Power of produce comes through in space and variety - Produce Marketing Association Fresh Summit 2001 International Convention & Exposition - Brief Article

DSN Retailing Today, Nov 19, 2001 by Mike Duff

PHILADELPHIA - Unlike many trade shows that have fallen on tough times, the Produce Marketing Association Fresh Summit 2001 International Convention & Exposition, held this year at the Philadelphia Convention Center Oct. 26 to 30 continues to thrive, in part because of the strong support of key food retailing executives.

Bruce Peterson, vp of food merchandising at Wal-Mart, said this show was a key opportunity to see a lot of vendors in a short space of time, something that is especially important in an industry where suppliers remain relatively small and diverse, and where personal relationships continue to be important.

"It's always a good show," he said. "It's one of the best weeks of the year in terms of getting things done."

Peterson also noted that the show's educational element is superior; it helps industry participants negotiate the complexities of handling perishable product in a distribution and marketing function, including growers, shippers, distributors, wholesalers and commodity boards.

Peterson, who is on PMA's executive committee, was only one of a host of retailers taking an active part in the show. The show's educational series attempted to develop dialogue on key issues such as space allocation. On this subject, representatives from the Washington Apple Commission, the Mushroom Council, Schnuck Markets and H-E-B, offered perspectives, and category management continues to be a central issue in the produce business. Mike O'Brien, vp of produce at Schnuck Markets, said a commitment to category management principles is critical to dialogue about space allocation. Commitment, he added, has to include follow-through on initiatives and trust when it comes to data sharing. "That's very important," he said.

Bart Minor of the Mushroom Council said, "Information is power, and it works both ways."

Information is particularly critical today as food retailers are developing more sophisticated tools to drive and evaluate performance. Hugh Topper, director of produce and floral for HEB, said space allocation today is being approached with the following elements in mind: customer demographics, efficiencies and merchandising for higher-gross items, higher rings per customer and higher sales through variety and taste attributes. He noted that when HEB introduced a stronger presentation of white nectarines into stores, sales for this higher-gross profit white variety increased from 1% to 34% of sales with only limited cannibalization of yellow fruit. Having good information can give food retailers a better sense of when and where they can introduce effective initiatives and get better returns from the produce section.

"What I'm really talking about is knowing what the customer needs," he said. "It's a lot more difficult to think like a customer than it is thinking about the customer."

As is common at food-oriented conventions these days, a seminar was devoted to independents and small chains trying to survive in a market increasingly thick with supercenters and warehouse clubs.

Jay Roche, vice chairman of Roche Bros., a 12-store independent chain based in Wellesley, Mass., said the personal touch is critical at the store level, as well as with vendors. Roche, who refers to his produce supplier as Uncle Eddy, said establishing a close relationship with vendors helps Roche Bros. secure high quality and unique products to differentiate its assortment from major chains. Independents these days have to pick a specific clientele and cater to its special preferences for assortment and service, while overlapping minimally with bigger operators that are going to win battles based on price. Roche said that independents can compete with the giants, but the new generation of chain retail formats is formidable. "I don't want a supercenter in my back yard," he said.

Jack Clemens, ceo of Clemens Markets, an eastern Pennsylvania 19-unit chain headquartered in the Philadelphia suburb of Kulpsville, said independents can develop specific initiatives that take advantage of in-store talent and local knowledge to meet recognized customer needs for elements like convenience. "You want to make sure you encourage creativity throughout," he said. "We're very interested in selling meal solutions."

The show also included the introduction of PMA's FreshTrack: Supply Chain Management in the Produce Industry report.

The research report noted the produce industry has been experiencing unprecedented consolidation over the past several years, with growers/shippers needing to take a more targeted approach to building relationships with retailers. Driving this process have been attempts by food retailers to operate produce departments using principles and procedures, such as performance guidelines, category management and supply contracts derived from dry grocery. This trend has made operating more complex and, at times, frustrating for suppliers--particularly as buyers substantially update orders right up to the day of shipment. Yet, the new realities require even closer relationships between suppliers and retailers going forward.