The produce industry is perfectly positioned to capitalize on many different trends in the retail industry, according to Walter Robb, co-chief executive officer of Whole Foods.
Mr. Robb was the keynote speaker at the opening general session of the United Fresh Produce Association convention, which was held in San Diego May 14-16. He spoke of what he called “stunning data” that fruit and vegetable consumption has remained flat in recent years.Mr. Robb said the ultimate answer to the health care crisis in the United States is people taking more responsibility for their own diets. “As spending on heath care has gone up [in the United States], spending on food has gone down.”
But he said the fruit and vegetable industry has the answer. “The produce industry has the right product for the right time,” he said.
Of course, Whole Foods also expects to be part of the solution as the produce department has always been the main traffic builder for that 32-year-old operation. Mr. Robb said the firm was “purpose-based” from the outset, with creating a better world as one of its core values.
During his formal presentation as well as a question and answer period with United CEO Tom Stenzel, Mr. Robb discussed the core values of Whole Foods, its plans for growth, and some key opportunities he believes exists for suppliers of fresh produce. He set the stage for his opinions with some facts about the changing world. By 2020, he said millennials (those born from around 1980 to the early 2000s) will control about 30 percent of retail sales. Retailers will need to appeal to three different generations in their marketing efforts: baby boomers, GenXers and millennials. For those Millennials, technology is very important and changing the way they do business as well as the way they interact with the products they buy. They already do much of their purchasing online.
While food and fresh produce presents some challengers for online merchants, Mr. Robb believes the “click and collect” model that combines brick and mortar with the Internet may prove to be the best solution for food retailers. In fact, he said Whole Foods is currently exploring that option and predicted that “within 12 to 24 months” the company will have something to introduce. The “click and collect” concept allows the customer to order online but then go to the store to pick up the order.
But Whole Foods clearly does not believe this will decrease the opportunity for the company to grow physically. Right now, there are 350 Whole Foods from coast-to-coast and Mr. Robb said the firm has publicly said it believes “there is a 1,000-store opportunity” or even more. He did not indicate how fast the chain would grow but said in the past few years it has been opening new stores at the rate of about 8-9 percent each year and it has already secured the real estate for that same growth over the next three years. If that’s true, the company will grow by about 100 stores over the next three years.
As he surveyed the landscape, Mr. Robb said some of the great trends and opportunities for the produce involve healthy eating education, renewed interest in cooking, populating food deserts with grocery stores and increasing transparency and traceability.
Whole Foods has initiatives in each of these areas that produce growers and shippers can also incorporate into their own business models for increased sales. The retailer is very active in improving the health of its customers through healthy eating classes and development of healthy recipes. By next year, it expects to introduce a “healthy immersion” program to its customers that will help them completely change their eating habits in an intensified six-day program.
The new fascination with cooking, he said, is an exciting trend for fresh produce as virtually all good meals emphasize the use of fruits and vegetables. And Mr. Robb said Whole Foods is helping to bring fruits and vegetables to many areas, mostly in inner cities, that are food deserts. Two store openings on the horizon will be in Detroit and New Orleans, which are very much under-served by the grocery industry.
In discussing transparency and traceability, Mr. Robb explained Whole Foods GMO philosophy, which is that the consumer has the right to know which foods have been altered so that they can make their own purchasing choices. He said that by 2018, the retailer expects that all foods it sells will be so labeled.
Underpinning his entire presentation was the chain’s philosophy that it is not enough to just be a profitable company. Companies must exist, he believes to “do business to do good.” He said successful companies must have “a balance between commerce and social responsibility.”
It’s not all about driving profits but about building a better world. Again for this work, he believes the produce industry is perfectly positioned as increasing consumption of fruits and vegetables will make for a better world.
Mr. Robb was preceded to the podium by outgoing United chairman of the board David Krause of Paramount Citrus, located in Delano, CA. Mr. Krause touched on several topics including the ongoing immigration reform debate in Washington, DC. He applauded the efforts of United in helping to form the Agricultural Workforce Coalition, which negotiated an immigration reform package with representatives of farm labor as well as key U.S. senators. The United chairman said establishing a stable workforce for agriculture is vitally important. He urged members to go to the convention floor that afternoon and call their representatives from the United call center to support the bill.
The breakfast session also featured the presentation of United’s Technology award to Walter Ram, vice president of food safety for The Giumarra Cos. He was cited for his tireless work in that arena as chairman of the United Fresh Food Safety & Technology Council.