The Case for Fresh | NACS – Magazine – Past Issues – 2015 – April 2015
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The Case for Fresh

Selling fruits and veggies in the fast lane.

​By Pat Pape

Customers of Tiger Farms Market in Burleson, Texas, can fuel up, purchase made-to-order smoothies and sandwiches, grab a bottle of vitamins and fill a sack with colorful, fresh produce in a single shopping trip. Since the store opened eight years ago, it has offered patrons a wide range of typical c-store merchandise, plus organic and non-organic produce.

“We try to stay competitive with prices on our organic produce,” said Nena Iniguez, acting manager of the Victron Energy-operated outlet. “Compared to local grocery stores and Walmart, we’re fresher and our prices are cheaper.”

In addition to whole fruits and fresh fruit juices, shoppers can select from assorted containers of cut fruit that were prepared and packaged in the store’s kitchen. Anyone who purchases a sandwich is welcome to a complimentary 8-ounce fruit cup.

“We don’t have much that goes to waste,” Iniguez said of the store’s produce. “It just goes in the juicer.”

reFreshing Convenience Stores
A decade ago, Tiger Farms Market would have been an anomaly. At that time, convenience stores were better known for selling packaged sandwiches with a lengthy shelf life than fragile fruits and vegetables. But as American consumers increased their demand for healthier food options, many convenience retailers have added produce.

To support nourishing noshing, NACS and United Fresh Produce Association, which represents the nation’s produce industry, partnered in June 2014, to identify the best ways to boost produce sales in convenience stores.

The 152,794 convenience stores in the United States make up 33.9% of all retail outlets, according the 2015 NACS/Nielsen Convenience Industry Store Count. But while fresh grocery sales were an estimated $43 billion in 2013, convenience stores captured less than 1% of that business.

According to Jeff Lenard, vice president of strategic industry initiatives for NACS, selling produce would be great for a retailer’s bottom line and more nutritious offerings would give the convenience industry a refreshed image. An image boost with a focus on freshness could help retailers as they approach zoning commissions and city councils in an effort to get new stores opened or existing stores remodeled.

Getting fresh produce into stores is just one aspect of what’s being called the NACS reFresh initiative, which addresses ongoing industry perceptions by focusing on three distinct elements:

  1. Creating tools that address NIMBY (not in my backyard) issues by educating the public about the contributions convenience stores make to their communities
  2. Sharing facts and data that demonstrate the evolution of the industry and corrects an outdated reputation
  3. Forming partnerships/relationships with credible nutrition and community-focused groups, such as the United Fresh Produce Association

“reFresh is the ideal name for the program because it addresses our path forward,” Lenard said. “It’s about refreshing our image and refreshing our offer while still providing refreshments of all kinds. The idea is to give retailers who want more options — whether fresh produce or healthy options — the tools to access the landscape and determine if it’s right for them.”

Looking around, Lenard already sees more produce on convenience store shelves than just a few years ago. “Can there be more? Yes. But we’ve gone from not seeing any to almost being surprised if we don’t see some sort of produce offer at a convenience store,” he said.

Many convenience store operators agree. A recent survey of NACS members confirms the importance of produce, with 62% of survey respondents saying that produce is important to their 2015 business plan.

Fresh and Fresh-Cut Fame
When Kwik Trip stores of La Crosse, Wisconsin, began selling fresh bananas more than a decade ago, even some of the chain’s leaders were skeptical. Today, the 476 Kwik Trip stores are famous for moving about 20 semi-truck loads of bananas each week, along with apples, pears, oranges, tomatoes, avocados, potatoes and onions.

“Fresh produce works for us because we have daily delivery to every store from our own distribution center; however, depending on the market, smaller chains could work with a wholesaler,” said John McHugh, manager of corporate communications for Kwik Trip. “Daily delivery is critical to the process. The standard fresh cases available in the industry are fi but delivery is the key.”

Another factor in Kwik Trip’s success is a strong commitment to employee training. “We educate them on what to look for in terms of freshness and when product should be pulled from the shelf,” McHugh said. “Fresh produce requires more attention than simply restocking the beverage cooler. Our training even deals with specific issues like not exposing bananas to temperatures below freezing for even a brief period of time.”

Rutter’s, the 60-store convenience retailer based in York, Pennsylvania, has carried a selection of both fresh and cut and-packaged fruit for the past seven years. Customers can include fruit in a combo meal, add it to a kid’s meal or substitute fruit for fries.

