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Retail panel says struggling economy affecting consumer produce-buying habits

by Tim Linden | February 08, 2009
PLEASANTON, CA -- A panel of retailers declined to formally shed the produce industry's "recession-proof" label, but it did say that the downturn in the economy is definitely affecting what consumers buy in each of their stores.

Speaking on a panel at a Northern California luncheon meeting of the Fresh Produce & Floral Council held Tuesday, Feb. 3, at the Castlewood Country Club, here, Greg Corrigan, vice president of produce and floral for Raley's Supermarkets in Sacramento; Adam Bazarnik, director of produce and floral for Nugget Markets in Woodland; and Jim Pohndorf, supervisor and merchandiser for P.W. Supermarkets Inc. in San Jose, indicated that consumers appear to be very cost-conscious as they shop and are looking for value for the dollars they spend.

Each of the three retailers said that the produce department was not necessarily losing sales -- thus keeping that recession-proof label -- but consumers were definitely shopping the bargains.

Echoing the sentiments of all three, Mr. Pohndorf said that in-store promotions featuring bargain pricing are definitely doing very well. Mr. Corrigan didnot give any exact figures, but he said that shoppers appear to be gravitating toward the more value-priced items.

Mr. Corrigan added that while produce appears to be holding its own, sales in the floral department are down significantly. He said that supermarket floral sales are definitely an impulse buy and that consumers are proving to be less susceptible to that impulse. The other two retailers agreed with Mr. Corrigan's assessment of floral sales, and the panel said that the big question is whether the shoppers will come out and make their typical large flower purchases for Valentine's Day.

While the economy and the effects it has on the produce department was the main topic of the day, the panel did discuss other trends. All three retailers said that the locally grown movement continues to garner interest among their respective shoppers, and each chain tries to capitalize on the trend by carrying and marketing locally grown products when possible.

Being situated in California, "locally grown" might have a different connotation than in other parts of the country. In fact, Mr. Corrigan said that at Raley's, which has about 125 stores under four banners, "locally grown" means anything that is within a one- day truck trip to the company's warehouse. If it can be picked on one day and on the produce shelf tomorrow, Raley's calls it "locally grown."

Mr. Bazarnik, whose nine-store chain was recently ranked as the No. 10 most desirable retail company in the United States for which to work, said that locally grown product typically means within about 100 miles of his stores. In addition, he must have a one-to-one relationship with the grower.

Being in San Jose, which is in close proximity to the Salinas Valley, Mr. Pohndorf said that he "absolutely believes all the producers in Salinas and the surrounding communities" fit the locally grown moniker. He said that his customers are interested in locally grown, but they are more interest in good value. If the quality and the price are not there, he said, it does not matter where the product is grown.

Organic produce was another topic discussed by the panel. From the comments of the retail executives, it appeared as if organic produce is still important and must be part of every store's mix, but it has lost a little of the buzz due to both the economy and the locally grown movement.

The three retailers use two different methods to acquire produce, which gave the audience an interesting view of the supply side of the equation.

Raley's has more of a traditional operation that uses many different suppliers around the country and the world to stock its shelves. Mr. Corrigan said that he is very interested in dealing with new vendors, and he told the room full of suppliers exactly when he heads into his ad meetings each week so that they can contact him with special deals if they have one in the works.

Both Nugget and P.W. use a single-supplier operation. Mr. Bazarnik said that Nugget welcomes new products, but the best way to get a product into its stores is through the chain's supplier. He raved about his produce supplier, Nor-Cal Produce Inc. in West Sacramento, CA, and said that it was an excellent partnership that gives him the best produce at the best prices.

Mr. Pohndorf said that P.W. Supermarkets switched in the fall to a single-supplier model, using United Grocers, based in City of Commerce, CA, and so far it has been working well. He believes that the chain offers its customers price and value advantages because of the increased buying power that it now has.

"P.W. has one produce buyer; our supplier has nine," he quipped.

The luncheon was attended by well over 200 produce industry members from throughout California.