"Let's Move" Fresh Foods | NACS – Magazine – Past Issues – 2011 – December 2011
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"Let's Move" Fresh Foods

By Chris Blasinsky

It’s not the most lucrative category in a convenience store, but with consumer demand for healthier options on the rise, perishable groceries could soon become a solid traffic driver. Admittedly, selling fresh fruits and vegetables comes with several challenges. There’s the reality of a short shelf life —nobody wants to bite into a bruised apple or an over-ripe banana —and making sure the products are attractively merchandized.

Fortunately, some retailers are getting ahead of the curve. And surprisingly, about 92 percent do offer some perishable grocery items, such as bananas, apples, oranges, potatoes and onions. Perishable grocery sales from January 2011 to July 2011 averaged $384 per store per month, according to NACS CSX data, while the category’s average gross margin dollars per store in 2010 were $1,680, according to the NACS State of the Industry Report for 2010 Data.

Although the data doesn’t show the category as a high-profit generator, for retailers who want to overcome an omnipresent industry challenge —public (and an increasingly legislative) perception that convenience stores are nothing more than a one-stop shop for "junk food," cigarettes and gas —the perish­able grocery category may be a good place to start.

Necessary Spoilage
Perishable grocery items go hand in hand with managing expectations. In an in­dustry where spoilage is a dreaded cost of doing business, putting a few controls in place will help keep fresh items in the hands of consumers and not in the trash.

Melina Patterson, senior category manager at Louisville, Kentucky-based Thorntons Inc., suggests that retailers who are moving into a fresh offer should rely on their supply chain —determine who will make the deliveries, how often and in what quantities. "These are ques­tions that must be answered before a program can get off the ground," she said, noting that a trusted supplier that delivers fresh foods often is an impor­tant consideration.

And while the program is gaining trac­tion, retailers should expect to experi­ence waste levels "above the norm" for highly perishable items such as produce, Patterson noted. "Retailers need to be patient and understand that incremental waste during the building phase is simply an investment," she said, adding that keeping product displays fresh and well stocked will allow sales to grow.

Retailers should also decide how long they are able to make the necessary investment in fresh products to maintain an appealing presentation. "Those who fail to keep displays full or those who abuse the shelf life of products will not help the profitability of their program. In fact, this is how programs are de­stroyed," Patterson warned.

Hope Ritchie, product director at McLane, agrees that some of the top-line challenges convenience store operators face when offering perishable groceries is managing inventory and maintaining a fresh, clean and attractive presentation. She suggests that retailers evaluate the location of their fresh program to make sure it’s highly visible to customers. Fresh selections are best displayed in "open air, stand-alone coolers that help raise consumer awareness of fresh offerings," she recommended.

Like Patterson, Ritchie says that spoilage is just the reality of a fresh program, but that distributors have resources that can help convenience store operators properly plan and monitor their perishable grocery programs.

"Distributors can assist with supplying the top-selling assortment and working with suppliers on product with extended shelf lives as well as operationally providing the best dating on products," said Ritchie, adding that McLane offers a custom cold chain solution with a wide selection of fresh products for convenience stores.

What Stays, What Goes
With every category inside a convenience store, measuring performance is vital, particularly when spoilage enters the equation.

At Thorntons, the perishable grocery selection varies from store to store, but stores carry a core group of fresh items, which include whole fruits and cut fruits and vegetables. According to Patterson, a range review is conducted on a regular basis to determine which items should remain in the set, which should be added to the core set or removed altogether.

Ritchie noted that retailers who are struggling to find the right product mix don’t need to go it alone. They should call on the expertise of sales representatives, who can help operators ensure that they carry the top items based on the size of the program, customer base, demographics and store location.

Fresh Movement
Since the industry’s inception, convenience stores have kept pace with what their consumers want, even if it means more perishable grocery items. But as with many categories, execution of the offer is everything.

Improving product quality, implementing at the store-level and having food safety processes in place are just some of the measures retailers are taking to meet changing consumer demands, noted Patterson, adding that retailers are also looking for supply chain changes "and continued innovation at the manu­facturer level to help them deliver on the expectations of consumers."

So as consumers continue to expect more from their neighborhood conve­nience store, expanding into fresh, perishable food offers could be an untapped reservoir waiting to spring.

Chris Blasinsky is the managing editor of NACS Magazine and she can be reached at cblasinsky@nacsonline.com.