Mastering Merchandising

Originally printed in the March 2019 issue of Produce Business.

Merchandising is the primary selling tool for the produce industry, and it has to change if it is to sell the products of tomorrow in the venues of tomorrow to the people of tomorrow. Merchandising is now a kind of three-dimensional chess game, and the dimensions are: Venue, Product and Data.

VENUE

Virtually from the birth of the modern supermarket, the great competitive fear was … another supermarket. Bigger, newer, better — but the same concept. This is not the primary problem today. The general purpose — serve one, serve all — supermarket is increasingly challenged by specialized concepts. Perhaps it is a Walmart supercenter or a Costco warehouse club; maybe Whole Foods has an outlet, Trader Joe’s, Aldi, and Lidl or, maybe the specialized concept is a web-based delivery service.

The point is each concept now serves a specific segment of the population or serves the population during certain specific moments of their lives. Now, certainly, there are many commonalities in how things should be merchandized in any venue — with color breaks, wooden tables and what not. But if you are in an epicurean concept such as Trader Joe’s, a price-focused concept such as Aldi or a health-focused concept such as Whole Foods, one will not be optimizing sales if the merchandising premise doesn’t focus on the specific concept.

PRODUCT

Of course, these different venues often should not have the same products to begin with. One of the things that has happened is there is an explosion of new produce items. Some of these are the fresh-cut products, many now with protein and highly specialized cuts. Produce items themselves now have also seen an explosion of proprietary varieties. Few departments can handle all the varieties of grapes, apples, tomatoes or tree fruit that are now available. So the selection must be edited, and then the distinctions between the varieties must be highlighted.

Should a store rotate varieties, settle on a few core ones, keep a core item and alternate a new one every month? How do you handle varieties that are only sold under one brand, such as Driscoll’s? How do you handle varieties that have totally distinct flavor profiles, such as Cotton Candy grapes?

When shippers assist retailers with merchandising, how do the shippers handle the fact that the retailers simply cannot sell some of the shippers’ own proprietary varieties in all of their stores? Steve Lutz (formerly with the Washington Apple Commission and now with the Produce Marketing Association) became famous in the produce world by insisting that the Washington Apple Commission’s category management efforts include apples not sold by Washington apple shippers. Are produce shippers prepared to show the same integrity?

Perhaps a heavy food stamp or paycheck-to-paycheck store needs a different offering the week after everyone gets money as opposed to the week when everyone is awaiting their checks.

DATA

Beyond the broad scope of a venue theme and the knowledge there are many products not available in any given store, it is the existence of data – what consumers have bought in the past, what consumers are buying in other stores of the same chain, overlays of shoppers with various demographic screens — that now give us an extraordinary chance to boost sales.

The great strength of multistore retail is to constantly be looking at what is working and why, as well as what is not working and why. I remember being invited to attend the old Walmart “Saturday Morning Meeting” and being fascinated at how deeply Sam Walton focused on this. They would make the star of the show the merchandiser of socks in one particular store and spend 20 minutes grilling this employee to find out what her secret was. How did she merchandise her socks in such a way as to generate triple the sales?

Every shipper should be working with retailers to have this kind of data — so they can go to the store that is selling over scale on their product and find out how to spread the magic.

Data also may indicate that merchandising should differ each week. Perhaps a heavy food-stamp or paycheck-to-paycheck store needs a different offering the week after everyone gets money as opposed to the week when everyone is awaiting their checks.

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When Tesco tried to conquer America with its Fresh & Easy format, it did something strange. Although in the UK the Tesco stores were highly focused on micro-marketing — offering different assortments in a neighborhood of African immigrants as opposed to a neighborhood of Indian immigrants as opposed to a heavily Jewish neighborhood — in the U.S., however, Fresh & Easy eschewed micro-marketing, presumably to make for a more efficient rollout. Yet, as Bruce Peterson, the founder of the Walmart produce program, pointed out: “offering a uniform assortment against diverse demographics is a guarantee of failure.”

So it goes for merchandising. The challenge — and opportunity — for the produce industry is to use the assortment of venues, product and data now available to optimize the sales flow. For those who focus and face this future — the opportunity is vast.