What are the big issues confronting grocers in their produce departments? Labour/training? Getting your hands on a consistent supply of quality product? Reassuring shoppers after the umpteenth food recall? Shrink? How to nudge Canadians into eating (and buying) more fruit and veggies? Competition? All of the above?
No question, the business of selling produce at retail is no walk in the park, as Canadian Grocer’s inaugural Produce Operations Survey reveals. Conducted earlier this year, our survey asked retailers across the country about what’s going on in their produce departments. The good news is that more than half (59%) reported their produce sales had increased in the last six months of 2019 and 64% are optimistic they’ll see a bump in their produce sales in 2020. But there are challenges, and plenty of them in this crucial section of the store. Let’s take a look at a few of the pain points revealed by the survey and how they’re being tackled:
Waste/Shrink—“Shrink, that’s the killer of produce departments,” says Mike Medwid, a long-time produce manager at Askew’s Foods in British Columbia. Indeed, about three-quarters of survey respondents indicated some level of concern regarding shrink-related loss—shrink being the difference between what is delivered to the store and what actually gets sold—with 26% reporting it to be a “very serious” issue and 60% reporting that the shrink rate in their produce department was unchanged from the previous year. Retailers have long contended with shrink, especially in fresh departments filled with highly perishable product, and have devised strategies for minimizing it such as first-in first-out rotation, competitively pricing items and reducing prices early enough so they continue to turn. At Calgary Co-op, produce category director Lawrence Wright says such efforts are effective, but require vigilance. “We’re constantly reviewing it. We work with the teams on a weekly basis and give them action items to hit as we’re all involved in overseeing where shrink is coming from; it’s having an impact.”
Other efforts retailers are taking to tackle produce shrink and waste revealed by the survey: selling items off as “Ugly” produce (33%), donation to food banks (42%) and using as ingredients in prepared foods (49%). In January, the Canadian Produce Marketing Association (CPMA) launched an Online Waste Efficiency Tool (free for its members) to address the problem of waste by helping identify exactly where the challenges are. “If [retailers are] seeing shrink in their produce department, it could be due to storage, it could be due to product handling, but by going through the online tool they can identify where the problem is, find solutions and put a plan in place,” says CPMA president Ron Lemaire. CPMA says those businesses using the tool have improved their bottom line by about 10%.
Labour—With a low unemployment rate and the rise of the gig economy with its flexible jobs, grocers continue to find competing for workers a big challenge. In fact, nearly 80% of survey respondents identified labour/recruitment costs in their produce departments as a serious issue with about the same (82%) seriously concerned about training of staff. And training in this section of the store is critical. “If you don’t have well-trained people, then obviously you’re not going to be as successful as you need to be,” says Wright, adding that at Calgary Co-op, courses in areas ranging from customer service to product knowledge are offered so staff at all levels are equipped with the tools they need to “be the best in their roles.”
Of course, there’s the ongoing apprehension that once new recruits are trained they won’t hang around and all that time and money invested in the new employee is for naught. At Metro, Ian Leaf, category manager, produce, says having a collaborative work environment is key to keeping staff engaged. “We also know the importance of celebrating success,” he says, be it recognizing teams or individuals. “We want our store staff to know there are future opportunities available within the company.” It’s a strategy more and more retailers are embracing as they seek to convince employees that retail is a viable long-term career. Calgary Co-op’s Wright agrees. “They [team members] need to feel this isn’t the end of the road for them,” he says. “We provide numerous avenues for people wishing to take on more responsibility, or learn a new role or develop their skills.”
Boosting consumption—According to a 2019 University of British Columbia study, Canadians’ fruit and vegetable consumption dropped 13% over an 11-year period and that’s a worry for folks selling produce. In fact, 40% of survey respondents said “how to increase produce consumption” was a very serious concern. Although the new Canada’s Food Guide, released last year, calls for Canadians to eat “plenty” of fruit and vegetables, “a question for us as a sector is how do we make it easier for them [to eat more]?” says CPMA’s Lemaire. You can start, he says, by removing barriers to consumers buying produce by ensuring product is priced right (price being the No. 1 perceived barrier) and is of good quality, and by educating customers on handling and preparing the produce once they get it home so it isn’t wasted. And, by having eye-catching displays and leveraging signage to encourage cross-promotion, retailers can capture impulse sales. “While produce is traditionally a planned purchase,” says Lemaire, “it’s also a significant impulse opportunity.” It’s also important to keep on top of food trends to ensure you’re meeting changing consumer demands. In this regard, Lemaire says “social media is your friend.”
And let’s not forget the growing importance consumers are placing on sustainability. “Consumers are very focused, as we are, on trying to reduce their environmental impact,” says Calgary Co-op’s Wright. With plastic packaging waste in the spotlight, many retailers are seeking ways to curb the use of single-use plastics. In fact, 73% of survey respondents said they plan to implement policies aimed at reducing plastic packaging waste in their produce department over the next 12 months. “We’ve brought in reusable bags in produce and we’re looking to source packaging products that are recyclable, biodegradable and compostable, all the time to minimize our [environmental] impact,” says Wright.
Although fraught with difficulties, produce departments are important to the success of most grocers, as it’s a store’s fresh offer that keeps customers coming back. “While it can be challenging,” says Metro’s Leaf, “part of my job that I enjoy so much is figuring out how we stay ahead of the trends to anticipate where we need to be tomorrow to meet our customers’ needs.”