Coronavirus: Retail Effects and Trends

Considering the worldwide crisis created by the Coronavirus, with the resulting lockdowns across the globe especially in the Western Hemisphere, I feel it is necessary to utilize this space to discuss the state of retail activity in the produce world concentrating on the situation in the United States. During the past few weeks, I have been able to discuss the global pandemic with many retailers across the country as well as Canada and Mexico to determine just what effect this turmoil had on the Retail Produce industry.

In my conversations with these retailers, one fact has come to light concerning this crisis: Overall sales of fresh produce have remained strong and above last year’s totals in spite of the lockdown.

While the increases are not as great as they were running prior to the shutdowns, they have held up remarkably well in the face of lower in-store traffic. Most retailers see increases especially in those staple items, such as citrus, apples, potatoes, onions, tomatoes, and other standard (hard) items. After a sharp spike when the shutdowns were first announced due to “pantry filling” and panic-buying, sales have remained remarkably constant.

Helping to keep sales going includes the fact that basket and transaction size have increased, along with increases from online orders and sales. Also helping to drive sales are the items perceived to be helpful in supporting the immune system, such as citrus, garlic, ginger, and other “super foods”. Surprisingly, the packaged salad category has held up remarkably well, with the blends and kits providing the majority of the sales.

Conversely, items that have not been selling include cut fruit, cut vegetables, salad bars, and other sorts of value-added and impulse items. Organic items started out strongly but, because of their overall higher cost, they are also losing sales. Overall, a conclusion can be drawn that those items that are the least perishable and most often the least expensive will continue to drive sales during this crisis.

Another area of unusual activity is in terms of logistics. Most retailers report strains on the shipment of perishables caused by the high demand for center-store items such as toilet paper, disinfectants, cleaning products, and hand sanitizer. Many stores have instituted case limits to slow down the demand and free up additional space for perishables on those trucks leaving the warehouse. As time has gone on, however, these challenges have been overcome by the use of outside carriers to deliver to the stores.

Most retailers report reduction of store hours to facilitate better cleaning and improved stocking of shelves. Produce operators report that they have been scheduling more early shifts in the produce department to make sure it is full and safe for consumers by eliminating the congestion of stocking on the sales floor. Some retailers have also begun additional nighttime deliveries of product to avoid congestion on the sales floor and in the back room.

Retailers express genuine optimism that there will be an opportunity for growth and success.

The retailers I contacted have some concerns about additional restrictions and regulations concerning the sale and display of fresh bulk produce. Some fear it will be at a call for additional packaging of produce by government agencies. Another concern is the potential for supply shortages and gaps if growers cut back on their production because of the lack of business to foodservice, causing a “demand-exceeds” situation when foodservice comes back online. Because of these concerns, virtually every retailer expressed a universal, vital need for free and open communication with all the growers.

In a near unanimous voice, retailers say growers can best serve the industry and the needs of both retail and foodservice by providing and communicating accurate crop availability information on a regular basis. Production forecasts, planting schedules, and volume projections make up all the key parts of the communication that retailers will be looking for to help growers through this difficult situation and beyond.

Many of the retailers also suggested that the growers “stick to what they do best and not take any unnecessary risks in their production”. Everyone agreed that the local production during the summer months will be key to the overall recovery of the industry, the nation, and the entire world.

In their comments, all the retailers express genuine optimism that there will be an opportunity for growth and success across all aspects of the industry following this challenging period of shutdown and global pandemic. In fact, most of them feel that the outlook for overall sales for the balance of the area is outstanding, and customers will reward our efforts by continuing to cook and consume more produce at home.

If there is one good thing that came out of this situation it is the fact that produce once again proved the value that it brings to the consumer on a consistent, everyday basis regardless of market situation or challenging environment. If we can facilitate free-flowing conversation and information-sharing between the retail community and the growers, we will all emerge from this worldwide crisis in the best possible position to continue the growth and success of our operations.

P.S. I would like to thank all the retailers who took time out of their schedules to discuss the situation with me. I will always be indebted to them for their candor and willingness to share information for the betterment of the industry.

Don Harris is a 41-year veteran of the produce industry, with most of that time spent in retail. He worked in every aspect of the industry, from “field-to-fork” in both the conventional and organic arenas. Harris is presently consulting. Comments can be directed to [email protected].