Pundit Interviews

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Perishable Pundit
P.O. Box 810425
Boca Raton FL 33481

Ph: 561-994-1118
Fax: 561-994-1610



Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur

Will Meijer Be In Tesco’s Sights If
It Succeeds With Fresh & Easy Format?

As Tesco prepares to enter the US market, if it finds some success, a logical question to ask is: “What will Tesco do next?”

Well, without a doubt, Tesco will continue to expand its small footprint concept. We know it has already signed several leases in the San Francisco Bay area and needs to build many more stores within range of its distribution center to efficiently utilize its enormous size.

We also suspect it will have to open many new stores because we think it will likely close some. Anyone who opens this many stores this quickly is not waiting around for primo real estate, so it has taken some marginal sites. Some won’t make it.

It also has taken a diverse set of sites in various ethnic and demographic areas and will learn that its concept won’t work with some of these areas.

Still if it has success, Tesco will certainly try to roll out its Fresh & Easy Neighborhood Market concept as fast as it can.

But it will find itself blocked as other supermarkets roll out their own versions of Tesco’s stores.

Tesco, though, is big, with enormous ambition and, in other markets it typically operates a range of concepts. We suspect if it has the slightest success it will want to quickly move into other concepts.

Most especially, it will want to compete with its arch-rival Wal-Mart in the supercenter arena. Yet because of the difficulty of getting zoning approval to open these stores, it will want to do an acquisition and, in the supercenter business, the only independent option left is Meijer.

So we will issue a Pundit prediction that Tesco will offer to acquire Meijer.

There have been discussions of this in years past. Especially when Meijer’s one-time President Larry Zigerelli resigned suddenly.

This time, however, things may be different. On Tesco’s side, its move to America is now a certainty, not an aspiration. It may make them willing to pay up for this opportunity.

On the Meijer side, the company has felt the increased burden of competing with Wal-Mart and realizes that every penny made will now be paid for with very hard work. Without outside capital, this family-owned business — Forbes ranked it as #10 in America in 2006 — will have difficulty expanding. They may see this as an opportunity to cash out while also being the best thing for the business.

Of course, others may also have interest in Meijer. Kroger owns the Northwest-based supercenter chain, Fred Meyer. If Kroger acquired Meijer, it could have a supercenter concept strong in both the Northwest and Midwest and be in a real position to roll out a more competitive threat to Wal-Mart.

But the Meijer family has competed against Kroger and not against Tesco. Meijer is an old Dutch family and the Dutch and British have been allies before. Maybe one more time.

Woolworths Supermarkets In Australia
Promotes Kids’ Produce Consumption

When little Nick comes home from school, he likes to make himself a pretty cool Celery Man. Check it out right here.

A most artistic young Emma gives her Mom “a hand” by preparing for herself a five-fingered snack with fresh produce and cheese. You can see how she does it right here.

Ryan is an aspiring aeronautical engineer and enjoys building a “Fruit Rocket” that winds up in the “black hole” of his own appetite. Sure looks like a lot of fun, and you can see how he does it right here.

Nick, Emma and Ryan are the child characters who star in a series of TV commercials running in Australia promoting increased childhood consumption of fresh foods. The commercials also serve to reinforce the positioning of the Australian supermarket chain, Woolworths, which has long billed itself as ‘The Fresh Food People’.

The Pundit goes back a long way with Woolworths, as many years ago, just as Woolworths was beginning to buy direct, it kindly brought the Pundit to Australia. We keynoted for the Australian United Fresh in Newcastle under the chairmanship of Arch Martin — still consulting today.

United used to be the major trade organization in the Australia trade. During its conference, we were inducted into the “Cuckoo Club” and gave a series of speeches and workshops including several each for both Coles Group Limited and Woolworths Supermarkets. Our real purpose: To help reassure wholesalers that direct buying need not be the end of their businesses. In effect, we were telling them how U.S. terminal markets had evolved in the face of direct buying by retail.

Since that time, Woolworths has grown exponentially and become the overwhelmingly dominant player in the trade. Its leading competitor, Coles, has struggled and its shareholders will be voting on November 7 on a takeover bid. As Woolworths has grown, its focus on ‘The Fresh Food People’ image seemed to dissipate — although it never dropped the slogan.

