RETAILERS TRY TO FIX PRODUCE PRICE PROBLEMS

LYNNE MILLER

ROCK ISLAND, Ill. -- Confusion over the proper identification of produce items continues to vex department managers, who are working to install programs that minimize or eliminate the possibility of error at the cash registers.

Yet, this frustrating scenario is always in danger of being repeated again and again: A check-out clerk glances down at the bundle of cilantro before ringing it up, doesn't recognize the herb and, rushed, rings it up as parsley.

"Grocery stores need to train their employees better," said Carol Loretz, a consumer who lives and shops in the Illinois Quad Cities. "I wonder if they can tell the difference between turnips and sweet potatoes?"

While tracking produce sales has always been problematic for retailers, the issue's become more critical in recent years as produce departments have expanded. The growing popularity of fruits and vegetables in general, as well as the introduction of new varieties of produce and fresh herbs, the proliferation of organic fruits and vegetables and the arrival of exotics from overseas have made produce departments much bigger operations than in the past.

Retailers say they have no way of knowing how much money they're losing at the front end. They say even the most current generation of price look-up numbers and UPC bar codes aren't foolproof, and in some instances even add to the confusion.

"It is a big concern at the store level," said Todd Peter, director of perishables for Niemann Foods, a Quincy, Ill., independent with 35 stores in five states. "We might have two different PLU numbers in the same group of tomatoes [because] there's more variety out there. So many things look identical."

Reigning in the problem "is a continuing struggle," he said.

Peter said he believes misidentification alone is a leading area of loss, resulting "in profit losses as high as 1 to 2%."

Roger Goodwin, Niemann's produce buyer, thinks it could be as high as 3%.

Five years ago, the retailer took a hard look at PLUs and bar codes, and took steps to create a uniform system throughout its stores.

"Every store used to do their own thing," recalled Goodwin, who's been with Niemann 29 years. Now, "none of our stores puts any UPCs or PLUs in the system until I see them and OK it. We're up to date on all PLUs and UPCs that come in. We verify the department every week."

The company also "cleaned up the front-end system," he said. The store developed its own price book for the front end. Different bar codes for the same product are now linked together under one code.

The company also sends "mystery" shoppers -- including Goodwin -- through the checkout lines to test checkers for accuracy. One time, Goodwin went through the line with nectarines and was charged the price for peaches. The checker had the price number for peaches memorized.

During training, checkers are encouraged not to memorize price numbers, Goodwin said. And, to make sure they're on the same page, produce managers meet weekly with pricing coordinators to stay on top of price changes.

The work paid off. The company has seen a 2% increase in gross profits over the last three years, Goodwin said.

But still, the job isn't done, and requires careful monitoring, since questions about produce items crop up regularly. Recently, the store received a shipment of Macintosh apples from the same grower. The 5-pound bags were identical, but different bar codes appeared on them. The national PLU book is also "very difficult to understand," Goodwin said.

The industry is working on the next generation of bar codes that may eliminate some of the ongoing problems related to PLUs. Dayton, Ohio-based Dorothy Lane Market is scheduled to test a new code label specifically designed for variable-weight fresh items, including produce. The stacked, omnidirectional RSS tag contains space for up to 14 characters of data, and promises to provide more complete product identification, as well as supply-chain information like sell-by dates, weight and value -- all over the current limit of $99.99 found on the current family of fresh-food labels.

Store officials hope it will improve accuracy at the front end, help them keep track of what they're selling and increase consumer confidence.

"In terms of reducing shrink, the new bar code should help," said Jack Gridley, the meat and seafood director for Dorothy Lane, which operates two upscale stores. "It'll give you the ability to trace products through the entire supply chain. It will improve the ordering process.

"The biggest challenge is going to be getting suppliers to switch over to the new bar code," he said. Suppliers will come around "when they know there's enough demand from the retailers. We'll see which one comes first."

To prepare for the RSS bar code test, Gridley has been working with the Uniform Code Council, the Lawrenceville, N.J., standards organization. The UCC is working with suppliers, trade groups, vendors, scanning software companies and other retailers to conduct additional pilots.

Dorothy Lane's test will get under way after the replacement of cash registers with modern registers capable of reading the new RSS code.

Several other supermarket companies want to know what they need to do to upgrade their registers to make them capable of reading the bar code, said Greg Rowe, manager of industry initiatives for the UCC. A cost-benefits analysis examining that question will be conducted next year.