Retail promotions, smart merchandising, packaging and variety are among keys to success.
Merchandising apples creatively — by identifying regions, providing totes, highlighting the seasons, offering usage suggestions, sticking to promotional plans and more — can light sales on fire month after month.The challenge and opportunity for retailers in the fall is to aggressively promote apples during the harvest season “without totally deflating the category,” suggests Steve Lutz, vice president of marketing for Columbia Marketing International, Inc. in Wenatchee, WA. “What we know from studying consumer purchase behavior is that apple shoppers are heavily influenced by retailer promotions and merchandising.”
As a result, aggressive promotions have the impact of shifting consumer purchases from one variety to another. Consumers use pricing and displays as cues as to find the best values, explains Lutz. “That’s all well and good, but overly aggressive price promotions can damage category profitability by moving consumers from planned purchases of high-priced apples to impulse purchases of low-cost promoted apples. When that happens, category profitability suffers.”
He emphasizes, the combination of hot pricing with large displays that every consumer must pass to get into the store shifts a huge percentage of total volume to apples on promotion.
The result, Lutz recalls, was an actual decline in total category performance of nearly 20 percent. “So during the fall it’s important for retailers to have a strategy to do more than just sell cheap apples. They should be actively looking for opportunities to trade consumers up, not down. Rather than just focusing promotions and displays on the cheapest apple, this can be done by highlighting higher-value apples like Honeycrisp Ambrosia, Kiku, Jazz, and others.”
Give Them Space
When it comes to merchandising apples year-round, Lutz says, space and location are key. “Apples are a fairly dynamic category because of the number of new varieties. Giving these items space in the store is key to year-round sales.” In addition, because apple purchases tend to be heavily influenced by impulse decisions, location in flow is critical to triggering consumer purchases.
“I think one of the hottest trends is the remaking of the bag segment of the apple category. Packaging is changing purchase behavior throughout the produce department.”
— Steve Lutz, Columbia Marketing International (CMI)
“I think one of the hottest trends is the remaking of the bag segment of the apple category,” says Lutz. “Packaging is changing purchase behavior throughout the produce department. Products such as packaged tomatoes are completely changing consumer preferences and acceptance of packaged products. We’re seeing this in apples as well, where high-graphic 2-pound pouch bags are leading overall category growth.
“Consumers appear to love these new branded apples such as Ambrosia and Kiku, and the 2-pound pouch bag captures shopper attention and reinforces brand recall once the consumer takes the produce home,” he says.
Lutz says he is finding that Honeycrisp and Ambrosia are the two hottest apples in the Top 10. “These are literally ‘must have’ apples. After these big two, apples like Kiku, Kanzi, Jazz, and Envy have all seen the strongest growth in the category.”
The other hot trend, Lutz continues, is organics. Supply is up this year “so we will be able to supply retailers longer. But overall there will be more organic apples available to sell, thanks to our increased supply of organics.” Indeed, over the past three years, the strongest growth segment of the apple category has been organics.
Front And Center
Fall display and feature promotion drive sales, says David Williams, vice president of sales and marketing for Fowler Farms Inc. in Wolcott, NY. His advice to retailers is to merchandise apples front and center of the department to take advantage of planned and impulse sales. “Include cider and other fall items in the display to maximize overall department sales and sell through.”
Williams urges retailers to take advantage of the new varieties on the market that have expanded sales beyond the typical fall selling period. “Promoting an apple a month seems to work real well with our more successful retailers. Don’t back away from the category in nontraditional periods, as the apple category is now at the top in terms of sales within the department. Consumers recognize the health benefits and portability of apples, which hold better than bananas.”
Williams is seeing “managed varieties that are new varieties developed, marketed and sold by cooperatives of growers across the nation. Also, pouch bags are popular due to their convenience and sharp look within the department. This follows an overall move toward this packaging within the produce department with other fruits and vegetables.”
Similarly, Williams also identifies Honeycrisp, Gala, Fuji, SweeTango, SnapDragon, RubyFrost and other managed varieties as being extremely popular.
