Originally printed in the January 2019 issue of Produce Business.
It’s the beginning of the year, and good produce executives use this time to review their operation’s performance during the previous year. This is a good practice to ensure the proper strategies are in place to meet the New Year’s expectations, goals and targets. Management often looks upon this activity as a waste of time. They think and often tell you that “anything sells in Produce,” and there is no need to review operations to determine how to best utilize the space in the department.
This attitude toward performance analysis of the produce operation once again proves that when it comes to upper management, they “just don’t get it.”
Not only does the review of your operations makes good sense, but it also allows you to objectively view how strategies and products are doing in terms of how they compare to all other items within the department. Every innovative and progressive produce executive knows the review of operations and its performance — down to the individual item level — is vital. The space allocated to the produce department is not infinite. Every square inch must be used as effectively as possible to meet management’s expectations and targets.
It would be a good idea to speak with other department executives to inquire about how they evaluate the performance in their departments. For instance, it would be helpful to know what technology and analysis the deli or meat department utilizes to determine which items perform the best.
Although produce is indeed a unique department, we can learn a lot about the analytical side of operations from the other perishable departments.
The first step is to determine what type of measurement is to be used to evaluate the data. There are two methods that are most commonly in use and show potential in the evaluation of the produce department. The first is sales per square foot, which can establish the value being returned by each item in its allotted space. Sales per square foot is the most accurate method of evaluation, but it’s also the most difficult to establish.
Training and development of staff must be coupled with enhancements for team members, including financial rewards, advancement potential or “a piece of the action.”
The second method is evaluating sales per linear foot throughout the department, which is easier to obtain but less accurate than the square-foot method. This can be more easily attainable given uneven and odd-shaped displays. Regardless of the method, the data reveals which items perform the best and which ones offer the most value per unit measured.
This data can help to design a schematic for your department that takes advantage of the space available and utilizes the items that generate the highest dollar value to help drive the sales in the department. It is especially important that ALL items — both fresh and non-fresh — in the produce department be analyzed using this process.
Once you have been supplied with this analysis, you can formulate a strategy that takes advantage of everything available to your operation, including commodity grouping, category management, display strategy, traffic patterns and department location. This combination of factors will allow you to provide direction to maximize the sales potential and ultimately the profit potential of the entire department, as well as each item.
Additionally, the analysis and strategic planning will allow you to provide each item with the space necessary to be successful. This is where the produce department differs from other departments because the size of display for each item can vary and be tailored to its potential for sales and returns.
Instead of simply adding items for the sake of additions, new items can be incorporated into the set utilizing the “value equation” to allocate the proper amount of display space for each item.
As you go through this analysis, you will find items that are occupying more space than their potential value would allow. The hardest aspect of any such examination is mustering the courage to change the amount of space each item has in accordance with its performance data. While this will prove difficult, the benefits will far outweigh any difficulties encountered and will allow for the best possible position to accomplish the goals set for your operation.
This effort to “right size” the displays of every item in your department will help to separate your operation from competitors, and provide consumers with the opportunity to discover and purchase each item in the produce department. This is ultimately the goal of any produce operation and is the proper direction to take for maximization of sales and profits.
Don Harris is a 41-year veteran of the produce industry, with most of that time spent in retail. He worked in every aspect of the industry, from “field-to-fork” in both the conventional and organic arenas. Harris is presently consulting. Comments can be directed to email@example.com.