When we heard about the TV campaign, and its focus on kids and fresh foods, we asked Pundit Investigator and Special Projects Editor Mira Slott to see what else we could learn.

Mira first spoke with Michael Batycki, Senior Business Manager, Fresh Produce at Woolworths and an important member of both PMA’s Retail Board and the Australia/New Zealand Country Council. Michael was kind enough to introduce us to the key contact on the Woolworths Fresh Foods Kids initiative, and Mira discussed the program with him:

Luke Dunkerley
General Manager Marketing
Bella Vista, New South Wales, Australia

Q: Woolworths’ logo and brand positioning slogan, ‘The Fresh Food People,’ seems the ideal segue to introduce a Fresh Food Kids campaign. How did the idea come about?

A: About 20 years ago, Woolworths Australia, which had been in the market for many decades, was going through a tough time and was much weaker than its competitor. Those running the company back then decided to position the company as ‘The Fresh Food People”.

Wisely they thought if they make fresh food the core of Woolworths, that promise would be consistent with what most people wanted when they shopped for food. People will buy a lot of packaged food, and fresh is not necessarily reflected in their consumption, but they want the company to know fresh food.

The line ‘The Fresh Food People’ appears with the Woolworths logo in stores, and advertising, on distribution trucks, you name it. The meaning of the slogan started to slip away and the company’s focus too. Six or seven months ago, I joined the company. I wanted to bring back the meaning behind the slogan, the meaning behind ‘The Fresh Food People’.

With the backdrop of childhood obesity and health and nutrition issues, political debate was escalating about whether or not there should be regulations around advertising during kids’ T.V. hours. That’s really how Fresh Food Kids came about. We thought we should take a stand and forget about the legislation outcome. We said let’s go ahead and create a program with an ad campaign at the center.

Q: What was the essence of the campaign and the tactics you decided to employ and why?

A: The strategy was to fight fire with fire, teach eating fresh foods as attractive to kids rather than in the typical patronizing and motherly way — this is what you should do. We thought kids should do the talking; relaying how much fun they have with produce and some with dairy, since we certainly want to put out a balanced message. In the original commercials, you see a lot of fruits and vegetables, in another ad yogurt and some cheese sit alongside the produce.

Q: How long does a program like this take to conceive and implement? It sounds like you moved at a fast pace from conception to full-fledged campaign. In the U.S., at least, a retail marketing program idea at a 750-unit chain could get bogged down in bureaucratic red tape, cost/benefit analysis and differences in tactical execution.

A: We decided to do it quickly, so it only took six or seven weeks. Sometimes you have things that just seem right and are not coming directly from a business brief. There is universal agreement that the time is right for a program focused on encouraging children to eat healthy. In the U.S, childhood obesity is a problem running out of control, but the problem has grown on a global scale.

We have a reason as ‘The Fresh Food People’ to take a stand. We also are the largest retailer of fresh food in the country. This program wasn’t coming out of cyclical company business reports. Lines of approval were much shorter than normal. I got the support of the director of supermarkets.

This is one of those initiatives that just felt so right to everyone concerned, so it was easy to turn around the idea into a program with solid execution.

Q: Could you provide more detail on the different components of the program and ultimate goals it hopes to accomplish?

A: Once the plan was finished and the material was ready to air, senior level members of the board saw huge value in it for building and reinforcing the reputation of the brand name, as much as for what it would do to help children’s consumption of produce and other healthy fresh foods.

We launched the campaign with three T.V. commercials and a pretty comprehensive website. We didn’t have to create or gather much new material for this site; like most markets we had already done work in this area but hadn’t been aggressive in sharing it with consumers. We work with a nutritionist who writes for us, and we carry two magazines with pictures of kids eating healthy. Sometimes we have the material but haven’t really harvested it.

The T.V. ads are out in front of the campaign saying, ‘Here’s what Woolworths believes.’

The basic formula is if you want children to eat well, you’re up against companies and markets with the goal of getting them to not eat well. You don’t want to take the nanny approach because you never really capture kids by doing that. You have to talk to them at the same level as McDonalds and Coke, which are very experienced at talking with children. The key is to let the kids do the talking.

