Fruit baskets are facing growing pressure from gift cards, but with the right program, retailers can still make a bundle off these holiday favorites
Sales of fruit baskets — a familiar holiday gift that's great for business clients, co-workers, relatives and friends — have slowed during the past few years. This hasn't posed a problem for the bottom line at most supermarkets, since many of those holiday sales have just shifted to gift cards.
However, retailers still looking to showcase their company's fresh, store-made specialties, or highlight the quality of their produce during the holiday season, are finding that custom-made basket programs can be a hit with shoppers who want to give a gift with a more personal touch.
“We haven't decreased the number of baskets significantly from a year or two ago, but from 10 years ago, we've decreased our fruit basket production by more than half,” Darin Larkin, produce buyer for Associated Food Stores, Salt Lake City, told SN.
Rand Mickelson, spokesman for Associated, explained that “the general consensus is these sales are going to different items, such as case oranges. I also think some of the gift basket business is going toward gift cards. Our gift card business was up nearly 150 percent last year, and we look forward to improving on the increases this holiday season.”
Associated only offers its fruit baskets during Thanksgiving and Christmas, and currently 90% of that business happens during Christmas, Larkin said. Associated's fruit baskets range from $7 to about $65.
By contrast, other retailers, such as Norwalk, Conn.-based Stew Leonard's, are reinvesting in their fruit and gift basket programs, and are anticipating growth.
“Stew Leonard's [has] unveiled a newly redesigned website for the Gift Center, as well as added new gift items based on some popular products we sell in the stores, and we are doing some new marketing initiatives this year,” said John Fallon, director of e-commerce at Stew Leonard's.
“Based on these initiatives, combined with the fact that we offer the consumer a great value and have not increased our prices for a number of years, we anticipate a 10% growth in our Gift Center business this year.”
Fallon added that during the holiday season the company typically sells approximately 100,000 baskets — about 70% of its Gift Center sales.
Basket sales are also up at United Super Markets Lubbock, Texas, according to spokeswoman Michelle Owens.
“In lieu of gift cards, which have become wildly successful during the holiday season, I think people are wanting to be a little more personal, and a gift basket is a great way of giving a personalized gift that they maybe don't have to necessarily go out and shop for,” she said. “They can go to their local grocery store and say, ‘Can you give me something, because this person likes martinis or chocolates,’ so I think it's a nice alternative to gift cards.”
OUTSOURCING VS. IN-HOUSE
Both retailers have built their gift businesses by offering highly tailored, in-store programs to their shoppers during already busy times of the year.
Stew Leonard's, for example, makes its baskets in-house and accepts special orders as well, depending on the volume and complexity, Fallon said.
“[Special orders] is how the Gift Center business actually got started. Stew's sister, Beth, who was running the bakery, was asked by a customer if the store could send some baked goods to his clients as a holiday gift. After the customer's clients received the baskets, Beth's phone was soon ringing with requests for additional orders, and the Gift Center was born,” he explained.
United does the bulk of its gift basket sales through custom orders and sees a 30% to 40% increase in gift basket sales during the holidays, Michelle Owens, spokeswoman, said.
“We don't buy any premade baskets,” Owens told SN.
“We do exclusive custom baskets. We do have samples out, we even have a gift basket book at our concierge desk, but we've really found that people really like custom gift baskets anyway, so pretty much throughout the year, we do a lot of fruit, cheese and themed baskets.”
United even offers to take customers shopping through a store to help them choose a variety of items to make the perfect gift. United does this even through the busy holiday season, where it sees a lot more demand for gourmet, upscale, organic, natural and local products, Owens said.
Consumers can also order through a store's concierge desk, or through the floral department if they don't have the time to walk through the store, Owens said.
Wine and cheese baskets are very popular at United.
“We don't have wine in all of our locations, but in the ones that do, wine and cheese baskets are extremely popular,” Owens said.
“We have one of the finest selections of gourmet cheeses in Texas. We pride ourselves on that, so we have an extensive selection of gourmet cheeses and wines that we can put together, and those are very common.”
These custom-made programs, of course, require a significant investment in training and labor at the store level — something many retailers can't afford for a part of their business that's primarily seasonal.
As a result, many wholesalers and distributors, such as C&S Wholesale Grocers, Keene, N.H., help their retailers pick up the slack during the holiday season with fruit and gift basket programs, as well as merchandising tips to help maximize sales.
Programs like the one C&S offers have helped pick up the slack.
“I don't know if I can say that more retailers are outsourcing [gift basket production], but certainly, our business does grow every year — we've increased our customer base by about 3% to 4%,” said Dave Prouly, director of sales and merchandising, C&S Specialty Packing Division.
Prouly added that from mid-October through the New Year, his division of C&S does 85% of its sales in fruit and gift baskets, which retail from $9.99 to $100.
