Holiday selling may have some pricing challenges
Holiday selling may have some pricing challenges
The holiday promotional season is just ahead. Your holiday ad program more than likely will include the usual items such as sweet potatoes, broccoli, mushrooms, grapes, celery, Russet potatoes and other festive favorites.
Every supermarket chain in town will be promoting similar items using the same promotion methods as always. Tradition usually dictates the items and manner in which it is programmed. However, that may change a bit this year.
If you think that selling produce this holiday season will be easy, think again. There is an uncompromising challenge this year with much higher product costs commanding higher retail prices. This will certainly make consumers decide where to do their holiday shopping for produce.
Shoppers will undoubtedly scowl at paying higher prices for holiday products this year. They will shop around for what they want and make purchases where they find lower prices. So, they will spend their money more wisely.
This does not mean that there won’t be much holiday shopping in the produce departments. People will still buy plenty of fresh produce, but they will pursue the best values for their hard-earned money.
Generally, all supermarkets carry the same fruits and vegetables. So, where will consumers shop for their holiday produce this season?
Vince Mastromauro, produce director for Sunset Foods in Highland Park IL, said, “This holiday season currently shows that we’re in a period with a lot of the crops from the West Coast transitioning to Yuma as well as Mexico, which can tighten the supply of certain items. Recent heavy rainstorms in California have added to the challenge. Unfortunately, these are the crops that we need in our ad such as broccoli, cauliflower, Brussels sprouts, green beans and leafy greens, both conventional and organic. The key here is to also make gross profit knowing that we need to show value but not so much aggressive pricing due to the market conditions.
“So, we show quality value in our entire ad and highlight a couple of items at cost, such as the popular southern sweet potatoes and perhaps three-pound seedless halo mandarins,” he continued. “When we have a promotional program that has quality in the forefront, the pricing takes a backseat to everything else. The key beyond this is also working closely with our supplier to make sure the key items are in stock regardless of cost in order to have a successful Christmas holiday. The main key is the merchandising on the sales floor. Aggressive secondary displays will generate high volume incremental sales as customers shop throughout the entire department.”
Jeff Tomassetti, produce director for Buehler’s Supermarkets in Wooster, OH, said, “When costs go extremely high as they are in the present market we try to cap our retails sometimes leaving us with less gross margin on many items. We try to cut back on display sizes to help control shrink. It always seems when the markets go volatile, some supplier may want to move inventory and offer us a deal on something so we can react quickly with a weekend special. For instance, the cauliflower market was $32.50 for a 12 size at a $2.70 unit cost. One of our great partners offered us a 12-size packed 16 in an RPC crate, something I usually would not carry for $1.50 per head. So, we could then offer cauliflower on a weekend hot buy special. We try to take advantage of deals so that we can offer value to our customers during these challenging market conditions knowing how tight the budgets are during the Christmas holiday period.”
The majority of consumers do not want to bounce around town seeking individual specials during the holidays. So, where will they decide to do their total shopping? Will it be a conventional supermarket, specialty store, club store or a mass retailer?
Without a doubt, it’s very difficult for conventional supermarkets to compete head on with mass retailers.
They are loaded with discounts throughout the entire store, especially low prices throughout the produce department.
Now that the holidays are the focal point, bargain hunters will again anticipate aggressive price-cutting by the big discounters. That could intensify competition among the conventional supermarkets even further as consumers continue to shop for better-priced holiday specials.
If conventional supermarkets are unable to compete against lower prices, then they should concentrate on the areas that can be controlled. Top premium quality produce is one way. The other is stocking levels. That’s where supermarkets can generate a lot of sales. Some retailers undermine customers with out-of-stock displays too soon. Replenishing displays fast is the utmost of importance.
Produce out-of-stocks can lose up to 15 percent of sales. Customers do not shop the same displays twice when produce items are unavailable. Consistent stocking levels increase consumer trust, comfort and satisfaction.
Keep your displays fully-stocked by being extremely enthusiastic in regular monitoring and replenishing items rapidly in order to boost sales.
Ron Pelger is a produce industry adviser and industry writer. He can be contacted at 775-843-2394 or by e-mail at [email protected].
