INEDENDENTS REPORT: Fresh ideas
Marketing's four "ps" shouldn't be limited to product, price, promotion, and place. For those looking to excel in the supermarket business, let's add a fifth -- produce.
As independents across the country strive to compete in markets dominated by supercenters and emerging limited-assortment formats, the answer to growing sales and customer loyalty may be found in the produce department.
"Produce definitely sets the freshness, price, and quality tone for the entire store," says Joe Himmelheber, director of merchandising for Indianapolis-based produce distributor Caito Foods. "Because customers judge what they cannot see by what they can, the image and credibility of other perishables hinge on the appearance and quality of the produce department."
Himmelheber believes that a well-managed produce department provides the best opportunity for independents to differentiate from price-driven competition. "The independent supermarket can successfully compete with a much larger format by promoting freshness and quality, and by remaining 'in the ballpark' on price," he says. "When you equip that same store with conversant, sales-oriented produce associates, the big guys don't have a chance."
Himmelheber suggests adding a sixth "p" to the marketing strategy -- passion. "Independents must be passionate about marketing excellent fresh fruits and vegetables," he says. "In addition, they must create a selling culture throughout their stores and learn to measure success in produce differently from ever before."
He explains: "The weekly gross-profit percentage theology must today be replaced with sales per square foot in the department, enhanced cart averages, and heightened percentages of customers actually buying produce. These we can best achieve by teaching associates to interact with customers and selling them on the nutritional value and affordability of produce.
"I don't think we should be too deeply rooted in the fundamentals," continues Himmelheber. "Recent trends, such as the growth of new cultures in our society, particularly Hispanic and Asian, along with the consumer's renewed interest in cooking, require associates to be more astute. I believe training should be equally divided into four parts: product knowledge and handling skills, merchandising skills, salesmanship/customer service, and culinary skills."
Price and variety
Enhanced training and merchandising may result in higher operating costs, but Himmelheber views both as smart investments.
"Oftentimes programs designed to save money can yield unexpected negative results," he says. "Think back to when misting systems were engineered and installed in produce cases. Many felt that placing leaf lettuces under the misting system allowed them to ignore product for days. Consequently sales and profits suffered because customers were presented with lettuce that was rusty, saturated with water, and in poor quality."
While price is a key component in the value equation, so is variety. "In choosing a supermarket, today's consumer places great emphasis on the produce department, along with the overall service levels and the entertainment factor involved in shopping at a specific store," says Himmelheber. "Lastly, he or she evaluates price. If the price works, the purchase is made. If the price of an item is unreasonably high in relationship to the competition or, more importantly, in relationship to his or her established budget, the consumer passes on making the purchase."
According to Himmelheber, variety is essential for the consumer to consider the produce department a shopping destination. He cautions, however, that product mix should be based specifically on the needs of the customer base. "A store shouldn't randomly offer items simply for the sake of touting variety," Himmelheber advises. "That will only serve to increase shrink and will ultimately cause retails to rise on other price-sensitive items.
"Order correctly so that advertised items don't need to be extended for cleanup," he adds. "Routinely monitor retails and scanning accuracy at the front end, and constantly evaluate refrigeration in all display cases and back-room coolers, to prevent losing product."
Says Himmelheber: "Nothing surpasses the beauty of fresh, high-quality seasonal fruits and vegetables mass-displayed as a greeting to the customer. By developing an unrivaled produce department, there's no need for the independent to worry about being the lowest-priced store in town."
Independent Retailing editor Jane Olszeski Tortola can be reached at [email protected].
As independents across the country strive to compete in markets dominated by supercenters and emerging limited-assortment formats, the answer to growing sales and customer loyalty may be found in the produce department.
"Produce definitely sets the freshness, price, and quality tone for the entire store," says Joe Himmelheber, director of merchandising for Indianapolis-based produce distributor Caito Foods. "Because customers judge what they cannot see by what they can, the image and credibility of other perishables hinge on the appearance and quality of the produce department."
Himmelheber believes that a well-managed produce department provides the best opportunity for independents to differentiate from price-driven competition. "The independent supermarket can successfully compete with a much larger format by promoting freshness and quality, and by remaining 'in the ballpark' on price," he says. "When you equip that same store with conversant, sales-oriented produce associates, the big guys don't have a chance."
Himmelheber suggests adding a sixth "p" to the marketing strategy -- passion. "Independents must be passionate about marketing excellent fresh fruits and vegetables," he says. "In addition, they must create a selling culture throughout their stores and learn to measure success in produce differently from ever before."
He explains: "The weekly gross-profit percentage theology must today be replaced with sales per square foot in the department, enhanced cart averages, and heightened percentages of customers actually buying produce. These we can best achieve by teaching associates to interact with customers and selling them on the nutritional value and affordability of produce.
"I don't think we should be too deeply rooted in the fundamentals," continues Himmelheber. "Recent trends, such as the growth of new cultures in our society, particularly Hispanic and Asian, along with the consumer's renewed interest in cooking, require associates to be more astute. I believe training should be equally divided into four parts: product knowledge and handling skills, merchandising skills, salesmanship/customer service, and culinary skills."
Price and variety
Enhanced training and merchandising may result in higher operating costs, but Himmelheber views both as smart investments.
"Oftentimes programs designed to save money can yield unexpected negative results," he says. "Think back to when misting systems were engineered and installed in produce cases. Many felt that placing leaf lettuces under the misting system allowed them to ignore product for days. Consequently sales and profits suffered because customers were presented with lettuce that was rusty, saturated with water, and in poor quality."
While price is a key component in the value equation, so is variety. "In choosing a supermarket, today's consumer places great emphasis on the produce department, along with the overall service levels and the entertainment factor involved in shopping at a specific store," says Himmelheber. "Lastly, he or she evaluates price. If the price works, the purchase is made. If the price of an item is unreasonably high in relationship to the competition or, more importantly, in relationship to his or her established budget, the consumer passes on making the purchase."
According to Himmelheber, variety is essential for the consumer to consider the produce department a shopping destination. He cautions, however, that product mix should be based specifically on the needs of the customer base. "A store shouldn't randomly offer items simply for the sake of touting variety," Himmelheber advises. "That will only serve to increase shrink and will ultimately cause retails to rise on other price-sensitive items.
"Order correctly so that advertised items don't need to be extended for cleanup," he adds. "Routinely monitor retails and scanning accuracy at the front end, and constantly evaluate refrigeration in all display cases and back-room coolers, to prevent losing product."
Says Himmelheber: "Nothing surpasses the beauty of fresh, high-quality seasonal fruits and vegetables mass-displayed as a greeting to the customer. By developing an unrivaled produce department, there's no need for the independent to worry about being the lowest-priced store in town."
Independent Retailing editor Jane Olszeski Tortola can be reached at [email protected].