PG Retail Produce Roundtable: Focusing on the Future

With consumer interest in better dietary choices steadily on the rise, the fresh produce department is universally viewed as the single most influential destination for shoppers heeding the call to action.

To that end, Progressive Grocer gathered a select group of invitation-only retail produce thought leaders at the Anabella Hotel, in Anaheim, Calif., last October to discuss the latest consumer trends and emerging solutions for an ever-changing landscape — one increasingly shaped by concerns about quality, convenience, taste and value.

Meet PG’s Autumn 2014 Retail Produce Roundtable Panelists

Retailers

• Shirley Axe, Health & Wellness Manager, Ahold USA
• Jeff Fairchild, Director of Produce, New Seasons Market
• Mimmo Franzone, Produce Expert, Longo Brothers Fruit Markets
• Justin Hill, Produce & Floral Director, Fresh & Easy
• Jon Holder, Senior Manager, Produce and Floral, Raley’s Family of Fine Stores
• Craig Ignatz, VP, Produce and Floral Merchandising, Giant Eagle
• Mike Orf, Assistant VP, Produce Operations, Hy-Vee Inc.

Suppliers

• Jim Grabowski, Director of Marketing, Well-Pict Berries
• Brian Huh, VP of Category Development & Customer Strategy, Dole Fresh Vegetables
• Doug Larson, EVP of Sales, Robbie Flexibles
• Charlie Piper, President/CEO, HarvestMark & ShopWell

Moderator

• Meg Major, Chief Content Editor, Progressive Grocer

Mike Orf, Assistant VP, 
Produce Operations, 
Hy-Vee Inc.

If you really think about the produce department of today and the diversity of consumers that are shopping it — whether it’s Millennials and how they buy differently than Boomers — there’s so much we can offer. As retailers, the reality is that we’re kind of out here trying to dissect this on our own in terms of differentiation and trying to find new ways to put our own spin on things to help us stand out from the crowd. Produce is very cool that way, because it’s typically front and center in almost every store in America. But it wasn’t always that way. Now we’ve got an emergence of new, smaller-format stores that are almost all about produce. So I think we’re all trying to find our way with how to best leverage service and the value proposition with the kinds of products we strive to offer to help us stand apart. And there are just tremendous opportunities before all of us.

I think what’s most important is that we’re carving out a unique niche that we believe in with all our hearts, that motivates us to get up every day excited about what we can do to go out and make it happen. There are just some really cool things happening in fresh produce right now that we can, and must, take full advantage of.

Mimmo Franzone, 
Produce Expert, 
Longo Brothers Fruit Markets

We’re really focusing on our people with training, education and hands-on learning with visits to our growers, to take our fresh produce departments to the next level. Our manager-training courses teach everything a successful manager really needs to know, such as margins, shrink and quality control. We also offer seasonal product knowledge seminars while investing in our produce teams by taking them out to see our growers, such as the six-day trip to California I organized last July for 44 team members, 28 of whom were produce managers.

We covered 1,000 miles on the ground, with frequent stops to visit with, learn and really engage with our grower-partners. For some, it’s like a trip of a lifetime, and everyone comes back and shares their knowledge with their store teams, which is then passed on to our customers. So it’s really ongoing education, from seed to table. So whether it’s dietary tips or sustainability issues that our growers are working on, educating our team members is huge because that’s what customers want. The education works both ways for our vendors as well, to help them better know what we want and need.

Justin Hill, Produce & Floral Director, Fresh & Easy

There are a lot of areas of opportunity for us, but none more so than service. Historically, you could have walked into one of our stores, which were kind of like nice vending machines — plenty of products but no service. So we’re working across the company to deliver a new experience based on a very simple acronym, FAST — fresh, assortment, service and taste — to help take us to where we see eventually ourselves going, with stores focused on dayparts, with fresh offerings that change all day long.

Specifically in produce, an area where we’ve changed our philosophy a bit focuses on flavor. So rather than trying to be first on items when they’re coming into season, we’re focusing more heavily on the best flavor. We’d rather be two weeks later bringing a product to our stores if it’s not eating great, because what we’ve seen from a customer experience is that when they come in and they buy, say, that first peach, if it doesn’t taste great, then we risk losing them for the season.

Flavor really matters today and is something that moves rapidly across social media channels. Previously, we could only tell people about products in ads and, with luck, by word of mouth. But now, anyone with a smartphone is suddenly able to share information — all the way across the country, or even around the world, in a matter of minutes, about where they are finding great-tasting products.