Q: Who is your target audience? You mentioned the ads running during kids’ T.V programming but are there other times the ads appear? Most companies focus on the parents, and usually the mother, since she’s usually doing the shopping and getting the final say on product purchases, albeit children can be quite forceful participants in steering the shopping cart.

A: We have two distinct audiences; the kids themselves — we want kids to actually want to eat produce — and the other audience is the parents. Ads run during the kids’ T.V. hours but also appear at other times of the day to accommodate various program scheduling, including prime time. We believe the parents need to see we’re encouraging kids to eat well. At the end of the day, the best we can do is encourage parents to buy the fresh produce.

Q: In addition to the T.V. commercials and website, what kind of in-store marketing and merchandising are you doing to promote Fresh Food Kids?

A: We’ve created a sub-brand called Fresh Food Kids. We have a Fresh Food Kids sticker that we put on packages of produce. Stickers in the shapes of pieces of produce say I’m a Fresh Food Kid. We have created the impression of the ad campaign in the store. We have large adhesive posters on the floor and are also doing point-of-sale material. At our checkouts, we also highlight the slogan.

Q: How does your promotion of all things fresh and healthy gel with your wider food selection?

A: These are all the marketing tricks used by the fast food people. We won’t get to the kids as an industry unless we start employing some of the same techniques as junk food marketers. The biggest hope is to shift the balance a bit. We’re not seeking to put the fast food business out of contention. The goal is to substitute a bit of fresh food for a bit of fatty food in the diet. We don’t seriously believe any kid should live by carrots alone. We’re a supermarket. We still sell chips and soft drinks.

The great danger is to say to people, ‘You have to eat vegetarian.’ It turns them off altogether. If you take the soft approach, it’s not a revolution. We thought about this.

It’s not just about biting into a raw piece of celery. We do think we should make it fun.

The technique is based on the learning we’ve had. Kids are much more likely to eat food if they have a hand in preparing it. It creates pride and ownership. So far I’m very happy that there has been nothing but positive feedback on the program.

Q: In terms of age groups, are you primarily sticking with the younger, more impressionable elementary school kids, whose eating habits haven’t been solidified yet?

A: Kids least likely to be influenced to change eating behaviors are teenagers. The kids in ads are from five to about eight. Once in their teens, they ignore our commercials. We haven’t tackled that challenge yet. Particularly when it comes to teenagers, a lot of their lifestyle is focused on fast food outlets when they’re out of the home. In Australia, like in the U.S., teenagers want to hang out with their friends. We believe the way to tackle this obesity problem is to get to work on the smallest children and the parents of those children and set habits very young.

Q: Is there any way to assess results of the program? Are you conducting any studies to quantify success?

A: Based on the history of our brand position, this campaign is particularly appropriate for Woolworths because we’ve been calling ourselves ‘The Fresh Food People’ for 20 years. It’s only going to help our brand. Bottom line is if you can’t make a business case, that’s where these things fall apart.

We do ongoing tracking of our brand as representing the fresh food source. We don’t track our contribution specifically to kids’ nutrition, but we might see a positive response that could be linked to the Fresh Food Kids program. One of the questions we ask is: ‘Do we care about our customers?’ We hope that measure would improve.

We could make just as much money selling Coke as apples. In fact, fresh food is a pain in the neck, harder to transport, has a short shelf life, and when product goes bad you have to throw it away, which leads to more shrinkage.

We could have just done another campaign on hard groceries. But we chose to encourage people to eat green groceries. We don’t say, ‘Eat more fresh fruits and vegetables from Woolworths.’ We say, ‘Eat more fresh fruits and vegetables.”

They could go elsewhere besides Woolworths to buy them and not actually visit our stores, but it reinforces our overall position, and in the end we are the biggest retailer so anytime fresh produce consumption increases, we benefit.

Q: How unique is this program in your marketplace?

A; It’s very heartening for me, the amount of very positive support at the top of the company for this. Twenty years ago, Coles was double our size. An interesting byproduct came out of this phenomenon. Woolworths’ internal culture of being the underdog has found itself being the biggest brand. Companies often thrive as the challenger, then they don’t know what to do next.

