LONG BEACH, Calif. -- A group of produce executives here said the consolidation of supermarkets on one end and suppliers on the other is bringing about significant changes, including tightened product quality, more sophisticated offerings and merchandising schemes that reach deeper into store-level operations.
The four retailers, who spoke as part of a panel discussion at the annual convention and exposition of the United Fresh Fruit & Vegetable Association, said the changed business landscape is compelling them to become more coordinated members of the produce supply chain.
"[Consumers] want in-stock conditions. They want convenience. They want clean stores. They want associates that are knowledgeable," said Mark Hilton, vice president of produce and floral for Harris Teeter, Matthews, N.C. "Those are all of the things that we do."
How retailers and suppliers are joining together to satisfy customers to a greater degree is a study in the evolution of the consolidation process, another retailer said.
"It's a lot of little detail things. There's no big watershed where the customer suddenly says, 'Wow, these guys do something different,"' noted Mike Giza, category sales manager for Big Y Foods, Springfield, Mass. "What we do is drill down to the nitty-gritty of it and try to deliver to our customers what they really want."
The process to date remains unproven and is full of trial and error. But the panelists said there are some obvious changes that need to be made. They noted early successes are encouraging them to take bigger risks with respect to new product introductions and more aggressive merchandising.
Rick Noeth, senior vice president of fresh products, Gerlands Food Fair, Houston, recalled how his chain of 15 stores made single-serve packaged salads a success by allowing a local produce department manager to sample the product for teachers at a local school.
"That store for the next few months sold more of those packaged salads than the rest of our stores combined," he said. "We decided to do the same thing in our other stores. Now we are one of the largest sellers of that single-serve packaged salad item for this [grower/shipper]."
Greg Corrigan, director of produce and floral for West Sacramento, Calif.-based Raley's, said "Something Extra," a glossy monthly magazine launched last year under the retailer's name, has propelled sales of items featured in issues.
"It's a different publication in that it's not geared to hot-priced items; it's more telling stories behind things like how to use squash," he said. "We had a huge lift on the squash category because we told customers how to prepare them."
Hilton, whose chain operates in six states throughout the Southeast, said the arrival of new competition required the independent retailer to re-think how it wanted to present itself to consumers.
"We have a lot of independent thinking in our company and, so in our produce departments, there wasn't any real consistency. Each of the stores had their own idea of what should go where," he said. "We created push-through/pull-through and in those displays, we've seen substantial lift and movement."
At Raley's, another independent, the retailer decided to make freshness its mark of distinction in an increasingly hostile environment dominated by national names.
"We started about three years ago [delivering] to stores seven days a week," said Corrigan. "We were preaching to our produce managers that we wanted the product in there fresh; we don't want you to carry more than basically a day's supply. We want you to turn your product."
That edict helped by cutting shrink and enhancing the chain's reputation, but daily deliveries posed a logistical nightmare. To make it work, orders are placed by 9 a.m., trucks start getting loaded at 10 a.m., and the first deliveries are arriving at stores by 6 p.m. The stores farthest from distribution centers receive their produce by 5 a.m. the next morning.
Raley's has also developed a weekly "spotlight special" in circulars, a comprehensive program that features relatively obscure items like maroon carrots and places them on ad supported by recipe cards in stores, prices and recipes in the ad and even links to grower/shippers of the product on the company's Web site.
"It really pushes sales of those items to another level, and then you see residual after that, when people go back and actually purchase it again," he added.
The panel -- convened by the Perishables Group, a Chicago-based research and consulting firm -- noted that finding their market niche as independent operators has been a primary goal in the post-consolidation era. Noeth of Gerlands noted smaller chains can maximize their size by staying creative and flexible.
"I'd really like Wal-Mart to come in rather than a good independent against me because there are a lot of things I can do that Wal-Mart just can't do," he said, adding a study of Houston's changing demographics resulted in the retailer splitting into three banners, a move that allowed it to change store sets and adopt new philosophies that acknowledged customer preferences in the neighborhoods where stores were situated.
Hilton said a smaller operator can use its size to stay closer to the customer. At Harris Teeter, all senior executives spend three days a week in stores, "working with store associates, looking for ways to improve that shopping experience."
There is keen interest in produce items developed by grower/shippers as a solution to specific customer needs. One such product, a personal-size, seedless watermelon bred by Syngenta Seeds, showed retailers just how far suppliers are going to gain their business -- and strengthen the entire supply chain in the process. Syngenta joined with other growers and distributors to form the NewProduce Network, a consortium organized around these types of premium, customer-focused products.
Branded under the new Dulcinea label, the PureHeart was a hit at Raley's, who helped test the watermelon in its Northern California stores. Corrigan said the retailer sold 45,000 cases over a two-month period.
"Those are the type of items we're looking for, that we can get behind and tell a story, that eats well, that serves a purpose, and creates a niche," he said.
Noeth urged grower/shippers to develop more items that fill a specific need, and he stressed that retailers are more willing than ever to share the responsibility of sell-through. "For any grower/shipper here, that should be your goal," he said. "To do that with your product. Pick one and [make] it your 'wow' product."