A primary benefit to outsourcing the production of these gifts, even for retailers that maintain small in-house programs, “is that a lot of retailers would rather use that productive labor to make sure that their highly perishable commodities are taken care of — things like mushrooms, grapes, raspberries,” he explained.
“If you spend your labor taking care of those products, they turn into real profit dollars for the retailers, instead of having your labor in the back room making fruit baskets. So, we like to think that our program is really an addendum to their in-store program. Most of our customers still make some baskets at the store level, [but] they use us for the bulk of their program. That does seem to grow a little bit every year.”
Prouly said he believes outsourcing can help retailers in other ways as well.
“One is the labor piece; the other is that they don't need to tie up a lot of inventory dollars in purchasing the baskets and the supplies, so it becomes a commodity, just like other items in the department.”
Similarly, Associated of Salt Lake City outsources a majority of its fruit baskets, mostly because there's not enough warehouse space to make them in-house, Larkin said. “We don't have the space to bring a crew in and have the baskets made here, so we pretty much have outsourced them for that reason. I think if we had the space, we would be doing them in-house. It's a little more convenient, and you don't pay freight or transportation costs.”
By contrast, Ukrop's Super Markets, Richmond, Va., has a small gift basket program in its specialty store, Joe's Markets. They tried making specialty baskets and distributing them to select Ukrop's locations last holiday season; however, the baskets will only be available at Joe's this year, because the company has found it more cost-effective to keep the baskets at the location where they are made.
“Having the gift baskets available at Joe's is profitable; however, having Joe's create the baskets to send to our stores is not,” Mandy Burnette, spokeswoman for Ukrop's, explained.
Burnette added that successful programs seem to be trending toward more upscale, specialty and local items — often connected with a theme.
“Many of our baskets are themed, with the most popular being Italian, Virginia products, grilling, bath and body and small indulgences.”
Customization is certainly easier with an in-store program, especially if the baskets will contain highly perishable fruits like pineapples or bananas, or other sensitive fresh items, like cheese or fresh baked goods. And, in-house programs allow stores to incorporate specialty items unique to a stores' region, or private-label goods that can't be found anywhere else.
“I think that a lot of our customers will do things like their own in-house brands in their baskets, that type of thing that would be much more difficult for an outsource facility like ours to do,” Prouly said.
Fallon agreed that consumers are asking for more specialty and locally produced items in their custom orders.
“One trend we are seeing is that customers want to send items that are unique and that are unique to Stew Leonard's, such as our hand-cooked, kettle-style potato chips, or our coffee that is roasted fresh in our store,” Fallon said.
“Stew Leonard's is famous for our farm fresh foods, so some of our most popular gifts include our fresh fruit baskets and fresh baked items. However, our top-selling basket every year continues to be the Sweet Treats basket, which contains chocolate chip cookies, chocolate truffles, caramel peanut patties, dark chocolate cherry almond bark, butter mints, caramel popcorn and peanut brittle.”
Prouly said he has noticed in the past three to four years that baskets containing a mixture of fruit and gift items have become more of a trend.
“I think the trend has really gone that way because it makes the basket just a little more different,” Prouly said. “It's a little more upscale than having just simply fruit in there. And at the same time, there's still that gift of fruit, so they're giving that gift of food.”
Prouly, who has done many food shows for C&S's customers and a lot of management training sessions, recommends that retailers tie in other departments with any gift basket promotion. And, whether a store's clientele tends to favor fruit baskets, wine and cheese baskets or baskets filled with fresh-baked treats, merchandising displays should be placed wherever impulse sales traffic is the highest.
“Those things all tied in together kind of make it a one-stop gift aisle location,” he said.
That way, if a shopper sees an attractive fruit basket that they like, but then decides that they won't have time to give the product away before it spoils, they may check around for other gift options, rather than simply walking away from the sale.
“And, of course, theme your display,” Prouly said. “If it's Thanksgiving, dress it up with cornucopias, pumpkins, scarecrows, the whole nine yards. We actually do a lot of business for Valentine's Day and Easter as well. I say the same thing: Tie these fruit baskets right in with your candy displays and your floral displays, and make it a one-stop shop. A lot of folks have tried it and have been very successful.”
Other retailers — even those that focus primarily on custom-made programs — agreed that merchandising a variety of premade baskets is a must during the Christmas season.
“We create a special area in the store to display the gift baskets during the holiday season, for customers who may need a last-minute gift,” said Fallon of Stew Leonard's.
Similarly, United keeps various non-perishable baskets available ready-made at the store level and merchandises them in the floral department, Owens said.
“We do keep a few premade baskets — such as a movie basket with some popcorn, beef jerky, candy and bottles of soda — that kind of thing,” Owens said. However, she noted that United's customers seem to prefer the service that the company offers in helping shoppers select items, including perishables, that give the baskets a personal touch.
“I think people are just looking for unique items; people are looking to personalize as much as possible. They want a gift basket that is really going to hit the sweet spot, if you will, for the person that they're giving it to.”