Becoming the dominating brand in the marketplace requires a cultural shift in the company. We know we need to show we are capable of being a leader to ensure Woolworths as a leader in the marketplace. The childhood obesity problem is a universal problem. We could do a campaign restricted to Woolworths but, generally speaking, kids should eat fresh food, with or without our logo. Being a part of such a good cause also is important psychologically for a company’s employees.

Q: How long will the program run? What are your future plans?

A: The ads have been going for more than two months now. In terms of T.V., we’re going to give a boost to the campaign at the beginning of every school term. It seems to me from observation that these time frames are good in terms of the mindset of the customer, where people make resolutions. We can do these four different terms in Australia in a given 12-month year. Four times a year, the kids come back from holidays. That’s the time when parents are most likely to see the message and act on it.

Woolworths is a company rich with history, as you can see here and here. To answer the question most Americans ask: No, Woolworths was never related to America’s F.W. Woolworth Company, the famous “Five and Dime” — although the initial stores carried similar lines, the actual name was chosen on a dare:

Woolworths opened its first store, the Woolworths Stupendous Bargain Basement, in the old Imperial Arcade in Pitt Street, Sydney, on 5 December 1924. Its nominal capital was just £25,000 and although 15,000 shares were offered to the public, only 11,707 shares were subscribed for by 29 people, including the five founders — Percy Christmas, Stanley Chatterton, Scott Waine, George Creed and Ernest Williams. The name on the draft prospectus drawn up by Cecil Scott Waine was “Wallworths Bazaar” — a play on the F.W. Woolworth name (the owner of the Woolworth’s chain in the United States and United Kingdom). However, according to Ernest Robert Williams, Percy Christmas dared him to register the name Woolworths instead, which he succeeded in doing after finding out the name was available for use in New South Wales. Accordingly, Woolworths Ltd in Australia has no connection with the F.W. Woolworth Company in the United States.

Perhaps the transformative moment in its food efforts was its acquisition of Safeway’s 126 stores in Australia in 1985. Safeway received a 19.9% interest in Woolworths, which it surely must wish it still owned today.

Woolworths, though, has always been a leader. In 1926 it was the first store of its type in the world to use cash registers that printed a receipt for the customer. And its positioning in 1987 of itself as ‘The Fresh Food People’ was far more difficult than just coining a slogan:

In 1987, Woolworths launched the ‘Woolworths the Fresh Food People’ campaign following a stringent review and implementation of new buying, merchandising and training programs in each of the fresh food departments. This ensured that Woolworths could reliably provide the freshest food and the best range at the lowest prices. The focus on fresh foods clearly differentiated Woolworths from other supermarkets and has remained the key philosophy in Woolworths supermarkets.

Now Woolworths has introduced its “Fresh Food Kids” program and a few things make it particularly interesting:

  • Woolworths has chosen the high road if you will by focusing on the end result — getting kids to eat more produce — and not specifically urging people to buy at Woolworths. Of course, this attitude is easier to sustain when you have a dominant market share.
  • The chain decided to try to preempt legislative action by getting out in front of the controversy over childhood obesity and doing the right thing.
  • Executives at Woolworths recognized that in this case they could do well by doing good… in other words they could enhance the image of Woolworths as ‘The Fresh Food People’ while also helping to encourage children to eat the good stuff.
  • They cleverly avoid the “nanny” approach and talking down to kids by letting children speak in the first person on the TV commercials.
  • Woolworths acknowledges that the program is ineffectual with teenagers. So there is a need for more work to be done on this important age group.
  • The program works on two separate leveld — partially aimed at kids, partially aimed at parents. This happens both through the scheduling of the TV commercials and the sections on the website that include both fun and games for kids and nutritional advice for kids but delivered to adults.
  • The campaign flows both in-store with a special sub-brand and over the web and on television.

What we like about the program is both that it avoids the asceticism of some approaches while incipiently encourages an “eat quality food” concept. We suspect that when kids get older, the only way to really change things from an eating perspective is to encourage the appreciation of quality food.

We can’t imagine teenagers ever turning away from fast food because they are told that it is not healthy, but we certainly can imagine them turning away because they want something better and higher quality.

