The Produce Channel Choice — Defending Our Turf

By Anne-Marie Roerink, Principal, 210 Analytics

There is no doubt about it: Supermarkets remain the produce powerhouses of the industry. For many, produce is the prime way in which supermarkets differentiate from the competition and an important tool in driving foot traffic. Supermarkets boast high shopper conversion, with 88 percent of shoppers who purchase the majority of groceries at supermarkets also purchasing fruit and vegetables there. Additionally, they attract many shoppers of other channels for the produce purchase, in particular, supercenter shoppers, of whom 37 percent switch channels to purchase produce elsewhere. The chief reasons for switching stores, in general, include better quality (55 percent), freshness (52 percent) and variety (36 percent).

While supermarkets’ superiority in produce remains unchallenged, there are several alternative formats nibbling away at the produce dollar. These include channels such as online, farmers markets, farm direct and even dollar stores. These may not be huge baskets or even regular purchases, but there are consequences nonetheless. Little by little the produce purchase is becoming more scattered, and supermarkets will have to work harder to maintain their reputation/draw, baskets and conversion rates. A subsequent effect of the rising presence of these alternative formats in produce is the potential to lose out on any additional (non-produce) items — making the possible impact much greater than just a few produce items. Let’s look at some of the new competition.

Online Produce Shopping: Six percent of shoppers occasionally purchase produce online along with other groceries, and another 4 percent have ordered online from produce-specific vendors. Using sales-based information from MyWebGrocer, it turns out that the online purchase is as much about stocking up as it is about fresh. In fact, 87 percent of baskets include produce, which is second behind dairy and far ahead of beverages, frozen items, candy/snacks and canned/packaged goods. For instance, bananas appear in no less than 44 percent of baskets; and onions, garlic, celery, tomatoes, and apples appear in at least two in 10 baskets. Produce is also a Top 5 driver of sales, with a growth rate of 13 percent year-over-year. As such, the myth that shoppers won’t buy fresh online is thoroughly shattered, and e-commerce presents a tremendous opportunity for brick-and-mortar retailers to prevent some of the fresh dollar leakages to other online perishable players.

Dollar Stores: More than one in 10 shoppers occasionally purchase fresh produce at dollar stores, such as Dollar General. In particular, they are a growing destination among lower-income households — with 19 percent of shoppers earning less than $35,000 annually — occasionally purchasing fresh produce at dollar outlets.

Farmers Markets: Aside from the primary store, shoppers will pick up produce items here, there and everywhere. Farmers markets lead the list of outlets for the occasional purchase. In fact, no less than 50 percent will occasionally purchase produce at farmers markets. Importantly, produce is a key trip driver for farmers markets with 66 percent going there specifically to purchase produce. Chief purchase drivers are freshness and quality, just like for produce in general. But there are two key differences: farmers-market shoppers care more about supporting the local farm community, and they are more curious about where the produce comes from. And let’s not forget that 40 percent reference the fun atmosphere, and 80 percent are “very satisfied” with their purchases. These are impressive percentages, and along with the rapidly rising number of farmers markets around the country, brick-and-mortar retailers should take note and more effectively communicate in-store produce is every bit as fresh and high quality, along with a strong emphasis on food safety in the supply chain.

Think about telling the backstory to keep shoppers in the retail produce department instead of diverting to farmers markets.

Explain fresh and the major industry efforts to keep the produce supply safe, fresh and varied.

Integrate local and the “feel good” that goes along with that. And don’t forget in the shoppers’ mind, local can vary from the hyper metro-area to grown in the USA.

Bring the fun by integrating new and different items, handwritten signs and fun merchandising.

Tell the item’s story about the farm, the farmer and why the product specifications provide consumers with the eating experience they are seeking.

Share the facts and provide ideation on how to use the produce items.