Alternative Shopping Venues May Be Good For Supermarkets

By Jim Prevor, Editor-in-Chief, Produce Business

As with all good research, The Power of Produce study by the Food Marketing Institute, made possible by a grant from Yerecic Label and implemented by 210 Analytics, raises at least as many questions as it answers.

This piece, by Anne-Marie Roerink, a principal at 210 Analytics, suggests this question: To what degree is there a fixed “fresh produce dollar”? Put another way, it is one thing to show that alternative venues are starting to take a higher share of produce purchases, but it is quite another to prove that this business would have gone to supermarkets had these venues not sold produce. After all, the produce industry has worked hard to get produce in alternative venues precisely because the trade believes that more opportunities to purchase mean more consumption.

Think about convenience stores: for many years there was virtually no produce sold in convenience stores, and even now it is a small deal with many stores just offering bananas, oranges, apples, as well as some fresh-cut fruits and vegetables in the cooler. Though small, sales are many times greater than they were a generation ago. Yet isn’t it reasonable to see these sales in some significant part coming not from supermarket produce departments but from the candy, cookie, cupcake, and chip offerings at these convenience outlets?

Farmers markets have grown, but there is no research demonstrating that purchases at farmers markets lead to lower purchases at grocery stores. As Ms. Roerink points out, farmers markets are fun — a kind of tourist attraction. But does buying funky heirloom tomatoes mean the consumer will buy less produce at supermarkets? There is no data to prove one way or another.

And here is another thought: Supermarkets have been paring down staff. It is not always easy for consumers to find knowledgeable produce experts to talk to in a conventional supermarket. At a farmers market, the stands are often manned by farmers or members of the farmer’s family. These people are often passionate and knowledgeable. If they convert consumers to using a particular melon or pepper, isn’t it likely that once turned onto an item, many consumers will buy it from their supermarket? So even if there is a short-term trade-off in the form of lower produce purchases at supermarkets, in the long term, the interaction with “produce ambassadors” in the farmers market could be a big win for supermarkets.

Internet shopping? Of course, many brick-and-mortar operations have their own online options. Shippers won’t care if the sale goes through a store or an online portal, but, once again, it is easy to imagine that online shopping could help boost produce consumption. How often do consumers not eat produce because they run out of an item and haven’t had a chance to run to the store?

Automatic ordering could easily reduce these times of shortage in a way that could move the needle on consumption. In addition, as more consumers shop at discounters (such as ALDI or the soon-to-open Lidl), they may be shopping in venues where produce variety is constrained. The “long tail” of the Internet allows for the offer of a more extensive assortment, which could boost sales.

We have long known that there is a correlation between increased income and increased produce consumption. It is not 100 percent clear why this correlation exists. Fresh produce can cost more than other foods, and shrink is a real risk in a way it is not with canned and frozen alternatives. It is also possible that higher levels of education and/or IQ levels allow for the easier absorption of public-health messaging for produce consumption and that higher income correlates with IQ and education. In any case, if lower-income people are shopping in dollar stores, then getting them access to fresh produce in these locations seems likely to lead to increased purchase and consumption.

Of course, supermarkets would rather see consumers buy everything from them, but a different philosophy may be in order. Many years ago, Max Brunk, who was a professor of marketing at Cornell University and specialist in produce and food industry issues — as well as founding columnist of PRODUCE BUSINESS magazine at its launch — was commissioned by Roses Inc. to do a study related to street floral vendors in San Francisco.

Professor Brunk carefully reviewed sales figures and determined that vendors selling only roses ought to be encouraged to diversify and sell multiple types of flowers. It turned out that vendors offering a variety of flowers attracted more customers and sold more roses than vendors that offered only roses. The results horrified the association, and the study was buried — never to see the light of day.

It may well be that a diversity of places that sell produce may change consumer habits and encourage eating more produce, and supermarkets might just wind up profiting from these changes of habit. We don’t know this to be true, but it is certainly possible and a great subject for future research.