Trajectory for Future Success
June 1, 2017 | 3 min to read
The produce industry is at an inflection point. If you sit in on the strategic planning sessions of company after company, as I do, you see the same dilemma. The tools, the people, the organizational structure of most organizations in the produce industry are simply inadequate to the challenges of today and, certainly, of tomorrow.
Producers who always just assumed the genetic material available to them would be identical to that available to their competitors have no real mechanism for knowing how to position their organizations to ensure they have superior and distinctive varieties on an exclusive or preferential basis.
Sales operations that successfully sell millions upon millions in legacy business are not organized to properly pursue distinctive lines of business that require specialized approaches. Foodservice is different than retail, and dollar stores are different from club stores. Most industry companies have neither the manpower nor the flexibility to engage with the booming home meal supply industry, where the companies will not care what the size of your standard crate is, but would in fact, be excited to buy if you could supply 6-ounce cellophane envelopes filled with pre-washed product.
In addition to meeting the needs of the non-traditional outlets, how many companies really take advantage of the opportunities now present for direct consumer interaction via labels, websites and social media? How many have been able to leverage these tools to make retailers feel they must stock the brand?
Retailers seem similarly stymied. Wal-Mart rolled out across America, and virtually no other retailer rolled out their own version of the supercenter. They just relinquished the market share of those consumers who prefer that shopping venue. It seems likely to happen again. Aldi is the fastest-growing food store in America, and Lidl is about to seize that mantle, but almost nobody is launching their own small footprint deep-discount format. The big box stores will compete on product and price, but it seems highly likely there is a market that prefers to shop in stores of this type. Based on experience in England, that might be upwards of 10 percent of the market, and most chains are preparing to cede that market share.
Nearly 15 years ago, United Fresh first tried to co-locate its trade show with FMI, the supermarket trade association. There were lots of reasons to try this; one of the reasons it was thought a good idea was that it would give produce industry exhibitors a chance to interact with chief executives at retail chains. This didn’t happen as much as was hoped, but when it did, the scene was often painful to watch. Because the salesperson at the typical produce company is not trained to address the strategic concerns of a large chain chief executive, the salesperson mostly said, “Buy my stuff,” and the chief executives walked by no more knowledgeable than before.
The requirement to assess individual accounts and identify advantages, then work two years before you sell a box, is coming fast.
There are, of course, bright lights and hopeful signs. Companies such as Driscoll’s and Sun World have found ways to create and leverage proprietary produce. Companies such as Naturipe and Sun Pacific found a way to get their produce on the menu at McDonald’s, and the Wonderful companies have leveraged marketing to build and revitalize whole commodities. Robinson Fresh found a way to use logistics, technology and organization to create value where there was none, and companies such as Mann Packing have become innovation machines, always with a new product around each corner. And, of course, there are many others.
Yet, these are exceptions that prove the rule: the produce industry has to change. We have to reorganize to triumph in the future. Everyone has to add value. This has always been a business where good product and good service were enough, but that window is closing.
In the next stage of business, strategic thinking will be more highly valued. The ability to assess individual accounts and identify advantages, then work two years before you sell a box, is coming fast. High volumes of national chains will justify dedicated staffing on-site with the customers so as to satisfy their needs and leverage the relationship for greater success. The once mighty buyer is rapidly fading in importance, as most become replenishment managers with strategic alliance decisions being made at the category and executive level.
The need to engage at this level is a challenge for most produce companies. Everyone is so busy selling the product, who has time or expertise to engage strategically? Yet, the future is clear, and the winning skill sets are clear as well. What is shrouded is which organizations will transform themselves, substantially enough and soon enough, to use this inflection point like a spaceship using gravity to slingshot to success.
Article 21 of 22
Have a story to share?
Take a place at Produce Business