RETAIL VIEW: Price takes back seat in produce promotions
- by Tim Linden | May 19, 2008
Price has long been the main driver that suppliers have used to entice retailers to promote their products, but it's not the only factor -- and maybe not even the best one.
There are at least a half-dozen different reasons that drive a consumer's decision to buy fresh produce, according to Stacey Larson, president of Consumer Effects, a Rocklin, CA-based company that designs and implements retail promotion programs for fresh produce.
Consumer Effects' forte is creating promotions that emphasize one of the reasons other than price -- such as brand loyalty, seasonality and big displays that can create impulse purchases. In addition, she said that promotions centered on educational or philanthropic causes can also inspire a consumer to make a purchase.
For example, Consumer Effects has paired suppliers with a number of retailers during the past three years on a "Pink Ribbon" promotion that combines produce purchases with donations for the prevention and treatment of breast cancer.
Ms. Larson said that the October promotion has been very successful, with a number of East Coast chains lifting sales between 10 percent and 30 percent for most of the participating products, and resulted in an individual retailer making a donation of as much as $25,000 on behalf of that particular cause. The promotion firm is expecting to expand the Pink Ribbon promotion to retailers in other parts of the country this fall.
While Consumer Effects does create produce promotions for individual suppliers, it tends to specialize on larger promotions utilizing multiple suppliers. The company's founder said that retailers seem to like multi- supplier promotions that can result in a greater increase at the cash register, which is the ultimate goal.
Additionally, she said that suppliers can spread the cost of the promotion and be assured of good retail participation. "There are 500-900 individual SKUs in the produce department," Ms. Larson said. "A single-item promotion can get lost."
A promotion that Consumer Effects recently created started with a pizza crust company. That company wanted to promote its product, so it hired the agency to develop a promotion, which involved multiple companies.
Ultimately, the promotion was called "Pizza Pizzazz," and it involved many different produce items. The concept was to convince consumers to utilize different products in developing unique pizza recipes at home. Besides some typical pizza vegetables, strawberries, peaches and kiwi joined the promotion. Ms. Larson said that the pizza crust had a sales lift of 60-80 percent, while the produce item sales peaked at 120 percent.
While multiple suppliers participate in a typical Consumer Effects promotion, each retailer gets exclusivity in its own market.
But the company will take a successful promotion on the West Coast for example, and pitch it to an East Coast chain with similar demographics. The promotion has already proved successful for that type of consumer, so many of the questions concerning its viability would have already been answered. Ms. Larson declined to discuss the particulars of upcoming promotions and did not want to attach specific promotions with specific retailers, saying that each retailer guards that information carefully.
But she said that the company does work with the top retailers in the country, such as Safeway, Kroger, Albertson's, Supervalu, H.E.B, Hy-Vee and Price Chopper.
In an e-mail to The Produce News
, Ron Coles, assistant vice president of produce purchasing for the Hy-Vee chain, said, "Consumer Effects has worked closely with us on the retail rollout for Pro-Health Potatoes in our stores - providing a turnkey introduction for our stores and consumers. They have also prepared a promotional program slated to launch this fall. The difference I've seen in working with Consumer Effects is that not only do they focus on successful store implementation, they assure the retailer that all program elements are fully executed and measurable."
On the supply side, Ms. Larson said that Consumer Effects has worked with a multitude of commodities, such as pineapples, packaged salads, stone fruits and avocados, in addition to well-known organizations like Fresh Express, Dole, the National Watermelon Promotion Board and the Chilean Avocado Importers Association.
Retailers are basically looking for whatever is important to consumers, she said. If there are trends driving the consumer, that is what the retailer wants to feature.
In recent years, the health issue has become very important, and now the local food movement is catching on. She said that the local food movement is an interesting one, as consumers exhibit conflicting sentiments on this issue: On the one hand, they say they want to buy locally; on the other hand, they want items available year-round, which basically requires growing and shipping in many diverse places.
Some retailers and suppliers are attempting to capitalize on the local food movement by developing retailer-specific brands, she said.
Philanthropic causes would seem to offer a lot of opportunity for promotion, but Ms. Larson said that most retailers have specific charities in which they are involved, so they are not necessarily open to a promotion for a charity not identified with their corporate program.
Cross-promotions are popular with non-produce items trying to cash in on the popularity of fresh produce, but she said that many retailers are wary of giving up "high-value real estate for out-of-department products." Ms. Larson said that the "clean store" movement also is a hindrance to tie-in promotions. "If it makes sense and can drive sales, then they are interested." But she added that there is a built-in reluctance.
What sets Consumer Effects apart from other promotion companies, Ms. Larson said, is that it takes the idea from concept through implementation. The company works with the suppliers and the retailers in developing the promotion, and then works on getting the promotion in the stores and properly placed from maximum movement.