Jim Grabowski, Director of Marketing,
Well-Pict Berries

The focus on health — and our industry’s collective role to accelerate it — is an extremely important issue for everybody in fresh produce. For our part, however, ensuring that the cold-chain management system never breaks is crucial. Unfortunately, however, that’s not always the case, and we know it happens, and often times, it’s at store level.

As an example, we were having problems with one customer, which was complaining about their berries. So I spent some time at their warehouse to understand their receiving, unloading and inspection practices, and everything was as it should be. We then went to look at some of the stores, which appeared to be fine there as well. But after returning to the retailer’s backroom after a lunch break at 1:30 p.m., in the thick of humid, 85-degree midsummer heat, I immediately noticed the wide-open back door adjacent to the delivery area, where the pallet was stored. On top of the berries sat a 50-pound bag of onions. And I said but three words: “That’s our problem.”

If we could commit to educating store-level teams about the importance of getting temperature-sensitive, high-demand items like berries into the cooler right away, we would all have a lot less to worry about.

Jon Holder, Senior Manager, Produce and Floral, 
Raley’s Family of Fine Stores

Education is playing an important role across our entire company. In produce, we’ve been experimenting over the course of the last 18 months or so on specialties that focus heavily on just one item. We’ll buy a truckload, but prior to sending the particular item out to the stores, we’ll do a one-page educational piece for our produce team, as well as provide talking points for our cashiers, supported with special in-store signage, so that when that item hits the stores, everybody knows what the item is, instead of, “Oh, we got something from the produce office we’re supposed to sell.” And we’ll do that seasonally as well, by selecting special items to focus on. We also now do a category of the month, and have found that we get a better-sustained lift in those categories by doing so. For our October apple month, we brought in every SKU of apples we could find on the West Coast, and [were] heavily promoting apples all month in all of our stores.

In terms of industry issues, I believe traceability remains the most important, because when it comes to recalls, the quicker we can react as an industry, the better we are able to communicate with customers, so that they have full trust in us to provide good, safe, quality food. And the quicker that we can tell them, the more confidence they’ll have in us, because it doesn’t matter what the item is or where it happens — if we can’t identify it quickly and get it out of the system, it not only hurts our entire produce department, it hurts all of us as an industry.

Charlie Piper, President/CEO,
HarvestMark & ShopWell

Quality is rapidly becoming the key differentiator in produce for successful retailers, along with freshness, both of which are the primary currency of the perishable supply chain. The industry is obviously changing rapidly, and with that comes a greater need for fresh supply-chain partners to focus on simplification. There are so many competing priorities in retail, and everybody’s drowning in mountains of data coming from various sources. But when it comes to data, more is not always better. So it’s all about simplification with the partners we work with for fresh food insights and traceability solutions that deliver transparency and fact-based strategies.

By alleviating some of the mounting pressure on retailers and growers with data collection, we can synthesize and present it in a way that’s both consultative and actionable. Although we were early in traceability, many of the top issues we’re talking about fall into one of three related categories of sales or customer loyalty, quality, and shrink management and risk mitigation, all of which are intertwined with sales, gross margin and risk-free products — they’re not mutually exclusive. It’s therefore never been more important for produce trading partners to work together to understand consumer needs such as [those of] Millennials who want to eat healthier, and who also want more information with ingredients, growing practices, nutrition, recipes and other attributes of their food. They also want to cook — not just take it home and heat it up — which is why ingredient packs with actual chopped and sliced fresh produce will continue to gain in popularity in the years to come.

Craig Ignatz, VP, Produce 
and Floral Merchandising, 
Giant Eagle

At the top of my list are varietals, cold chain and supply chain management. I’m living in a world where an umbrella of convenience rules, which consequently requires solutions that deliver taste, value, speed and, of course, nutrition. And kids plug into all of it, which is just another fantastic opportunity for all of us. As I see it, the next frontier is how we will continue to adapt to changes in our distribution model with the increased penetration of value-added products. And that’s what we’ve been focusing on: the stronger demand for value-added products that continue to change the game, especially in terms of freshness and taste — and part of that focus centers on altering the traditional distribution model.

We also see clear trends with how people are looking at things differently in the produce department in terms of easy, easier, easiest. Take, for example, broccoli. We’ve long had florets, which languished when sold as a commodity. But our larger-size, value-added packages have since replaced that lost sale and continue to do extremely well. In addition to better in-store benefits of stronger volume and higher sales, the shift has helped us see greater efficiencies with improved supply-chain measures.