A few things we hope Woolworths will work on:

  • We would like to see some research specifically addressing whether the program is altering purchasing and consumption. With access to historical scan data, Woolworths has the ability to do this relatively easily.
  • The fun part is great but probably limited in its ability to be integrated in real life. We can’t say definitively how things are in Australia, but the Jr. Pundits — ages 4 and 6 — have busy lives and between sports, music classes, enrichment after school, religious instruction, play dates and other programs, there is a very limited window for actually making all these fun things like fruit rocket ships and fresh food hands and celery man.
  • We actually wonder if Woolworths couldn’t sell fresh-cut packages that have all the ingredients pre-cut to do the things suggested in the commercials. In one of the TV commercials Emma speaks of her mom being appreciative when she does it all herself — but a child her age can only do it herself if someone already cut all the items up.
  • If Woolworths continues to integrate other fresh food items, such as whole grain breads and lean proteins, into the produce and dairy of the existing campaign, it could begin to focus on the quality and flavor of these foods. This might be an approach that can start reaching up a bit older. A focus on the quality of fresh foods may be more sustainable than the fun and games.

The challenge for society, of course, is that obesity is a big problem and this type of effort, as Luke Dunkerley points out, is only aiming to “…substitute a bit of fresh food for a bit of fatty food in the diet.” This means this won’t solve the problem.

But that may be too much of a burden to place on any supermarket which, after all, sells many products. That they have selected out fresh ones to promote is something for which we should all be appreciative, and if it happens to nudge consumption in the right way among little children, so much the better.

When he discussed the Food Dudes program here, here and here, we were able to salute a program that was being scientifically evaluated and integrated in school curriculums. That probably isn’t the future for a private, branded effort.

Still, the Woolworths effort can do some good, and we hope some American supermarkets pick up on the idea.

Many thanks to Luke Dunkerley and Woolworths for sharing their efforts with the broader, worldwide industry and much appreciation for making fresh produce and the broader fresh food field the centerpiece of your efforts.

Will Fresh Industry Foot Bill If Frozen/Canned Uses More Matters Logo?

Does the fresh produce industry need its own promotional agency? This is one of the questions that is raised as the Produce for Better Health Foundation came out with an announcement that both Safeway and Schnuck Markets are going to use the Fruits & Veggies — More Matters logo on their private label canned and frozen products:

Fruits & Veggies-More Matters Logo
To Appear on Safeway and Schnuck′s
Private Label Frozen and Canned Products
US Retailers Work with PBH to Increase Fruit and Vegetable Consumption

Produce for Better Health Foundation (PBH) is pleased to announce that Safeway Stores, Inc., Pleasanton, CA, and Schnuck Markets, St. Louis, MO, are the first grocery retailers in the nation to make a commitment to including the Fruits & Veggies-More Matters logo on a wide assortment of private label frozen and canned fruits and vegetables.

The first packages of qualifying frozen fruits and vegetables offered under the Safeway brand label are now beginning to show up in freezer cases of Safeway’s stores from coast to coast.

In St. Louis, Mike O’Brien, Vice President of Produce at Schnuck Markets, and the current chair of PBH, said that his company’s decision to redesign their private label packaging initiated the inclusion of Fruits & Veggies-More Matters. “I knew that our private label people were making a label change and suggested that we consider including Fruits & Veggies-More Matters wherever possible,” O’Brien said. “The next thing I knew, they were showing me samples of canned vegetables sporting the new logo. I thought it was great!”

PBH President, Elizabeth Pivonka, stressed that while the Foundation’s old “5 A Day” program always included canned, frozen and dried fruits and vegetables, as well as 100% juice, a more concerted effort is being made to include all forms as one of the core messages within the new Fruits & Veggies-More Matters public health initiative.

”Our research shows that consumers feel relieved to know that these other forms of fruits and vegetables ‘count’ as part of their daily consumption,” she said, adding that PBH was acknowledging consumer concerns over convenience. “If all Mom has the time for at dinner is to open a package of frozen broccoli and zap it in the microwave, then that’s great,” she said. “Her family is still getting a nutritious side dish.”

