Category Spotlights

Melons are a staple summer fruit. In June through August, melons account for more than 6% of produce department sales. Because the melon category can take ample department space to appropriately display, it is important to ensure every component of category management is successfully implemented, including assortment, pricing, promotion and merchandising support.

Melons:  Year in review

Melons accounted for 2.8% of produce department sales during the 52 weeks ending March 26 and sold an average of $1,154 per store per week nationally; this was an increase of 0.8% compared with the prior year.

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Watermelon and cantaloupe accounted for the majority of the melon category. Watermelons, with just more than 50% of total sales, drove the small growth that the category experienced during the latest 52 weeks, with a 5.4% increase in dollars sold. Cantaloupe declined in sales by 3.3% compared with the prior year, prohibiting melon sales from growing further.

Specialty melons had the greatest sales decline, down 36.1% from the previous year. A substantial increase in the average retail price for this subcategory, up 119.1% compared with last year, can be attributed to this decline in sales.

With convenience a top priority for today’s consumer, packaged produce is on the rise, and melons are no exception to the trend. Between 2006 and 2010, packaged melon sales grew 17%. Driving those increases was watermelon, with a 21% increase in packaged sales since 2006. As is typically the case, however, convenience comes at a price. The average retail price of melons increased 9% during the past five years.

Due to their seasonality, melon sales primarily occur May through September and steadily decline leading into the winter months. Melons had peak sales during the weeks of Memorial Day and Fourth of July, when sales respectively reached $3,030 and $3,175 per store per week, more than double their average dollar sales per week of $1,154.

Although still a small segment within the category, organic melon sales are growing and steadily gaining share from conventional melons. Sales of organic melons increased 16.8% in the latest 52 weeks. Watermelon again led the way in this trend, up 36.4% compared with last year.

Evaluating regional differences in melons, the East region led sales with $1,638 per store per week. A gap of $836 occurred between the top-selling East region and the bottom-selling South region, which sold an average of $802 per store per week.

The Central region had the most significant melon sales increase of 5.3%, 4.5 percentage points higher than the national average growth of 0.8%.

Category Management Toolbox: Space to sales studies

Across all departments, shelf space is increasingly valuable and hard to find. In the produce department, the number of unique products sold (impressions) increased 2.6% during the latest 52 weeks ending March 26 compared with the prior year. Fruit impressions alone increased 4.7%.

The challenge is that shelf space is both limited and fully utilized. Decisions to increase space in one category must result in a compensating loss of space for another. It’s essential to make assortment decisions that result in the highest revenue per square foot of available display space.

One method to ensure the best use of shelf space is a space-to-sales study. These studies identify the correlation of product display size to category and department success, typically measured in volume and dollar sales.

In 2009, the Northwest Cherry Growers commissioned the Perishables Group to identify summer fruit space productivity at retail. This study examined the relationship between summer fruit square footage and sales performance. The information helps produce management make assortment and merchandising decisions that result in the highest revenue per square foot of available display space. This is especially crucial in the summer, when space is particularly limited with the vast amount of summer fruit available.

Across the stores audited during the summer fruit season, correlations between category performance and space varied by category. However, several summer fruits showed that the amount of display size directly affects sales performance.

Of the 10 categories evaluated, cherries, cut fruit and berries had strong relationships between display size and category space, with larger display size driving stronger category sales.

For the grape and melon categories, display size did not directly affect sales. For these categories, performance may be more dependent upon other factors, such as promotions, pricing or display location.

Space-to-sales studies take into account multiple strategies to accurately assess the correlation.

It is necessary to study multiple items or item groups to understand the space-to-sales information within context. Whether the study focuses on garnering insights for a specific product group, or across categories, comparing the space-to-sale ratio across products is important to the overall findings and implications.

Due to greater seasonality in produce, as well as the other fresh departments, selecting the appropriate time period for a space-to-sales study is crucial. For example, watermelon sales peak in the summer months; conducting analysis several times during that peak period helps understand how space and category performance can vary by month.

Auditors can be used to obtain exact measurements of in-store space dedicated to a category. Any secondary displays also should be considered in the analysis because they can boost sales above normal levels.

The validity of a space-to-sales ratio can be enhanced by selecting a broad set of stores to audit. The stores should include a mix of various store sizes and shopper demographics. Auditing stores across a group of retailers also can be helpful to understand trends in a specific geography or region.

As a final step in the study, a statistical analysis should be used to most accurately correlate sales performance with the selling space.

Consumer insights

Outside of bananas, watermelon is one of the few bulk categories to have a larger percentage of sales than branded items. Although the majority of the category is unbranded, branded products comprised 8% of watermelon sales in the latest 52 weeks ending March 26. Branded watermelon products grew in dollar sales consistently with unbranded products, increasing 5.2% and 4.4% respectively.

Private label watermelon programs just began to develop during the latest 52 weeks. Although still a very small percentage of overall sales, private label increased more than branded and unbranded.

Brand awareness, whether for national brands or private label, benefits the watermelon category and can be a successful example for other bulk products. Brand support can help drive consumer product knowledge, including product selection guidliness, nutrition and usage ideas. Category promotions also can be supported through brand support such as stickers, materials, floor talkers, unique ads and coupons, all of which help gain consumer attention.