Doug Larson, 
EVP of Sales, Robbie

There is perhaps nothing more important than the impact of cold-chain management for fresh produce, with the exception of packaging, and especially with salads, where the impacts are tremendous. Because if you don’t have the right package, the right transmission rate of oxygen, etc., you’ll end up with a potentially dangerous product. Which begs the question about what is more important: the package, which helps provide the exchange rate, or the cold chain, which allows the package to work? It’s a yin and yang. While there are so many ways to bring value to customers, the packaging [application] is in the best position to help consolidate a number of the most critical things in play among fresh produce trading partners.

In regards to more convenient, grab-and-go solutions, SKU proliferation is becoming increasingly complex. And while the bulk of the proliferation is occurring with value-added fresh products, we’re seeing a shift among some companies that are interested in learning how to create the same convenience and ease of purchase for bulk commodities. We’re getting questions all the time about how to look at other products differently in terms of packaging and merchandising. With this the case, we ask our groups: If your store has great quality, variety and pricing, then what’s next? And we ask the same of our retail partners: What are you going to do to drive them to continually come back? And, in many cases, packaging gets the nod as one of the key ways to help that happen. There’s a variety of things that can be done, but when you look at bulk commodity products — which remain one of the biggest leaders in fresh produce — there are simple, affordable ways to package bulk in a convenient carrying case that helps drive revenue and maximize customer convenience.

Shirley Axe, 
Health & Wellness Manager, Ahold USA

I live, breathe and sleep how we can promote health and wellness throughout our stores, and the first place I start is the produce department. We know through our nutritional programs that about 55 percent of our healthiest items are found in produce, so it’s a key touch-point category for me. Consumer buzz on social media is a key piece of the conversation, and I don’t think we’re going to see it ever slow down — it’s only going to get bigger and bigger.

I try to work closely with our produce team, because I know the better job we do, the more customers are going to purchase, because of its halo effect. People know that if they buy fresh produce, they are making healthier eating choices, and chances are, they are in other parts of the store as well.

Good nutrition is one thing, but how somebody looks at being healthy is another. I’d like to push folks a little farther with ways to help keep them in the produce department longer, because that’s where the health and wellness begins. And if I can get them to put one more item in that shopping cart while they’re going through produce, that’s what I want to do. The more tools our in-store nutrition leaders have to work with, the easier and better it will be for everyone.

Jeff Fairchild, Director of Produce, 
New Seasons Market

While people are demanding convenience, they still want to cook, so it’s up to us to marry those two situations together in a mutually effective way. What I see in our key growth areas, especially with fruit, is hand-to-mouth convenience. But what I’ve lost in recent years are the things that make a mess and that require people to wash and cut them in order to be eaten, followed by the need to wash their hands when they’re done. My citrus category is a great example of that — but obviously doesn’t apply for satsumas and mandarins — which are easy to peel and eat with no mess. But anything that needs to be washed and cut, followed by a hand-wash, is not growing very much for us these days.

The other thing for us is flavor, which just continues to be a strong driver. As we talked about earlier with kale and some of the salad blends, people now realize there is flavor differentiation, and they’re looking for that as part of the value component. For a long time, people looked at it more in terms of price, with flavor the secondary element. But now, they want the “total experience,” with flavor leading the way. While we’ve traditionally been an organic retailer for years, we’re now finding some really strong conventional categories where flavor has really become the calling card.

Brian Huh, VP of Category 
Development & Customer Strategy, 
Dole Fresh Vegetables

Produce as snacks is a definite shift, and, I believe, a lasting trend that’s here to stay. People who were once routinely buying candy bars are now eating bananas, berries and celery sticks that are much more wholesome and really better-tasting. It’s what it’s all coming down to now.

In terms of department presentation, it’s often qualitative, particularly for items like bananas, which, right or wrong, still set the tone for the whole produce department. Everybody wants to see ripe, pristine bananas when they come into a store. That’s why, if I was in retail, I would set bananas front and center in the produce section to get the consumer engaged with a familiar, approachable item that gives them a comfortable mindset to shop the entire category.

I think the other interesting thing is consumption. Forget produce for a second; just look at how the consumer is buying lighter meals and snacks. And if they’re buying these five, six, seven, 10 items for more immediate or near-term consumption, is your produce section merchandised to take advantage of this? Snacking can be berries, celery sticks, carrots and dips, to cheese and fruit, versus everything revolving around cooking and preparing meals. It’s a very different concept in terms of how you lay out the produce section. But I personally believe that’s going to be the next generation of how we’re going to see stores merchandised. But it will require us to create a different infrastructure for us as buyers and sellers. That’s the fascinating and fun part of my job — to look at the emerging trends and devise how we can add value to them.