must consistently find ways to procure, store and deliver the freshest products. In addition, store merchandising and operations must also consider the importance of product freshness. At the foundation of operational improvements comes a dedication to accurate and effective ordering of products. A salad variety, for example, that sells ten cases each week should not be ordered in a manner that all ten cases come in on one deliver. Same goes with every item you offer.
Second, understand that “what cannot be measured is hard to fix.” And that doesn’t mean that logging your shrink on a chart each week will fix your overall freshness levels. It will take a concerted effort to monitor on-hand inventory of items versus weekly sales. Does it make sense to have a two case inventory of apricots on hand if you normally sell a half-case each week? And, how many days shelf life - as an average - does your salad section have, for example? If that’s three days this week, could it become five days in the future...then maybe six or more?
Next, recognize that the worst possible attitude about freshness is that “it is what it is.” Certainly fresh produce has a certain amount of shrink that is inherent in the nature of the product. But the fragility of the product can be heightened by poor ordering and merchandising practices. Many of us were trained early on in the “pile ’em high and watch “em fly” doctrine—building huge displays to grow sales. The Oliver Wyman report would indicate that this philosophy of merchandising has its flaws— “it can actually hurt sales when the produce at the bottom of the piles is damaged.”
And finally, recognize that we may have chosen to be a bit oblivious to this situation all along. For example, how long do those mushrooms you filled on Monday stay on the shelf before they are completely purchased by shoppers? Are the strawberries you displayed on Friday “hanging around” for next Wednesday’s customers? The Wyman report says it well: “It’s not enough in perishables to be good on average: it’s what the worst 20% of product looks or feels like that matters.”
The freshness of your products is the most important concern for you as a produce professional. While price is important, a bargain is soon forgotten by a customer trying to cook with a wrinkled pepper or soft tomato. Take Freshness Seriously. Happy Selling!