Originally printed in the February 2022 issue of Produce Business.
At the start of every year, entities all over the world report the “state” of their enterprises. Whether these enterprises are political, economic, or governmental, the leaders of these organizations relate how their entities are doing presently with an outlook for the future. It is a time-honored tradition and one that has major implications on the success and sustainability of every institution.
Upper management at retail has historically not participated in such activity, as the focus has been on continued growth of sales and profits, but the new reality of challenging and changing times requires everyone to make this evaluation of their industry. The same can be said for the produce segment of the industry, and an attempt to frame the reality of the industry must be made. Management’s reluctance to do so for the entire retail segment once again proves that “they just don’t get it!”
This type of statement concerning the status of retail produce operations is long overdue. Several attempts over the years have tried incorporating the reality of produce retail by numerous organizations; however none of them have actually revealed the true reality of produce retailing and only detailed the state of overall produce industry health. This attempt to describe the present state of produce retailing will focus on multiple aspects of the organization and key measurement factors.
To begin our review of the “State of Retail” in produce, we should review the most obvious measurement of success for the industry. Sales is that measure, and in general terms over the past several years, produce has enjoyed increasing sales each year. This positive measure glosses over some of the actual situations that are hindering the level of success in this area.
Initiative seems to have left the industry, and creativity has taken a back seat to the quest for the Almighty Dollar.
While prices and sales have increased (even prior to the recent inflation), the amount of product or volume has decreased. In other words, while we are selling more dollars of produce, we are selling less pounds or volume. Increasing pressure on profits and the use of “margin creep” (increasing of margins) has forced higher prices on produce commodities, thus reducing the volume of product sold. Given this situation and declining consumer consumption, trends indicate an unsustainable direction in this sector.
The second area of our review is in store operations. While there may be a few exceptions, overall store operations is in decline. There seems to be a lack of direction and motivation in store operations. Complacency has set in and allowed for a lowering of standards for presentation to the consumer. The concentration on utilizing labor to complete “tasks” instead of managing workforces to make presentations that entice consumer purchase is eroding customer appeal.
It also seems that accountability has been lost for the responsibility of maintaining superior operations, both on the retail sales floor and in the back room. There is also a surprising lack of consistency across the board in these operations. There are far too many out-of-stocks and “holes” in their departments, not only during key high-traffic periods, but throughout the day. This is yet another warning sign.
The third area to be reviewed is innovation. This area has always been a strength in the industry, however recent times have shown a tendency to continue the “status quo” instead of finding a better way to present and sell more product. Initiative seems to have left the industry, and creativity has taken a back seat to the quest for the Almighty Dollar. It seems in the majority of departments across the country that the present state of affairs represents the best we can do in terms of presentation.
This goes beyond just the retail store and applies to the supply chain as well. Given the past three years of uncertainty and challenge, it would seem to be a priority for the industry to examine every possible method to improve and elevate the produce retail operation.
Finally in our review of the “State of Retail” in produce, we should examine the risks going forward in the present state of affairs. Presently, our operations are approaching a state of stagnation, and continued emphasis by management on sales and profits, sacrificing volume movement, is not only unsustainable but risks everything we have gained over the past 40 years. Many of us will remember where the industry was in the early 1980s when it seemed we had progressed as far as possible. But suddenly the industry reinvented itself and we advanced our industry to new heights during the “Produce Renaissance” of the late 1980s, and the 1990s. Now is no time to be complacent! We must do some soul-searching, out-of-the-box thinking, and innovation creation to seriously move the industry forward.
The “State of Retail” in produce is not as healthy as it should be. The industry is in danger of falling behind its accustomed position as an innovative, positive force in the success of the entire food store industry. Action is required to reverse the present trends and reinvigorate the creative and innovative nature of produce retailing.
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 protected]