Breaking Down the Barriers to Produce Purchases

As consumers become increasingly conscious of the quality and nutritional value of the foods they eat, health and wellness trends bode well for continued growth and greater innovation across the store perimeter. Manufacturers are introducing countless products that tout wholesome attributes, while retailers are launching new, health-focused store concepts, including Hy-Vee’s new HealthMarket in Des Moines, Iowa, and Raley’s farm-to-fork concept, Market 5-ONE-5, in Sacramento, Calif.

With the rising focus on fresh, healthy food, one might assume the produce department is practically guaranteed consistent growth, but several factors, including time constraints, consumers’ greater aversion to food waste and shrinking U.S. households, among others, are hindering the category’s full potential. Sales of fresh produce have dropped this year, signaling the need for innovation in terms of unique products, merchandising strategies and communication efforts between trading partners.

“Although more and more Americans are increasingly concerned with their health and diet, fresh produce sales actually declined year over year,” says Matt Lally, associate director of New York-based Nielsen Fresh. “Being inherently healthy is no longer good enough as products across the store continue touting their own health benefits.”

A $63 billion category, and the second-largest fresh department with 99.7% household penetration, according to the Food Marketing Institute’s (FMI’s) The Power of Produce 2017 report, produce is ample in opportunity. Yet there is room for growth in consumption occasions such as snacking, lunch and dinner. And with 86% of consumers saying they purchase unplanned produce items on occasion, retailers have the opportunity to capitalize on consumers’ desire for healthy foods and boost impulse sales through convenient, value-added products, exciting recipe ideas, enticing displays and education.

Tackling Time Constraints

In addition to health and wellness trends, the demand for convenience is driving growth and innovation throughout the grocery sector, and the produce industry is responding with items such as fresh-cut, ready-to-eat items and meal kits.

“The biggest trend I have noticed is the growth in the importance of convenience for our customers,” says Al Rivero, director of produce and floral for Giant Food, based in Landover, Md. “If you look at the trends with the customers, time-starved customers searching for healthy options are gravitating toward convenience produce.”

According to a 2017 Barriers to Purchase (BTP) study by Idaho Falls, Idaho-based Category Partners and Chicago-based Beacon Research Solutions, not even half of consumers eat produce daily, and about 10% only do so weekly. Yet consumers across all generations seemingly want to eat produce more often, and with most shoppers making their purchase decisions in-store rather than planning ahead, according to the BTP study, retailers can encourage impulse sales by providing portable, value-added and conveniently packaged fruits and vegetables to satisfy this desire.

“Consumers love fruits and veggies but offer a lot of reasons [why] they don’t eat as much of them as they should,” says Lauren Scott, chief marketing officer for the Produce Marketing Association (PMA). “They know fresh produce is healthy and good for them, and they recognize they should be eating more.”

Photograph courtesy of Produce Marketing Association

As consumers seek to bring fruits and vegetables into more quick and easy meal occasions, products that focus on snackability are particularly growing, according to Nielsen. Sales of mandarins, for instance, were up 25% in the 52 weeks ending Aug. 11, 2018, while value-added vegetables and packaged salads/meal kits grew 7.4% and 14.1%, respectively.

“We are seeing more fresh produce items delivering new taste experiences and providing the added convenience of packaging or easy preparation,” Scott says. “We know consumers are pressed for time, so it is important to get more produce items included in booming convenience foods, from the old standby salad bars to the new on-trend grab-and-go packs and meal kits.”

Making a Positive First Impression

To appeal to consumer demand for healthy food, retailers such as Encino, Calif.-based Gelson’s Markets are remodeling their stores to feature expanded produce departments to convey a greater sense of freshness and accommodate a vast product assortment. Traditionally located at the front of the supermarket, the produce department is often what gives shoppers their first impression of a store, which makes its quality and appearance vital to driving not only produce sales but also sales of other departments throughout the store.

“A majority of consumers tell us that they will pick—and change—their grocery store for the produce department,” Scott says. “Making sure the department looks, smells and feels good to consumers is a given as produce is usually the first thing the consumers see.”

Poor appearance, quality or color ranked as one of the top three factors that deter shoppers from eating and buying more produce, preceded by price (No. 1) and product spoilage (No. 2), according to the BTP study. As such, retailers must maintain a visually appealing and attention-grabbing produce department that boasts ripe, vibrant fruits and vegetables coupled with enticing signage and merchandising displays.

“It starts with the visual appeal,” says Lally. “Especially when it comes to produce, we eat with our eyes. There must be a constant evaluation of product quality on shelves. If you wouldn’t buy it yourself, then your customers won’t either.” From there, he adds, retailers can build sales by connecting products from other departments throughout the store to inspire ideas for complete meal solutions. “Understanding how people ultimately utilize the product and developing promotions, displays and recipes focused on those ideas can drive sales.”

