The produce manifesto or how to be a leader and not a lemming.
Updated: Mar 6, 2019
Good morning and happy Wednesday. Well it seems that you loved my post last week? I had over 18000 views, 20 shares and many new followers from around the world. Most importantly were the many comments I received. I appreciate all of them positive as well as negative because if you have a better way, I want to learn about it. In case you missed it her it is.
This was the second most popular post that I submitted. The first has over 32000 views. Not surprisingly is that post as well was of another independent retailer’s awesome displays. So, my first question to CEO’s, produce directors, is if you love it what makes you think your customers will not love it as well?
Here it is as well
This week we will revisit some of my philosophies about retail produce. What I think is right and what I think is wrong. I welcome your critiques and objections because I always want to learn something new but in the same vein you may have to learn something old.
The Produce Manifesto. or
How to be a Leader and not a Lemming.
As I recently stated you probably viewed my post because you were drawn in by those awesome displays. Produce 101 consumers buy with their eyes. Make it beautiful and sales will increase. “stack it high and watch it Fly” What is great about more fast sales it creates less shrink. I am going to digress here to what I see as a major turning point in the retail produce business for the largest retailers, ACCOUNTANTS. When large retailers let Accountants run the produce departments that is where they lost their way. Accountants want to sell produce like the way they sell widgets and until this day they have not changed. The same is true for Wall Street. They sell a story, invest millions and billions of dollars on ideas that have no merit. Meal kits are a good example of this, without wall street money they would have never took off and now they are falling back to earth where they belong. Selling imperfect produce is another that comes to mind. They waste all that time, energy, packaging and money on an inferior product that could be easily used for processing without the added expense. A much better idea is selling produce at a reduced price that is perfect and abundant. Everyone from farmer to consumer wins in this scenario. I even have a brand for this merchandizing so call me if interested and I will set it up for you. Accountants, CPA’s, MBA’s I am sure are all brilliant with numbers but when it comes to produce, they are clueless. Produce people will make your departments much more valuable and that will make your accountants smile.
Bean counters who know beans about produce were only concerned about cutting cost, saving on labor and of course increasing profits. So, they replaced their experienced help with minimum wage help. They substituted beautiful displays with that box in box out rack systems to cut down on labor and make produce dummy proof. They went to contract or fixed pricing because that’s how they sell widgets and were not capable enough to handle the intricacies of a supply and demand market. They also had to do their ads 3 weeks out because advertising cost are lower when you do it that way. They only understood that $600,000 was less than $1,000,000 and not that the difference could easily be doubled or tripled with profits and could offer better ads, more volume, better value for the consumer and would even help the growers be more sustainable.
First upgrade. Leave the accountants in accounting and let produce people run produce.
Digression is over. Eye appeal is buy appeal. Does your produce department say buy me? I can tell you if you have everything in plastic, if you have those rack systems, that many of the largest retailer utilize, if you have 1 box displays, IT DOES NOT SAY BUY ME! What about your pricing? Chances are your prices are ridiculously high or your prices are low but your produce sucks, so people only shop at your store once or twice. I am trying not to call out these stores by name, but I assure you there are stores that fit these parameters and they might be your stores.
The one group of stores who buy and large get it right are the independents. Great displays, value pricing, service their neighborhoods with ethnic products, knowledgeable help, 1 week out ads, concentration on fresh not grocery. All of the things I have been preaching for the last 20 years. I have to tell you these independents produce departments do twice the volume, in half the space of the large retailers, more profits and with about one tenth the customer count. Maybe you can learn something here?
Let’s get to your objections.
1) With that much produce on display there will be too much shrink?
