Editor's note: This column is part of a series by Joe Watson, who spent 30-plus years as the director of produce for Rouses Markets and was named Produce Retailer of the Year in 2014.
As the calendar turns to the months that end in “-ber,” that sigh of relief you hear is produce retailers collectively breathing again as the summer season winds down.
While summer creates all sorts of opportunity for promotion, summer also presents a huge shrink challenge, which can hamper retailers if the fear of shrink is too great.
Shrink is never out of mind for a retailer. It’s like playing a poker game.
If a retailer shows their cards too early, such as aggressive merchandising, they stand to lose. On the other hand, if they are too conservative, with a “clean” floor and limited promotions, someone will beat them anyway.
If retailers played it too safe in summer, they might not have achieved their sales goals. If they were too aggressive, however, they may end up with excessive shrink numbers and worse, an erosion of gross margin. So what is the right approach?
It’s a tricky proposition but one that can be overcome. I spoke to a vice president of produce in the Southeast recently who told me that his shrink ran 6% over the summer, which he was pleased with because his produce department’s performance over the June-August period surpassed the goals that were targeted.
This intrigued me because we all hear that we must lower shrink at retail. But do we? And at what cost? What is the “right” number for shrink? Well, that is in the eye of the beholder – in this case, the retailer.
Having an exit strategy is critical and does a couple of things.
It puts a plan in place to reduce true loss of goods, also known as shrink, and while a product may not be sold as it was intended, if that product is used in a safe way then it’s a win-win. One thing is for certain: Shrink is part of the everyday lives of retailers, and understanding what is acceptable to the retailer will go far in determining the statement a produce department makes on consumers.
For those retailers who are high-fiving over a successful summer, congratulations! Your plan was well thought out and executed. For the remainder, rest assured the sky is not falling. In fact, the fall season is arriving soon to rescue those who may have fallen short over the past three months.
Shrinking the shrink and fall recovery period
Hard goods and hardy products will be ample throughout the remainder of the year. Expect to see retailers taking full advantage of these opportunities and cooler weather to promote these items heavily while managing shrink to achieve their sales goal for a successful conclusion to the year.
Strategies to grow sales while maintaining acceptable shrink levels in fall and before the holiday push are abundant. Here are a couple of examples to consider:
Look for promotional opportunities on unique sizes of packages or containers that will provide your stores with a differentiated sales opportunity. Club varieties are all the rage in the apple category, and growers are looking for retail partners to develop a market for all sizes and grades.
Avoid the assumption that your customers only want specific varieties.
Tell the story of the product and remember the selling proposition is on experience – taste and texture – not on price alone.
Place these in high-traffic areas for great impulse purchase opportunities.
Also, many K-12 school districts and school nutrition organizations host Apple Crunch Day, The Great Apple Crunch and various iterations of this health, wellness and awareness initiative in fall. Dates vary by region, but many are held in October. Find out how your local districts and their foodservice suppliers are participating and consider partnering or extending the campaign into stores. It’s a great potential way to connect and engage with local school communities, leverage momentum of in-school events, and potentially increase apple demand.
In many cases this is a category that needs promotion. In my retail days we considered pears the soft fruit of the fall season, and they should be treated as such. But many times customers don’t understand this, so it’s an opportunity to share the message. Pears are a high-brix, lower-acid fruit, and with conditioned pear programs retailers are in good position to promote pears to grow sales and profits in the vacuum of soft fruit before Chilean fruit begins.
But consider stretching yourself by offering varietals like comice, seckel, forelle, concorde or red to go along with bartlett, anjou and bosc.
Give your customers a new experience in the pear category – a category that is a hidden gem.
Create a pear destination with bulk and packaged offerings.
Also, World Pear Day is Dec. 1, and this December marks the 15th anniversary of the U.S. Department of Agriculture proclaiming the last month of the year as National Pear Month. The celebration went global in 2016. Be sure to join in on the fun with your own merchandising, public relations and social media engagement using the hashtag #WorldPearDay. But no need to wait until December to gain traction. Pears are perfect for the duration!
These are just a few ideas for fall transition, shrink management and demand creation. I’d love to hear yours. Feel free to share this article and comment with your own insights on social, contact me directly, or join the conversation on Produce Marketing Association’s Fresh Ideas LinkedIn group for produce and floral marketers.
Joe Watson is the Produce Marketing Association’s vice president of member engagement for the eastern U.S. He joined PMA in 2015 as vice president of domestic business development and assumed his current role in 2018.