First to Market Owns the Market: Emerging Merchandising Trends in Produce

By Anne-Marie Roerink, Principal, 210 Analytics

Megatrends, shopper demographics, e-commerce, mergers, acquisitions and more are driving profound changes in the food retailing landscape. Working closely together with food manufacturers, retailers continuously adapt strategies to ensure maximum relevance to their shoppers while optimizing traffic, sales and profits. According to FMI, retailers see a product and merchandising innovation as the No. 1 way to drive top-line growth and differentiation in a deflationary marketplace. This was ahead of pricing and promotional strategies, in second.

“First to market owns the market” is a tried-and-true saying among category managers relative to the importance of new items and concepts in driving new sales. Many shoppers are creatures of habit — buying the same items again and again. The Power of Produce’s purchasing decision tree research underscores the importance of habit for both fruit and vegetables. Cutting through habitual purchases requires innovative and inspiring merchandising tactics aimed at driving impulse in the short term and loyalty in the longer term. After all, as mentioned, shoppers are creatures of habit and tend to keep purchasing items at the store where they first made their new item discovery.

Actual sales numbers by data insights firm IRI underscore the importance of frequent new item introductions to the financial health of food retailers. In 2015, IRI measured more than 65,000 new items in the marketplace that was responsible for generating more than $72.6 billion in sales. In a produce-related example, Nielsen Fresh found that retailers introduced more than 500 new organic produce items in 2015 with corresponding sales increases of 14.9 percent.

So, step one is the continual introduction of relevant new items based on your store audience. Step two is trying new programs or merchandising tactics addressing how items are brought to market. The Power of Produce 2016 looked into several programs, including grown locally or in the USA, non-GMO, organic, ugly fruit, fixed weight and “each” pricing that are in various stages of development among U.S. retailers.

Programs that tell a story — Origin, organic or non-GMO, it is programs that tell a story about the product or production process that drive great interest among shoppers. For instance, 61 percent of shoppers want their store to add more locally sourced produce, and 56 percent want more U.S.-grown produce. Interest in GMO-free is much lower at 39 percent.

“Ugly fruit” — A few U.S. retailers started experimenting with programs seen in Europe and Australia focusing on less-than-optimal-looking produce. As a largely unknown concept in the U.S., ugly fruit draws relatively low interest among total shoppers, at 31 percent, when positioned as a program to reduce food waste. With many shoppers focused on money-saving measures, angling ugly produce as a way to save will likely draw higher shopper interest although the environmental angle is resonating much more with Millennials, at 41 percent.

Fixed weight produce — Influenced by shoppers increasingly seeking convenience in every step of the path to purchase, fixed-weight merchandising is reaching critical mass in several categories, with the sales share exceeding 70 percent for 10 produce categories and 40 percent for 20 categories. It is important to balance shopping convenience with shoppers wanting control over selecting their items — which is different for each category, format, and generation. For instance, fixed weight is three times more popular among club shoppers than specialty organic store shoppers, but overall only 19 percent of shoppers agree with adding more bagged/wrapped produce in a blanket statement, not specifying particular items.

“Each” pricing — 35 percent of shoppers agree with introducing more each (or per unit pricing) in the produce department, such as 99-cent green peppers versus $1.99 per pound. Segments of the population with a higher interest in “each” pricing include supercenter shoppers and lower-income households.

Importantly, no one item or program works for every store or company. Explore, execute, evaluate and adapt are still key to discovering how you can make “new” work for you.

Source: The Power of Produce 2016 — Shopper research by the Food Marketing Institute, made possible by Yerecic Label and Hill Phoenix and conducted by 210 Analytics.

Food Marketing Institute is a trade association that advocates on behalf of the food retail industry. FMIs U.S. members operate nearly 40,000 retail food stores and 25,000 pharmacies. Through programs in public affairs, food safety, research, education and industry relations, FMI offers resources and provides valuable benefits to more than 1,225 food retail and wholesale member companies in the United States and around the world.

Source: The Power of Produce 2015 Shopper research by the Food Marketing Institute, made possible by Yerecic Label and implemented by 210 Analytics.