First let us put this into perspective. I am not saying you stack $100,000 of produce if you are only doing $50,000 a week but also don’t let it look like you are doing $5000 a week. You know what cuts waste better than anything else? SALES! Get rid of those rack systems. Take that beautiful produce out of the box and display it with pride. Get rid of all unnecessary packaging, produce is more beautiful naked. Stack it high and watch it fly. Use dummy shows to make your stands look awesome with less product. Obviously, you can’t have a dummy making your produce look and sell beautifully, which leads us to our next objection
2) We can’t pay that much for help
Let me clear a real produce man is a profit center not an expense. He keeps your waste down by proper maintenance of your displays as well as your walk in box and the rotation of your product on the stands and in your box. Makes your displays pop to increase sales and is a customer service representative when the shopper needs a sweet melon for 5 pm Saturday night, he knows how to pick the perfect one. The produce manager who set up that store that thousands of you WOWD last week does not get $15 an hour and I think you would agree he is worth his weight in gold and I can GUARANTEE you that his department is more profitable than your department even after his hefty salary. This super star is also training all of your lower paid entry level employees so that in a few years’ time you have a stable of super stars to fuel your growth in other locations. You get what you pay for and when you pay more you get much more in profits. On a personal note take me for example, I am a very expensive employee, the caveat is I don’t cost you anything. Why? First, I guarantee I do the work of 10 of your bargain employees. Second, I make more profits no matter what you pay me. Ask anyone I have worked for in the last 40 years. Again, you get what you pay for.
On another tangent you know what boggles my mind? Chain store A goes out of business. Chain store B hires chain store’s A management to implement them in chain store B. Am I missing something here?
3) If we lower the price consumers will not buy any more.
You may have a point here but, in my experience, especially in ethnic areas this is not the case, they buy more when prices are low and buy less or not at all when prices are high. I will assume you are right for my argument. Let’s say you have the right produce man or woman. Your displays look great and now you throw value pricing into the mix and you get away from that old pricing paradigm that your accounts gave you and incorporated a more pragmatic approach, what would happen? Well usually consumers shop at more than 1 place, so they will see your pricing and compare to the others in your area. They see that your produce department always looks great and your prices on many not all items are much better than the rest. They don’t buy any more than they use to buy but I will bet the ranch you will in turn get more customers in no time. This one scenario alone is the reason I have one independent store owner that only opens stores in close proximity to the large retail giants and he wins every time, of course he has the red pepper king taking care of him as well. J.
Another important note is that produce is also in a fight with other foods. Most people know the benefits of fresh produce and if given the choice would always pick health friendly produce to feed a family. Sometimes it comes down to money. A box of macaroni and cheese is $.99 and a head of Broccoli is $2.49 we are going to lose that fight. What really makes me CRAZY is when the large retailers are selling that broccoli for $2.49 a head and broccoli is $4 FOB a box, which hurts everyone including themselves but again those accounts don’t know produce.
I wrote the following excerpt a few years ago in an article on LinkedIn called “produce as a luxury item”
Do you believe the economy is good? I would argue it is good for some but for the majority of people in our country the economy is not good. Many people work from paycheck to paycheck. My Father told me a story that put it all together for me several years ago. This happened about 30 years ago. He went to visit my Aunt and Uncle who just bought a new house several months earlier. He noticed that the refrigerator was empty, and he asked why? They told him the mortgage has to be paid, the utilities have to be paid, the car has to be paid and the only place to cut down was on food. I believe this is still the case today.
Online shopping or the 80/20 rule in reverse.
Do you know the 80/20 rule? It’s where 80% of your profits come from 20% of your customers and conversely 80%of your problems comes from 20% of your customers. So, the rule state concentrate on the 20% that give you profits and get rid of the 20% that are giving you the problems.
Well it seems when it comes to the current state of large retail this rule is forgotten. The industry has spent $billions on the hope of consumers buying their food online, and it is continuing.