Embrace The Source
An important consumer trend today, notes Jim Allen, president and chief executive of the Fishers, NY-based New York Apple Association Inc., is “to purchase local and support regional produce. Obviously, many items cannot or will not fall under that umbrella. But for apples in the East, promoting a region such as New York, New England or Mid-Atlantic means something to the massive population centers of Boston, New York, Philly, DC, etc.” Retailers need to embrace this, he says, “to identify the source at point-of-sale.”
“Apples are now available year-round in all retailers,” notes Allen. “Therefore, retailers should find ways to keep the displays and the merchandising themes fresh and exciting.”
Cross-merchandising with other items during the year works. For example, Allen says, in March “promote green apples for St. Patrick’s Day. In January, promote apples as an alternative to snack foods and dips for the Super Bowl. In April, use Passover and Easter as themes to include apples. Thanksgiving offers so many opportunities for baking apples and including them in the dinner, but very few retailers ever include them. It’s always all about celery and turkeys and pumpkins.”
From his vantage point, Allen says the most popular varieties now and going forward are Honeycrisp, Gala, Fuji, and newcomers such as Koru, Kiku, SweeTango, Evercrisp and Pazazz. Traditional flavors such as McIntosh and Empire, he adds, will continue to be popular in regional markets.
Set Up A Planner
Brianna Shales, communications manager for Stemilt Growers in Wenatchee, WA, points out the company grows apples in Washington, “where our year-round supply offers retailers the opportunity to promote apples consistently all months of the year. Fall, winter and spring are big months for apples in the produce department.”
In an average store, she continues, apples make up 8 percent of total produce department dollars each week all year long. “They are an important part of overall produce department success. Because of this, we encourage monthly apple promotions with multi-variety ads, especially during the key fall and winter timeframe.”
Monthly “Apple Ramas,” where several varieties are on sale, are great drivers for the entire category, say Shales. “Beyond that, large apple displays, keeping displays fresh, and using in-and-out packaged items like our Lil Snappers kid-sized fruits or Fresh Blenders apples for juicing/smoothies are great ways to drive up the purchase price and build impulse sales.”
Shales says it’s important to set up a planner for apple promotions months in advance of the actual promotion in many cases. “Having a great plan is the best way to align your merchandising efforts and ensure the four Ps of marketing [product, price, place and promotion] are covered.”
Looping the entire team into the promotion plan — from merchandisers to produce managers — is “a great way to further ensure success at each store. Because apples are available year-round, it’s important to keep the merchandising of them interesting and impactful. Bring new varieties in to mix things up, create a theme based on seasons or holidays, and keep pushing creativity in order to make your apple display stand out.”
Consumers want to know who grew their food and how it was grown, says Shales. “At Stemilt, we’ve long been on this now-‘trend’ by telling consumers about our founding family, and the farm-to-fork story that gets apples from our farms to their table through our merchandising display, signage on our website, and now throughout digital and social media. Storytelling is a great way for retailers to set themselves apart as a store that’s focused on quality and relationships with family farmers.”
Carrying local favorites satisfies loyal customers. Legacy apples such as McIntosh and Cortland in New England add tonnage to the category, according to Tim Byrne, special projects director for New York Apple Sales Inc. “In the Midwest, varieties such as Jonagold, Jonathan, Ginger Gold and Haralson garner long-time support from their fans. Western consumers resonate with Pacific Rose, Pink Lady, Ambrosia and Piñata.”
Making exciting displays attracts consumers to the department and the category, Byrne has found. “Most every retailer is going to carry Gala, Honeycrisp, Pink Lady, Granny Smith, Red Delicious and, to a lesser extent, Golden Delicious.” He recommends expanding the number of varieties and SKUs during the slowest apple sales period, from early May through late August. “Pouch bags are the new great visual appeal package that resonates well with consumers.”
“Most every retailer is going to carry Gala, Honeycrisp, Pink Lady, Granny Smith, Red Delicious and … Golden Delicious. Pouch bags are the new great visual appeal package that resonates well with consumers.”