“Our food program lends itself to a fresh image by having these options that are perceived as healthy and fresh,” said Jerry Weiner, vice president of foodservice at Rutter’s. “We do a much bigger business with the cut fruit. The bananas are a home run in any convenience store, but the fresh-cut fruit is a big part of our business, and it’s all grab and go.”

There are many reasons to offer fresh-cut produce in a convenience store. It has a significantly longer shelf life than whole fruit, ranging from three to 13 days for bagged salads and vegetables to 21 days for bagged apple slices and baby carrots. In addition, fresh cut is usually ready to consume, requires no additional washing, doesn’t need to be weighed and can be scanned at the register.

Rutter’s purchases cut-and-packaged fruit from an outside provider. An order placed at night is delivered within 24 hours and has a shelf life of about eight days. With seven different and desirable fruits available almost year round, Rutter’s operates a produce program with minimal spoilage.

“We have a wedge-cut watermelon that sells extremely well,” said Weiner. “Two thin slices are in a container shaped like a wedge of watermelon. At $1.49 it’s relatively inexpensive compared to some other fruits, and it’s pretty popular. Everybody loves watermelon.”

Lenard believes that sliced fruit, such as cut melon or individual grapes in a cup, would be an ideal offering for most convenience stores. “Produce can be sealed and come from a distributor, or it can be something you prepare on site,” he said. “Put it into a cup and it goes into the [car] cup holder. Cup holders today are for a lot more than drinks. Cup holders are how people eat today. In many cases, the cup colder is the new dining room table.”

Getting Started
Redwood Oil Company operates 23 Redwood Market convenience stores in Northern California, 16 of which have a made-to-order food program and in-house restaurant called Aztec Grill. Last year, the chain ordered produce racks they discovered at the NACS Show and in November launched a fresh fruit program at all Aztec Grill locations. Today, those select stores sell limes in the beer cooler and oranges, apples and bananas on the racks. Eventually, management hopes to add other produce, such as avocados and tomatoes.

“The perception of freshness is a huge thing, and our customers feel like they have healthy alternatives,” said Brian Adam, category manager for Redwood Market. “It’s also a great opportunity to cross-merchandise. Our vendors are clamoring to get in on promotional opportunities. For example, ‘buy two waters and get a banana free.’ It’s a wonderful opportunity for those synergies.”

Consistently sourcing the high-quality merchandise that customers demand is a challenge. “We have a few locations where we actually send our managers out to purchase fresh fruit,” said Adam. “We had problems getting quality fruit, especially bananas, so we ended up going that route.”

Managers shop for fruit twice a week, and while there are company guidelines for produce selections, they have a lot of discretion. “We go for some ripe and some not-so-ripe produce and let it ripen in the store,” he said. “We’re working on a solution [to manager shopping], and we hope to build some momentum to increase those turns so we can depend on the local fruit and vegetable suppliers.”

While there are increased amounts of waste associated with produce, the margins for fresh produce are still higher than nearly all other in-store items, according to the NACS State of the Industry Report of 2013 Data. At convenience stores, perishable grocery is 43%, merchandise overall is
29% and fuels margins are 5.4%.

Redwood Market’s produce program has weathered a few waste issues, but “it is something that we were prepared for and budgeted for,” Adam said. “We’re still in the early stages, but having fruit up front and center helps the brand image. And we’re selling a ton of it.”

Overcoming Challenges
The reasons convenience retailers hesitate to sell produce are the same now as they have always been: a short shelf life, temperature requirements, additional deliveries and merchandising methods that keep the produce moving. Industry leaders involved in the reFresh program (including retailers, suppliers, academics and other organizations) are looking for ways to tackle each of those challenges.

Currently, participants in reFresh are examining ways to manage costs, increase deliveries, enhance merchandising and minimizing spoilage, and they’re open to hearing new ideas and welcome new collaborators to the team. “This is the beginning, and the idea is to raise awareness and interest,” said Lenard. “Our next step is to deliver tools to those who are interested. Retailers who want to get involved [in reFresh] should get in touch with us. There is plenty of room at the table to share ideas.

“Convenience stores know how to sell packaged products very well,” he said. “So do a lot of other retail channels. However, by offering more fresh products or produce, convenience stores have a great opportunity to differentiate themselves from other retailers who sell packaged goods.”

Pat Pape worked in the convenience store industry for more than 20 years before becoming a full-time writer and communications consultant.