Natural Foods Merchandiser

5 tips to minimize produce shrink

Experts offer 5 ways to minimize shrink in your produce section, including staff and customer education, creating an exotics section, stocking in small amounts, keeping it cold and calculating shrink for individual products.

Your customers want to know they can find perfect kumquats, jicama and starfruit at your store even if the exotic produce items don’t make their shopping lists each week. Delivering fruits and veggies from afar became en vogue in the 1970s when kiwi was introduced in mainstream grocery stores. For today’s shoppers, though, what was once a trend is now an expectation in the produce department.

Offering variety and freshness in your produce department contributes volumes to your overall cachet and could be the reason customers shop for their staples with you rather than with another store. “You are not necessarily providing these exotic produce items to make money,” says Paul Beswick, head of the international consulting firm Oliver Wyman’s North American Retail Practices, based in New York City. “You are doing it to create a halo effect, to improve customer perception of your store as a place that provides an interesting, unique and high-quality product.”

Still, when you stock exotic and unusual produce, chances are you’ll experience extensive shrink—the difference between the profit you should have earned and the profit you end up with due to spoilage. In fact, as many as one in seven truckloads of fresh food delivered to supermarkets gets thrown away, according to a study published by Oliver Wyman. This is especially true for exotic produce, where retailers can expect up to a 75 percent loss in product.

But this level of shrink isn’t inevitable. Follow these tips from experts to provide the impression of exotic variety while keeping shrink to a minimum.

Educate store staff along with your customers

Signage is a simple and inexpensive way to provide exotic produce education. Start with a description of an item, where it comes from and how to use it, says Ron Pelger, owner of Reno, Nev.-based produce-industry consulting firm RonProCon. On the back of the sign, provide more detailed information that your clerks can access if the customer has more specific questions. Pelger suggests purchasing plastic 3-inch by 4-inch signs to place on wire holders next to each item, and black wax crayons to write in price changes.

Steve Oates, director of produce and floral for the Boulder, Colo.-based Sunflower Farmers Market chain, uses educational materials to highlight novel items. “We often announce a new product with a marketing campaign that includes posters and signage, and wrap samplings around that as well,” he says.

Create appeal with a dedicated exotics section
The best way to merchandise exotic produce is up for debate. Some retailers prefer to blend products throughout other sections; others separate them out. Pelger says a dedicated section has more allure. “I believe the right way to merchandise it is to have a small tropical section,” he says. “Those are the peculiar items, the romantic items. They are delicate and have to be handled and displayed properly.” Pelger suggests “dumbing” the display by adding structure beneath one layer of produce to create the illusion of abundance. If you’ve already had a lot of shrink with an item, you could first reduce the layers of the product, say from two to one, before discontinuing it.

Stock new items in small amounts

If you’re testing the market for an exotic item, start small, both in terms of the amount you order and the amount you have on display. “Limit the quantities of a new product that you buy, and the number of stores you test it in,” Beswick says. “Be selective in getting the right case-pack sizes. Sometimes what sells in one store doesn’t sell in another store.” When buying in small quantities, you can either set out the entire carton or keep a few leftover pieces in the back room in the cooler.

Keep it cold
The quality of your produce will only be as good as your cold chain from source to store, Pelger says. The produce must remain chilled to prevent the growth of bacteria, which can lead to shrink from spoilage. Make sure your supplier can ensure a flawless cold-chain sequence. “From the grower to the packer to the shipper, all the way onto the truck, to the warehouse and to the store, the product has to stay at a low temperature,” Pelger says. This is especially critical within the exotic produce category because the product is less likely to sell quickly, Beswick says. “Freshness is critical, and it goes against the desire for availability; the more variety you have, the slower the product moves, and that leads to less freshness.”

Calculate shrink for individual products
If you want to reduce shrink, it’s key to keep close tabs on the success of your inventory and buy accordingly. “For exotic produce in particular, it’s important to understand shrink at a per-item level,” Beswick says. Today, you can study the movement of nearly every product electronically. Each week, track sales by category and by individual product. Then discontinue the lowest-volume produce sellers. “Cut back to the top 20 exotic items based on overall sales,” Pelger says. “This type of category management will help you control the shrink of your exotic specialty items.”

Ways to whittle waste

Reducing shrink by 100 percent may be impossible, but there are several efficient and economic ways to sell or repurpose produce to keep it out of the Dumpster. Steve Oates, director of produce and floral for the Boulder, Colo.-based Sunflower Farmers Market chain, says sampling is his number-one strategy for saving produce on its way out. “Sample out that product while it’s still good; don’t wait until it is bad,” he says. “By doing this, you can sample out 25 percent of the product, sell half of it or more and not lose any money.”

Many stores reduce price first and then repurpose any leftovers to use in other store departments, such as the deli, though this requires communication and menu coordination between your department heads. “Depending on the commodity, you could use fruit for breads or muffins, and vegetables for salads or other dishes,” Oates says.

Another option is to take part in composting programs with local farmers. This may require some effort on the part of your store to find a farm and set up a system for transporting the compost from store to soil.

The final stop for produce is the food bank. “We donate to our local food banks in every city,” Oates says. “We don’t wait until a product goes bad before we pull it off the shelf and donate it to the local food bank.”

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