NEW ORLEANS -- Produce merchandising and buying may have started out as an art form -- but its future lies in becoming a science, said a produce outlook panel at the Alexandria, Va.-based United Fresh Fruit and Vegetable Association's annual convention here.
The panel, consisting of growers, sellers and buyers, said the retail community's push toward Efficient Consumer Response is dragging the industry down the path of scientific marketing based on better information, made available quickly.
It will be a far cry from the days when deals closed with a handshake and buyers acted on intuition, the panelists said.
But of all the ways the business is changing, consumer satisfaction more than anything else will still determine how retailers do in the future, said the panelists.
One panelist, Michael Julian, chairman, president and chief executive officer of Farm Fresh, Norfolk, Va., warned that proponents of ECR could be losing sight of the "consumer" component.
"I'm not a big advocate of ECR," Julian said. As a speaker at this year's Food Marketing Institute Mid-Winter Conference, he said he was struck by the many discussions among participants about who is benefiting most from ECR.
"There is a concept of Efficient Consumer Response as a benefit either to the supplier, or the retailer, or the wholesaler. There really has to be a benefit
to the consumer. If one in that chain is getting a bigger benefit than another, there won't be any Efficient Consumer Responses," he said.
Fred Heptinstall, chief operating officer for the East and West regions at Chiquita Banana N.A. in Cincinnati, also on the outlook panel, said that retailers, wholesalers and grower-shippers need to understand how consumers' wants and needs are changing.
"If you look at consumer lifestyles, the number of working families, dual-income, they demand something different," he said. "I think it's extremely important for the industry to understand what the consumer defines as value. In produce, we think it's fresh produce, produce that tastes good and, in some cases, produce that is more naturally grown," he said.
Heptinstall admitted that "value" is an elusive concept, but one that offers big opportunities.
Doing your homework is one way to find out what consumers want, said Lorri Koster, director of trade and media relations for Mann Packing in Salinas, Calif. She used packaging needs as one example.
"We've conducted focus groups on the tray pack vs. the bag, and packaging is certainly on their minds as well as ours," she said. Produce is one of the few departments in the grocery store that's increasing the amount of packaging it uses. That may not necessarily be what consumers want, though, Koster warned.
"We've found consumers enjoy the shopping experience, the touch, the feel, the smell, the misters going. It says fresh to them.
"While fresh-cut is certainly growing, maybe we shouldn't take that entire experience away from them. I don't think we want to turn the produce department into the cereal aisle. And before that happens, I hope we take the time to find out what the consumers not only want to purchase, but what they want to experience," she said.
Mike Cavallero, vice president of fresh fruit sales and marketing for Dole Fresh Fruit, Westlake Village, Calif., agreed.
"That's really important, because in the past, I think a lot of the times the suppliers and also the buyers have made the decision for the consumers," he said. "The consumers are often never really asked what they actually are looking for. I think we learned that with the salad mixes that came out a few years ago." The food-service side of produce marketing also is concerned about connecting with consumers, said panelist Lawrence Taylor, vice president of supplier development at PepsiCo Food Systems, New York.
"Historically, we've staffed up our marketing groups, we've staffed up consumer affairs groups and kind of decided what might be a nice product to carry in our restaurants. We've got renewed emphasis on asking what does our customer really like," he said. Taylor pointed to PepsiCo's fast-food chain Taco Bell and its "Border Lights" lower-fat versions of traditional Taco Bell fare. The line failed to live up to expectations, which Taylor blamed on an insufficient amount of consumer research.
"We need to do our homework much better. We have to satisfy the customer needs, whether it's speed, cleanliness, service. That's got to be our mantra going forward," he said.
Julian of Farm Fresh pointed to an retail legend who learned that mantra early -- Sam Walton, founder of Wal-Mart.
"People who have reacted in our business to Wal-Mart are opening their eyes to the fact that Sam didn't build his business on running an efficient retail store. He built his business by building sales, by satisfying consumers," Julian said. "Then, when he got big enough, he went back and figured out how to make a lot of money at it."
Category management is a way for retailers to emulate Walton, according to Julian.
"It is the first time we have focused as an industry on giving the consumers the best shopping experience they can have. That's what's going to bring people back to supermarkets. Not that we've been able to cut tremendous costs. Of course we have to do that. But the fact is that we can make the consumers' shopping experience something they can enjoy."
The increasing availability of marketing information will make that possible, panel members said.
Koster of Mann Packing praised the use of bar coding on packaged products. "For 51 years, we were unable to really track sales accurately," she said. "Just about four or five years ago, we were able to put Universal Product Codes on our products for the first time ever. It's just been really astounding to us to be able to track the distribution, to get accurate profiles of our consumers, of who's buying our product, who's not, what their concerns are."
For panelist Mike Rempe, vice president of produce for C.H. Robinson, Eden Prairie, Minn., increased information and a sharper focus on the consumer add up to the capability of the industry to work harder.
"We're going to be working harder, which we never would have thought possible. But it will be possible," he said.