Bryant Wynes, PBH Senior Executive of Retail Marketing, said that a few other retailers have contacted the Foundation about including the Fruits & Veggies-More Matters logo on packaging, but none have yet to make the commitment to include private label to the extent that Safeway and Schnuck’s have.

“It’s growing,” he said. “Many retailers are now including the logo on private label fresh produce. Meijer has added the logo to their private label dried fruit packaging.” Wynes noted that interested retailers should first contact him before adding the logo to produce packages. “Unlike fresh produce or 100% juice, not every frozen or canned fruit and vegetable will qualify to use the new logo,” he said. “Our associates at PBH can evaluate each product’s ingredient panel to make sure that item meets our ‘products promotable’ criteria as outlined in the Fruits & Veggies-More Matters license agreement.”

This is actually great news from a public health standpoint. There is no evidence that, for example, frozen produce is less healthy than fresh, so PBH as a non-profit organization dedicated to enhancing the public health, should champion the consumption of produce in all its forms.

It is a win for retailers as well. Schnuck Markets and Safeway are leading-edge in this — they recognize that they can capitalize on the endorsement of the “More Matters” message by public health authorities to sell more canned and frozen items.

And the truth is it is a real win for consumers — in fact from a consumer perspective it is more important that canned and frozen produce carry the Fruits & Veggies — More Matters logo because, unlike with fresh items, with canned or frozen, the logo actually gives out valuable information.

If the frozen vegetable medley is drenched in butter sauce and salt, it won’t qualify to carry the logo, so with frozen and canned goods, by looking for the logo consumers can actually trust they are getting healthier versions of canned and frozen foods.

So it is a win for consumers, for retailers, for the public health… but is it a win for the fresh produce industry?

Well, certainly putting the logo on more items will increase the number of exposures that consumers gain of the logo, but it is also true that seeing the logo on canned and frozen foods may create an image of equivalence that is simply not in the interest of the fresh produce industry.

The statement by PBH is telling; it quotes Elizabeth Pivonka, PBH President:

“Our research shows that consumers feel relieved to know that these other forms of fruits and vegetables ‘count’ as part of their daily consumption,” she said, adding that PBH was acknowledging consumer concerns over convenience. “If all Mom has the time for at dinner is to open a package of frozen broccoli and zap it in the microwave, then that’s great,” she said. “Her family is still getting a nutritious side dish.”

Elizabeth is 100% correct. Consumers will be relieved to learn that canned and frozen are “great” to serve their families.

The question is whether the fresh produce industry wants to teach them this?

We suppose that one could use this as a lever to build a much larger, better funded, PBH. Right now the funders of PBH skew heavily to the fresh industry, so Del Monte Fresh is on the board of trustees, but Del Monte Foods, selling canned vegetables, is not.

If we can get Birds Eye and Heinz and the private label packers who pack for retailers and the many other producers of canned and frozen produce to ante up and join PBH with substantial contributions, maybe the enlarged budget could make the program more effective and a rising tide would lift all boats.

Perhaps… but this seems like a stretch, especially with the actual production of these items increasingly moving offshore.

The bottom line is that a consumer deciding to eat frozen broccoli is not an acceptable outcome for a fresh broccoli marketer. Frozen broccoli is the competition.

In fact, one of the major constraints on private brand marketing of new recipe and usage ideas is that, regardless of a company’s fresh market share, consumers may just use frozen product to make the suggested dishes.

Nobody is doing anything wrong here. It is PBH’s responsibility as a public charity to do all it can to help public health.

Yet the whole notion of promoting frozen and canned produce raises the issue of whether the fresh produce industry doesn’t require its own marketing arm.

There was a time when processing was primarily a byproduct of fresh production — turn the lower quality apples into apple sauce — but the world has changed. To use broccoli as an example:

The majority of fresh broccoli consumed in the United States comes from domestic production, with less than 10 percent of consumption coming from imports in 2004. However, over the last two decades, the percentage of consumption of processing [canned and frozen] broccoli produced domestically has decreased. In 2004, 80 percent of processed broccoli consumed in the United States came from imports compared to just 10 percent in 1980 (Figure 6). The majority of frozen broccoli imports come from Mexico, with a smaller amount entering from Guatemala. In 2004, the value of imported (fresh and processed) broccoli amounted to $206.5 million, making the United States a net importer of broccoli overall. The United States has come to rely largely on frozen broccoli imports because production of frozen broccoli florets is labor intensive and U.S. labor costs are higher than in other countries. In particular, Mexico’s low cost of labor has allowed Mexico to provide the majority of both fresh and processed imports to the United States, accounting for 74 percent of total broccoli imports in 2004. Guatemala was the second largest source, accounting for 14 percent of total imports, the majority of which consists of frozen broccoli.

