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Can Kraft Persuade Retailers To Shift Produce Departments Behind Dairy?
Should Grocery Items Be Marketed In Produce?
Retailers Beware: Consumers Need To Come First!

Sarah Nassauer at The Wall Street Journal wrote a piece titled, A Food Fight in the Produce Aisle, and it was subtitled, “Since Fruits and Veggies Have ‘Farm Fresh’ Image, Other Groceries Want to Sit Alongside Them.”

Supermarkets, trying to redesign their stores amid increasing competition, are confronting a growing truth: Packaged-food manufacturers want to sit next to the lettuce.

Packaged-food manufacturers that make products like cheese and juice hope to cozy up to colorful and fragrant tomatoes, apples and pumpkins — in some cases fundamentally changing traditional store layouts.

The produce section has become the equivalent of the popular kids’ school-lunch table. The area is increasingly located near the supermarket entrance, so every shopper passes through it. And stores are finding that consumers consider even packaged foods placed there to be fresher and higher quality — researchers call this a ‘halo effect.’

But some grocers are grumbling, wanting to keep packaged goods from invading the produce section, which they say gives them ‘freshness credibility’ that distinguishes them from the competition, such as warehouse clubs and convenience stores. With limited space, grocers are most likely to display fresh, high-margin items in the produce section.

None of this is new and has only a bit to do with the placement of the department. By virtue of the perishable nature of fresh produce, almost all shoppers have to go through the department to replace their home inventory. That is not true of, say, the snack food aisle.

Thus it has long been known that almost everything sells better in produce. We’ve been involved with stores that have put an item such as pistachio nuts in produce and seen more than ten times the sales they get in snack foods.

The way we see it, the article and accompanying video — you can watch it below — conflated several different ideas.

First, is the move to copy Wegmans and group fresh produce, bakery, prepared foods, specialty cheese, deli etc., in a kind of fresh and gourmet marketplace. This is a response not to manufacturer pressure but an attempt to both elicit a sensory response from consumers and satisfy the way they think and shop.

Second, is the placement of non-produce items that need refrigeration in the produce aisle. Vegetarian soy-based products and refrigerated salad dressings, as well as the explosion of fresh juices, fall into this category. Although one could put them elsewhere, this is a pretty logical place. Would you want to put vegetarian cuisine in the middle of the meat case?

Third, is an effort, apparently being pushed by Kraft, to move dairy to the front of the store. Obviously stores can always be redesigned, and one can certainly imagine incorporating many dairy products in a fresh food marketplace format or department. But dairy doesn’t have the high service level of the other fresh food departments, and some of its products — such as cheese – are duplicative of the deli offers.

Packaging is typically not farmstand-oriented, although that could change. In any case, putting dairy front-and-center would surely help dairy sales, but we are not aware of any research that shows it would boost overall store sales. Whatever is gained in dairy would typically be lost in other departments plus more.

None of these points, though, really relate to the headline, which is talking about putting non-produce items in produce.

A quarter-century ago there was a lot of non-produce items in produce. Fireplace logs, candy, bird seed, etc. — mostly put in on guaranteed sale. Retailers such as Harold Alston at Stop & Shop, Bob DiPiazza at Dominicks and Dick Spezzano at Vons led an effort to get rid of that stuff and make the department a refuge for fresh product. 

In general, the rule became that top operators only sold non-produce in the produce aisle when it contributed to selling fresh. So this was cross merchandising — short cakes and Cool-Whip next to the strawberries or things such as guacamole mix, that were useless unless the consumer bought a bunch of avocados.

In recent years, specialty cheese has become a popular item to cross merchandise with fresh produce. To stay on top of this world, you can get a subscription to Pundit sister publication, CHEESE CONNOISSEUR, right here.

Lots of vendors try to get products in produce. High traffic driven by the perishable nature of the product, the halo effect of association with fresh produce and the general absence of slotting fees all make it prime real estate. Most retailers are smart enough to know that if they start carrying lots of non-fresh items in produce, the department would lose the very attributes that make it so appealing.

The bottom line is that consumers have to come first. What consumers want is a cornucopia of fresh foods. Any store that puts plastic tubs of cottage cheese up front or clutters up the produce department with unrelated goods is being driven by something other than consumer demand. That is a recipe for ruin.

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