Giant Food, for instance, has found success boosting impulse produce sales by cross-merchandising in the center of the store, including placing bananas in the cereal aisle, lemons by the seafood department and limes near the beer case, says Rivero. Creating reminders and points of interruption with product pairings and eye-catching displays can help drive fresh produce convenience into other areas of the store, which helps to solve shoppers’ decision-making process.

The retailer has also partnered with The Wonderful Co.’s Halos Mandarins brand to launch in-store promotions around the portable and snackable fruit. “They provide us with merchandising opportunities, such as literal cardboard trees, cardboard tractors and high-graphic branded boxes,” says Rivero, “all of which helps draw the customer’s attention to their mandarin oranges in our stores.”

Stemilt Growers, based in Wenatchee, Wash., also recently hosted a series of creative events promoting its new signature apple brand, Rave, including a pop-up shop experience in New York City. Tapping into consumer trends and interests, the company designed the pop-up shop to mirror an Apple store, featuring white walls, simple graphics and a wall of Rave apples. To help spark excitement and product awareness, Brianna Shales, communications manager for Stemilt, suggests retailers get creative and use better display space within the store. “Display bins and display cases with POS materials help support ads and contests, and build up more display space,” she says.

Photograph courtesy of Stemlit

Collaboration between retailers and suppliers is key to driving impulse produce sales through targeted merchandising, marketing and pricing that fits the particular needs of various shopper demographics. “Retailers, with the help of their suppliers, need to be relevant to their shoppers, whether it’s through assortment, how they display produce and what messages they’re conveying—particularly dependent upon demographics and time of year and seasonality,” says Angie Hanson, director of category development for Category Partners. “We’re seeing stronger efforts—among retailers and suppliers—to geotarget shoppers and consumers to ensure connectivity, customization and demand in what they’re offering, how they’re displaying and what/how they’re communicating.”

Sharing Produce’s Story

Communication among retailers, suppliers and consumers is essential to not only drive awareness of a product’s availability or promotion but also to inform the shopper about a product’s attributes and uses. In line with consumers’ health and wellness demands, organic fresh produce serves as a key area of growth, with dollar sales rising 6.9% in the 52 weeks ending Aug. 11, 2018, according to Nielsen.

“Today’s shoppers are increasingly concerned about the makeup and life cycle of their food, largely as it relates to health and environmental/social responsibilities,” says Hanson, adding that locally grown, natural, organic and non-GMO attributes were among the top factors driving produce sales. “Studies have shown having a responsive assortment—particularly as it relates to organics—will drive overall produce department sales.”

As such, branded produce serves as another key opportunity for driving impulse produce sales and consumers increasingly seek products that are in line with their health interests and social values. Offering branded products also serves as a way for retailers to communicate to their shoppers that they share those same values, which in turn build shopper trust and loyalty and ultimately drives sales.

“Branded produce is growing faster than private label and generic products based on Nielsen data in the past two years,” Shales says. “The big reason is the desire for transparency of who grew the fruit or vegetable, and also the story that goes with the brand.”

Retailers can use signage, in-store experts and branded products with informative packaging to convey the story, nutritional value, cooking methods and recipe ideas to inspire impulse sales. While 50% of consumers are “creatures of habit,” routinely purchasing the same few favorite items, 83% say they are always on the lookout for something new and welcome fresh ideas for their healthy meal occasions, according to The Power of Produce report.

“Consumers are looking for fresh ideas for mixing and matching fresh vegetables, so they can eat more veggies every day without getting veggie fatigue,” says Teri Gibson, director of marketing and customer relations for Peri & Sons Farms, based in Yerington, Nev. “We try very hard to use our produce packaging to communicate the health and wellness benefits associated with eating onions. We provide consumers with free recipes, information and helpful tips and tricks for buying, storing and cooking onions.”

Photograph courtesy of Peri & Sons Farms

Studies have shown that developing healthy eating habits early on is an important factor in forming consumers’ eating habits throughout their lives, according to Scott. Retailers can use creative and interactive communication methods, such the Eat Brighter initiative, sponsored by PMA, the Partnership for a Healthier America (PHA) and Sesame Workshop, to engage children and young families. The initiative allows participants to use popular "Sesame Street" characters such as Big Bird, Elmo and Abby Cadabby royalty-free to appeal to children and families to drive produce consumption. The initiative also offers turnkey graphics and marketing materials to make it easy for any company to join and succeed.

Illustration by WGB Staff

Holidays Boost Hass Avocado Sales

Seasonal occasions offer a key opportunity for grocers to launch promotions and cross-merchandise produce with items from other departments to inspire exciting food experiences and drive impulse sales. Hass avocados, in particular, showed strong sales during the second-quarter 2018 holidays, with Easter, Cinco de Mayo and Memorial Day all generating increased dollar and volume sales over the prior year, according to Hass Avocado Board’s new Q2 2018 Avocado Holiday Retail Recap. Analyzing retail POS data from IRI/Freshlook, the report found that avocado retail volume exceeded 43 million units for Easter and reached nearly 66 million units for Cinco de Mayo and nearly 50 million units for Memorial Day.

Graphic courtesy of  Hass Avocado Board