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A group of mid-sized retailers were surprisingly
candid as to their needs and wants during
a retail roundtable discussion held in conjunction
with the United Convention & Expo,
held in Long Beach in February.
As part of the United Produce Marketing
& Management Conference, produce executives
from four retailers discussed numerous topics
in relation to the topic of the day, which centered
on the theme of high value produce.
Earlier in the program, four grower-shippers
discussed their efforts in promoting their particular
item, which each has identified as a superior
product to the norm.
The four retailers present varied greatly in
size from the 16-store Gerland’s Food Fair Inc.,
in Texas to California’s own Raley’s chain and
Harris-Teeter of North Carolina, both of which
have about 150 stores. Rick Noeth represented
Gerland’s, while Raley’s and Harris-Teeter’s
spokesmen were Greg Corrigan and Mark
Hilton, respectively. Also involved in the
roundtable discussion was Mike Giza of Big Y
Foods, Springfield, Mass., a chain of 47 stores.
Since most of the day’s discussion had revolved
around value-added and high value
products, those were the main topics of discussion
for the retailers. These retail experts agreed
that they were looking for innovative products
in the produce department, and each were on
the lookout for items that could help differentiate
themselves in their marketplace. They differed,
however, on what level of commitment
they were willing to give to a new product.
Corrigan understands that a new product
may not be fully developed when it is presented
to him, but if he can get it first, he is
willing to work with a shipper to test market
the item.
Noeth said before he handles a new product
he wants it to be fairly far along in the development
phase. He said the shipper should
be able to commit to supplying the product for
the long term, such as one year. The retailer
laughed when an audience participant asked
him if he was also willing to commit to carrying
the product for one year. But he did say he has
reasonable expectations and knows that a new
product needs time to build sales.
Hilton said this his chain is encouraging
shippers to develop new products with a customer
focus as that is the direction that Harris-
Teeter is moving. To differentiate themselves
from their competitors, he said the chain is focused
on improving the shopping experience
for their customers. This involves giving the
consumer what they want such as always instock
items, convenience, clean stores and
friendly, knowledgeable associates.
Giza pointed to the newly-developed personal-
size watermelon as a great new product
that is consumer-focused and retailer friendly.
He said the size caters to consumers and saves
retailer the costly back-room labor of slicing
watermelons.
Discussing the ever-changing retail landscape,
Noeth said for his relatively small chain
he fears large independents more than a Wal-
Mart. He said his size allows him to do things
better than Wal-Mart and some of the other
large chains. In fact, Noeth claims his chain
has grown by taking over failed markets of the
giant retailers over the years. He did say, however,
that the company has shifted to a couple
of different formats in specific regions to compete
on a price basis with the lower-priced larger
stores.
Giza admitted that he can’t compete with
Wal-Mart on a price basis, so he doesn’t try. “We
want the customer to have the best fresh experience
possible and we accomplish this through
lots of little things.” Toward this end, he said
Big Y has an extensive training program for its
in-store clerks. He wants a highly knowledgeable
staff that can communicate effectively with
the consumer and set his store apart. In an
effort to be the “freshest store in town” Big Y
has instituted a seven day a week delivery sched-ule for its fresh produce. Giza said this has given
the produce manager the “ultimate tool” in delivering
top product to the consumer.
The retailer discussion followed presentations
by a number of shippers on what was
called “high-value” produce items. This category
was loosely defined as a product that is above
and beyond the “commodity stage.”
Bruce Axtman, president and CEO of The
Perishables Group, led off the discussion reviewing
the industry and the opportunities that are
available for creating value in the produce industry.
Axtman said that the commodity-based
model that has been ruling the produce industry
for decades is less and less rewarding. It is
difficult to find a product sold on a bulk commodity
basis that is realizing good returns on a
year by year basis. He said there are fundamental
changes occurring in the produce industry
that necessarily lead to the introduction
of new products and a new way of doing business.
Fewer and fewer buyers have driven the
price of most commodities down to unprofitable
levels. The forward-thinking companies are
developing higher value products that cater to
specific consumer wants. These products attempt
to create points of differentiation, which
allow for increased value, and ultimately, a
higher price.
Following Axtman to the podium were
four marketers who believe their individual products
fit this definition.
Kevin Donovan of Phillips Mushroom
Farms, Kennett Square, Penn., explained how
his company has moved out of bulk white button
mushroom and into exclusively marketing
specialty mushrooms. Today the company concentrates
its efforts on the higher value items
such as portabellas, criminis and shiitakes. The
firm has created a number of new value-added
items such as a package of sliced shiitakes and
a sauce mix.
Donovan explained that the categories of
mushrooms it is now selling are the higherpriced
items and tend to be consumed by the
higher-end consumer. The company has developed
promotional materials for this group
and is continuing to develop new products for
this niche market. This experience has led
Donovan to believe that to grow a new category
you have to be “innovative, with innovative
products, innovative packaging, innovative
marketing, innovative promotions and innovative
partners.”
California Oregon Seed Inc., Bakersfield,
Calif., has attacked the high value market by
developing a new proprietary potato seed variety.
The company has kept exclusive control of
the seed and established a marketing company
and a brand identification to sell the product.
Amanda Campbell of Discovery Gardens, a subsidiary
of the seed company, said the Sierra Gold
potato is a cross between a russet and a Yukon
Gold, with the hearty skin of a russet and the
rich, buttery flavor and color of a Yukon Gold.
The company has developed a packaging
strategy which it believes is unique and
started test marketing the item in a few California
markets. Campbell said the results have been
very encouraging and the firm is on-target for
an expanded roll out, complete with an accompanying
promotion program.
Another seed company with an innovative
story to tell is Syngenta Seeds. Along with
production, packing and marketing partners,
the company has formed a new brand called
Dulcinea. The Dulcinea promise is to produce
a brand of fruits and vegetables that deliver “the
ultimate eating experience every time.”
Jennifer Armen-Bolen discussed the
partnership’s first product which is the Pureheart
watermelon. This personal-size seedless watermelon
has been developed as a new product
in the watermelon category. Initial marketing
this past year has proved very successful. Armen-
Bolen said 74 percent of consumers surveyed
said they plan to purchase once or twice per
month and 90 percent said the quality and taste
exceeded their expectations. The partnership
is planing on marketing a number of items under
the Dulcinea brand.
The final speaker with a new product to
offer was West Mathison of Stemilt Growers, Inc.,
Yakima, Wash., which is one of the main players
behind the new Cameo Apple Marketing
Association. The Cameo is a new apple variety
that Mathison said offers superior flavor and size
and is particularly promotable late in the season.
The forecast is for production to continue
to increase at a rapid rate over the next few
years.
Currently, the apple category is fairly
crowded as a number of new varieties have
been introduced over the past 10 years. Consequently
Stemilt and other grower/packers got
together and devised a new marketing strategy.
Combining about 60 percent of the volume,
the group created a brand identity for its
packers and target marketed the new apple.
Mathison said the group created a “factbased
selling” concept that gave the retailer “a
road map for success.” He added: “We identified
the right consumers, the right time, the right
stores and right price.”
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