VALUE-ADDED GROWTH POSES RETAIL CHALLENGE

LAURA KLEPACKI ADDITIONAL REPORTING: LOUISE KRAMER

SAN ANTONIO -- How to handle the rapid growth of value-added produce items is one of the biggest operational challenges facing retailers and wholesalers in the coming year.

That issue is revealed in an SN survey of attendees of the Produce Marketing Association's annual convention and exposition held here last month.

"My greatest challenge is to maintain temperature control [of value-added produce items] from the time of receiving until the time of delivery to the retailer," said Anthony Totta, head produce buyer for Affiliated Foods, St. Joseph, Mo., a 450-store cooperative.

Other issues cited by produce executives include finding and maintaining qualified employees, implementing standardized Price Look Up codes (PLUs) for tracking bulk produce, and educating consumers on preparation methods and the nutritional values of products.

But for many, the proper handling of pre-cut produce, which requires lower temperatures and often has a shorter shelf life than commodity items, was foremost on their list.

Totta said his company is addressing the issue by upgrading refrigeration equipment and educating loaders on proper ways to maintain temperatures.

Two produce executives from different divisions of Supervalu, Minneapolis, also said the boom in pre-cuts, with the refrigeration requirements that accompany them, are proving challenging.

"Three, four years ago we didn't have any dated product in our warehouse," said Don Goodwin, produce product manager in the company's Fort Wayne, Indiana, division, which supplies some 200 retail stores. "It's something we check seven days a week now. We're checking rotation very closely now in our warehouses. We're encouraging stores to watch dating and temperatures very closely."

Greg Murphy, produce product manager for Supervalu's Spokane, Wash., division, which serves 105 stores, said he needs to work on item proliferation in the year ahead. "There is only so much space in a warehouse," he said. "As it gains popularity we're going to have to start making some choices as to what we're going to carry and how much we're going to carry."

Goodwin said his division has taken a "real hard line" on items in recent months. "We've discontinued some just because we've gotten too wide," he said.

That doesn't mean he won't consider new items, though. "There's some new introductions here that look really interesting," he told SN at the convention.

Milton Fehr, director, produce merchandising, Associated Wholesale Grocers, Kansas City, Kan., which supplies some 350 stores, said to better handle pre-cut product, "we are looking at multi-shelf inserts and better temperature controls."

"Fresh cut requires a lower temperature than what we in the industry have been used to and that applies to wholesale and retail levels," said Fehr.

In addition to the need for better temperature controls, Fehr said he anticipates a space shortage at the warehouse "because we have so many new items."

Marvin Damrauer, vice president, produce operations, for Seaway Food Town, Maumee, Ohio, a 52-store chain, said the company has the refrigerated cases it needs to properly merchandise the products. He added, however, that he's concerned about a lack of space in the near future.

"We are putting in so many new value-added items. There are so many varieties, it is going to be a real challenge," said Damrauer.

"We try to carry one label to better coordinate the department, but it is hard to say what we are going to do because there are so many nice items coming out," he said. "Value-added is growing for us."

For Hannaford Bros., a 115-store chain in Scarborough, Maine, handling pre-cut doesn't pose too great a problem, but maintaining a well-trained work force does, according to Gary Argiropoulos, category manager, floral and produce.

"Having the right people in the stores -- having trained people to do the job -- that is the biggest challenge," said Argiropoulos. "It is still a people business."

To try to maintain a solid workforce and reduce turnover, Hannaford Bros. offers training and a competitive salary, said Argiropoulos. "But sometimes it is hard to get people to think of it as a career."

Meanwhile, for Tidyman's, a 10-store operator based in Greenacres, Wash., implementing the standardized PLU codes is a challenge for the year ahead, said Kevin Cunningham, produce department manager.

"Obviously, we at retail are very excited about that for various reasons. It is a uniform system and it will help checkers at the front end," he said of the four-digit codes.

He said standardized PLUs will help retailers more accurately track sales and price products. But, he noted, there are some costs involved for the industry to launch the program.

"There is a lot of work to be done, including getting cooperation from some of the growers."

Additional challenges this year, he said, are meeting customer demands for information on product preparation and nutritional values of fruits and vegetables.

Cunningham said there are many new items in his market, such as kiwifruit and Jerusalem artichokes that customers need to be educated about. "It is a challenge but there will be great benefits as a result."

Tidyman's is increasing its in-store sampling of produce and in August launched a nutritional information program called "See the Light." Many products, including produce items, are given either a red, yellow or green shelf tag to indicate whether they have a high, medium or low level of fat and cholesterol, respectively. Brochures are also provided to explain the program.