In effect the fresh U.S. broccoli industry is in a battle with the imported frozen industry. Okay, PBH has to emphasize nutrition and promote all. Enhancing public health is still a worthy cause and, perhaps, everyone will want to support it to at least some extent.

Yet surely it is true that the US producers and marketers of fresh broccoli are going to want to have someone on their side giving reasons why it is preferable to consume fresh.

If PBH can’t do that — and it probably can’t — we probably need another advocate just for the fresh industry.

Pundit’s Mailbag — Wal-Mart Lacks
Store Level Produce TLC

The quality and food safety standards of a producer are often dictated by its clients. So if you specialize in export to British supermarkets, with their rigorous standards, you usually know a thing or two about quality.

So we were intrigued to receive this letter following up on our series on Wal-Mart and quality:

I just read your article about the quality of produce at Wal-Mart.

I am an apple farmer from the Hudson Valley region of New York and when they purchase product they require high quality specs. Then when I shop in their stores, the produce is terrible. It has about two days life span when I get it home.

The quality of bananas varies greatly. The displays of the produce are terrible also. It is the store level that needs improvement.

It always has been when it comes to the supermarkets. They receive top quality produce, and then they destroy it when it comes to the stores. It is not stored properly or displayed correctly with refrigeration.

— Helene Dembroski
Dembroski Orchards Inc.
Plattekill, New York

We’ve been running a series on Wal-Mart. Most recently we ran Is Wal-Mart Foolish For Focusing On Small Savings? This piece focused on whether Wal-Mart’s and other’s efforts to import directly weren’t attempts to save pennies at the risk of quality.

Prior to that we ran, Wal-Mart’s Global Procurement Division Gets Special Pass On Quality, which analyzed acceptance procedures for product Wal-Mart imported itself versus that supplied by U.S. importers.

This particular discussion was kicked off with our piece, High Lettuce Prices Strain Supplier Relations With Wal-Mart, and then followed up with an article we called, Wal-Mart Tightens Quality Specs.

We also heard from a Wal-Mart vendor and used his letter in a piece we called, Pundit’s Mailbag — Wal-Mart’s Path of Decreased Store-Level Execution. And all of these pieces built on a series we ran some time ago that concluded with an article entitled, Wal-Mart’s ‘Opportunity Buy’ Policy Reveals Much About The Company.

Helene, though, calls a spade a spade by pointing out that in today’s world where grade standards are available and most retailers buy tough standards and kick anything that is compromised at all — when we find poor quality produce being presented to consumers, it is usually due to poor store level execution.

Wal-Mart is worse on this criteria than most supermarkets. Why? First, rapid expansion strains management. How many great managers does any company have?

Surely one of Tesco’s big challenges as it rolls out will be how does it suddenly pick up thousands of great store-level employees? It is almost impossible.

Second, Wal-Mart has special challenges because it does not have a food-centric culture. Meijer does a better job at store-level because it is a grocery company that has come to handle general merchandise. Wal-Mart is a general merchandise discounter that now handles food.

Wal-Mart doesn’t have the store-level expertise in fresh produce and it doesn’t have the systems that give produce the TLC it really requires.

Those who attack Wal-Mart on grounds that its merchandising isn’t innovative enough have it almost precisely wrong. The key criteria that a produce executive at Wal-Mart must always consider is not if a proposal is appealing to consumers; it is simply this: Is this scalable?

Wal-Mart has slowed down its domestic expansion. If it uses the breather to focus on enhancing store-level execution, it will be a very profitable pause. If it does not, it will continue to struggle, and produce procurement will be pushed to impose even tougher standards with no consumer gain at all.

Many thanks to Helene for sharing her experience.

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