— Tim Byrne, New York Apple Sales
Byrne points to Nielsen data that shows retailers stock more than 30 varieties of apples in late September and October, and keep their selection at that peak until about February “when they whittle down both selection and SKUs. Concomitantly, category sales diminish.”
He suggests retailers get more creative about cross-merchandising apples. Departments such as the deli are a perfect location to sell additional tonnage, adds Byrne.
“Apples and cheese are natural partners for a summer spread. Also, a ‘healthy alternative’ snack display near the checkout could promote impulse sales. Kid-sized apples also represent an important way to build healthy eating habits and generate new category sales: size-appropriate apples for growing hands.”
“Produce is located and available as soon as you enter most any grocery store in the country,” says Tom Labbe, domestic accounts manager for Jack Brown Produce in Sparta, MI, “and for good reason, because it promotes freshness and is a quality ring through the register.”
Among the opportunities to generate more revenue that organizations may be missing, he says, is taking advantage of secondary buying locations and store-education promotions.
“Tie-ins are an easy way to add items to the initial purchase by creating an idea the consumer can bring home for the family,” says Labbe. “A quick example is something I make for my kids called Apple Nachos: slice up some apples and add granola, caramel sauce, chocolate chips and coconut. It’s a healthy ring for the store and new snack idea for the consumer.”
Labbe says retailers could create a farmers market feel with display opportunities in the produce department. “Crate displays and bins let the customer pick up and touch the fruit. Filling a bag or tote with their harvest — not just a bag on a shelf for sale — makes the buying process more personal and fulfilling.
Highlighting the quality of the product is what Labbe calls the most important way to merchandise apples and be successful all year long.
“Customers demand great products and expect freshness when they purchase Michigan apples.” Controlled atmosphere facilities and packing to order for each customer, he adds, helps maintain quality longer and sustain varieties that consumers want throughout the season.
Labbe sees new bag designs being created, “and are a trend to catch the consumer’s eye. Offering a taste profile on each bag with each variety is a way to educate the consumer.” He says identification of the growing location is “very impactful to the customer and builds loyalty to the brand.”
Promoting the apples is the job of the supplier, he adds, “to create a buzz at store level. Offering a price that gives value and can be advertised is the key. Promoting varieties after the initial harvest has occurred is critical to bring value all year long.”
An apple display needs to be well organized, with varieties and prices clearly labeled. “Many times, from a distance, a Gala apple may look like a Fuji or Braeburn,” suggests Chuck Sinks, president, sales and marketing for Sage Fruit Company in Yakima, WA, “so having good color breaks in the displays
can eliminate confusion and create an attractive display.”
Keep Displays Full
Retailers should also keep displays full and fresh, says Sinks. “Tote bags and pouch bags are excellent methods to increase incremental sales. Most rings on tote bags are roughly five pounds of apples, and pouch bags hold two or three pounds of apples.” Apples on refrigeration will have a longer shelf life than non-refrigerated fruit.
Sinks agrees with his colleagues that apples should be merchandised year-round, even in the summer months. “They aren’t going to be the focal point of ads in the summer months, but maintaining full, fresh, rotated displays with clear signage is an opportunity to capture some additional sales as consumers are filling their baskets with summer fruits.”
In the summer months, retailers should make apples stand out by having spillover displays on the apples that they want to move during that particular time period.
Sinks and his colleagues see several methods in merchandising that include pods, Euro tables, secondary displays in lobbies, and others. “It really depends on the footprint and type of store a consumer visits.”
As far as apple promotion, Sinks usually sees one variety promoted at a time, but “sometimes several varieties, and sometimes the majority of a category if it is an apple-themed ad. It is really a mixed bag depending upon the retailer and the market.”
Sage Fruit tries to learn about its retailers’ needs and which promotional strategies are effective for them, and then tailor programs accordingly. “What works in one market may be different in another market, and this is where it is important for us as a grower/shipper to listen to our customers and ask questions, says Sinks”
Slice Of Life
Sliced apples continue to grow in revenue and tonnage. It was estimated that sliced apple sales were more than $500 million in 2014, Byrne of New York Apple Sales points out. “Continued growth will be aided by expanding SKUs to include yogurt dips in the sliced package. Foodservice has aided greatly in the introduction of sliced apples, bringing healthy dessert snacks to the fast-food business. Sliced apples account for about 5 percent of total apple sales.”
