Picking Up The Pace

Produce department increasingly influential in total shopping experience.

With consumer interest in better dietary choices continually on the rise, the produce department has become a must-stop during most shoppers' visits to the supermarket — a trend that bodes well for most retailers, which remain immersed in a battle to elevate sales amid higher wholesale and retail prices, fluctuating energy prices and lingering inflationary pressures.

While more Americans are heeding the call to increase their intake of fresh fruits and vegetables, with the bulk of related purchases primarily generated in traditional supermarkets, the pesky economic backdrop again played a significant hand in curtailing the full potential of the dynamic gains generated in the average retail produce department during the past 12 months, according to the latest insights revealed in Progressive Grocer's 2011 Annual Produce Operations Review.

Providing a snapshot of the foremost issues the average U.S. retail produce director contends with on a daily basis, PG's annual “state of the retail produce department” study is based on the collective input of a cross-section of retail executives with authority for the produce category who were polled in August 2011.

Although the produce department represents the single greatest opportunity for retailers to help consumers meet their elevated nutritional goals as a partner in delivering healthy food choices, value-seeking, waste-resistant shoppers continue to cautiously protect their wallets and refrain from making indiscriminate purchases of products that might potentially spoil before they can be consumed. However, as revealed in this year's study, more consumers are routinely turning to value-added, convenience-oriented products that lend themselves splendidly to immediate consumption and quick preparation. In addition, more shoppers are returning to, or migrating toward, organic produce, which is also helping to blunt declines of other longtime category leaders that are falling out of favor.

Indeed, as indicated on the “Produce Sales by Segment” chart, random-weight fruits and vegetables continue to do well, accounting for almost two-thirds of total department sales. And though value-added salads slipped slightly from last year, the category seems to be on the uptick again, as does organic produce. However, fresh-cut fruit showed the biggest comparative gain in this year's study, while specialty produce edged downward.

Produce Retailers' Worry List

A breakout of the problem index, which asks Produce Operations Review panelists to rank the most problematic departmental issues on a scale of one to six (with one being not serious and six being extremely serious), finds wholesale prices at the top of the leaderboard, leapfrogging from last year's sixth-ranked issue to claim the top spot this year, dethroning competition from other supermarkets, which ranked as this year's second most troublesome consideration.

Quality of product also gained two spots on the “retail produce worry list” as the third most vexing issue for this year's survey participants, followed by shrink/ spoilage, which held steady in fourth place, paced closely by profits, which ranked as the fifth most challenging issue.

Customer satisfaction levels, which rose to the sixth rung from 11th place last year, was another big gainer on the produce department problem index this year, as was the seventh-leading consideration — the price perception of fresh produce — an issue never before cited as a concern in previous PG Produce Operations Review studies. Especially interesting was the collective view of the competitive threat posed by Walmart, which dropped back to the eighth rung among this year's survey panelists versus its second-place standing in last year's survey.

Rounding out the retail produce worry list in the 14th slot was compliance with the industry's joint Produce Traceability Initiative (PTI), a finding which, devoid of enlisting further specific feedback on the issue in this year's survey, can either be interpreted favorably from the standpoint of panelists that consider their organizations aptly prepared, or negatively, as a result of indifference, or worse, resistance, to adapting to the important industry project.