Taken from Supermarket News “Brick-and-mortar grocery accounts for 95% of transactions, and 99% of adults say they buy food and beverages regularly at a brick-and-mortar outlet, TABS reported”
What this means is large retailers are chasing the 5%, which is all food and mostly groceries and that number can be under 4%, and forgetting the 95%, which is totally ridiculous. If they show a 200% increase, they still would not reach the 20% number in the 80/20 rule. Remember the majority of this is grocery items not fresh items, those numbers I am guessing would be in the tenths of 1%. Imagine if that money was invested in making the store look and run beautifully as I advocate. Also, if you want to sell fresh online you better have the consumers’ confidence that your produce is perfect in your stores or you will NEVER get out of the starting gate. The battle continues in the supermarket wars for grocery, but the war will be won in FRESH. Independents get this, they shrunk their grocery where they couldn’t compete with the large retailers and expanded their fresh departments. The main reason the independents can’t compete is that the larger retailers subsidize grocery with fresh profits. This is also the reason that their prices are high in produce and also the reason independents are beating them. They would be much better served letting each department run on their own merits because groceries are similar everywhere you can stand out with fresh. When you are the consumers choice for fresh believe me, they will buy your groceries too. This is from supermarket News “Large-format outlets — mass market, food and club — account for 57% of transactions, while small-format — dollar and drugstores, convenience stores and value grocery — is only 38%,” the study noted. “Despite the disparity, small-format and online are gaining at the expense of larger format, with the biggest increases coming from small-format brick-and-mortar, not e-commerce.”
I am a big fan of technology and it has its place but forgetting what worked in the past is not the right path for the future.
My mission statement” I am always searching for new opportunities to marry old school produce knowledge with new school technology and omni channel marketing”.
Technology has played a very important role in the Planting growing, harvesting, management, distribution of produce and the advancements keep coming almost daily.
The area that is most interesting is the amount of produce that can be grown in protected agriculture and often without harmful chemicals. This I believe is the real opportunity for retail going forward but the large retailers will have to follow the smaller retailers lead on this one and change their paradigm as it is related to retail produce.
First there will be more produce grown under protected agriculture and the yields are usually twice or more than can be grown in open field. That means there will be times of overabundance of product and here is where the retailers have to step in and move product to the consumers at a reduces cost and higher volume. If you really want sustainability this is it. When product is short, and prices are high for a variety of reasons growers don’t need you to sell their product at a reduced price because you had to have a 3 week out sale and there was a freeze. That product will sell itself, no matter what the price. Real sustainability is retailers take the product when it’s abundant, sell it in volume, usually at a reduced cost and a good profit for themselves. The future is in the past. You cannot make the vegetable machine produce more when you don’t have enough and you can’t stop it when you have too many, this is not widget manufacturing, this is produce, this is supply and demand and this item you can’t sell like the rest. You are only fooling yourself if you think otherwise. Many people, companies have tried to manipulate this market’s natural ebb and flows and were crushed every time. The avocado embargo of a few months ago is the most recent memory.
I believe the next big opportunity is in organic produce. Technology has made great advancements here as well. I believe that in the near future many items will be able to be grown organically at or near the same prices as conventional produce, a few items have achieved this already. Again, large retailers can be the facilitators of this process just by adhering to some of the basics I have outlined here such as supply and demand buying and value pricing to the consumer. Who would not want organic produce for the price of conventional? You could be that leader. This war will be won by a leader not by the lemmings of the past who followed the others to one failed idea to another, break out of that box, be the new paradigm.
Please understand I say these things for my love of produce not to disparage you. I just believe many not all of you are going down the wrong road. You may agree or disagree but, in the end, let’s find a solution that benefits all from grower to consumer because we do not thrive independent of each other.
Plan for success
Educate- Educate your employers and consumers on all commodities and explain how they can save money by shopping for in season and non-value-added items. Value added are an oxymoron, they add no value and only thing added is higher pricing.
Innovate – Keep up with technology but don’t buy into every fad. Believe in me, your customers are not going to leave you and your beautiful, perfectly displayed produce because you have cashiers and don’t have robots and the competition has robots and no cashiers and their same old ugly produce.
Renovate – Get rid of the racks, invest in beautiful stands, let your produce be the star. Invest in your produce manager. He will teach his crew to be your future produce managers.
Stimulate – Sales add value pricing, change that bean counters pricing model. Sell produce with its natural ebbs and flows. Sell high sell low and let the produce flow…. Naturally the way it was always supposed to be.
Agitate – Yes you will agitate the competition. Don’t be complacent, try new things, engage your customers. Let them taste something new or something that looks ugly but eats great.
Dominate – This is the end game. You did it. You win. You are the winner and we all win with you.
Please share this with all CEO’s and keep it away from accounting. J