The most popular varieties for slicing, Byrne finds, are Gala, Pink Lady and Granny Smith. Others that seem to have gained favor in the slicing trend are Empire, Fuji “and durable — not easy to bruise — selections. In foodservice the single-serve dessert size are tops.”
Larger apples, 10- to 32-ounce for foodservice and schools continue to perform well. “The innovative integration of sliced apples and dipping liquids has added to the value proposition.”
Sliced apples offer a great convenient nutritional and portable snack, according to Allen of the New York Apple Association. “The best slicing apple, in my opinion, is the Empire. It is a round, red apple with very white flesh and it slices and holds its slice shape very well. Customers, such as McDonald’s, like the Empire slice.”
Challenges & Opportunities
As with any produce category, apples can present a set of challenges for retailers, which is when a skillful hand is needed.
Among the major ones that retailers face, according to Tim Byrne, special projects director for Glenmont, NY-based New York Apple Sales Inc., apples tend to require refrigeration at the point of purchase. Mobile refrigerated display units, he says, are not inexpensive. “Also, ringing up the sales from cross-merchandised categories can be a sticking point because they take space away from the department in which they are being merchandised.”
While chips and candy bars are wrapped and packaged, Byrne continues, smaller amounts of apples, “say two or four are not shrink-wrapped here in the States, though you see this throughout Europe and Asia.” He says apple packers and marketers need to get creative and work with retailers to tailor high-graphic and visually appealing new modes of packaging to get real estate at other key places in the store.
“The challenge of the fall is just getting retailers focused on the right opportunities of the crop and then getting off to a fast start,” says Steve Lutz, vice president of marketing for Columbia Marketing International, Inc. in Wenatchee, WA. “Every crop brings unique challenges in terms of sizing, timing, and quality. It requires flexibility.” Getting retailers to embrace the unique opportunities of this specific year “versus simply doing what they did last year is always a key challenge.”
Another is getting a fast start in early- to mid-September, which Lutz terms key. “Retailers like to focus on local apples in the fall, which often don’t hit markets until October. In the West, we start picking Gala in mid-August, so there is plenty of supply for retailers to promote in September.” Many retailers, he has found, miss this opportunity to generate strong early season sales by waiting to promote until October.
“The challenge is getting retailers to embrace this by designating appropriate floor space for the product, rather than co-mingle apples from Washington with regional varieties,” says Jim Allen, president and chief executive of the Fishers, NY-based New York Apple Association Inc. “Most all of the large eastern retailers, especially in the northeast, have found success in this practice.”
According to Chuck Sinks, president, sales and marketing for Sage Fruit Company in Yakima, WA, there are many more SKUs in the apple category compared to 20 or 25 years ago, so more are present than ever before. “We see this as a challenge and an opportunity. If we are providing the right products and the consumer has a positive experience, we think we have a chance at earning repeat business.”
“I would say the biggest challenge is to not let off the gas on apple promotions, and adapt to a changing market,” says Brianna Shales, communications manager for Stemilt Growers in Wenatchee, WA. “It’s important for retailers to know which varieties to promote and when, so they can capture sales and ensure freshness and quality remain high in their store. When quality is there, consumers will come back for more apples.”
“Space in stores is crowded and time is limited at retail for produce clerks,” says David Williams, vice president of sales and marketing for Fowler Farms Inc. in Wolcott, NY.
“Getting the okay from the corporate level to activate programs and ideas to hit the floor at store level” can prove an obstacle according to Tom Labbe, domestic accounts manager for Jack Brown Produce in Sparta, MI. “It takes time to get new ideas signed off on, but the impact can be very successful once implemented.”
Merchandised properly, apples of all varieties can have a solid impact in produce departments year-round.