ThePartnership no. 14

Let’s take the mobile

Let’s take the mobile phone industry as an example. For many years, growth came easy simply because of more consumers buying and using cell phones. But little by little, the market started to saturate and the cell phone companies were forced to change tactics from merely chasing new users to chasing more dollars among current subscribers. Subsequently, their consumer outreach has switched from the base need of having a mobile phone to having a bigger data, text and calling plan, the need for a fancier phone and having access for the whole family, as well as attempts to get people to switch from one provider to another by pointing out competitive advantages. A bright future lies ahead “Driving growth in produce is much the same as making consumers spent more money on their latest new smartphone,” explains Anne-Marie Roerink, a principal at 210 Analytics, a U.S. market research firm specialized in food retailing. “As an industry, we have to inspire consumers to buy fresh produce as often as possible as well as find ways to prompt them to spend more than they did before – preferably on our items or at our store – by leveraging the four guiding principles of category growth. By applying basic category management, combined with supply chain efficiencies and fuelled by constant innovation, a bright future lies ahead for continued produce growth.” Marketing Go where the growth is Produce – fruit and vegetables – is a big category with very high household penetration regardless of the country or continent in question. While that makes produce a significant contributor to overall supermarket retail sales, finding growth in a mature market is not easy. Guiding principles for category growth To best understand how all players in the produce industry can work together to support greater consumption and spending, we have to put the consumer in the middle of our game plan. After all, in a scenario where consumers buy more produce, we all win – from farm to fork. When we look at our world through the shoppers eyes, four guiding principles of category growth emerge: participation, trips, spending and operational excellence. What can brands and retailers do to safeguard sales and create loyal, lasting relationships in a world where many are vying for a bite out of the produce spend? International produce market experts Hans Verwegen and Anne-Marie Roerink weigh in from the European and American perspectives. Tipping point in grocery retailing From the explosion of new offerings, store formats and competition to changing consumer habits, the speed of change in retailing appears to have hit an inflexion point in Europe and America. What is the role produce can play in the battle for the grocery share? Roerink: For U.S. retailers, produce plays a critical role in the grocery battle. Produce along with meat are the two most important departments for picking one store over another. But traditional food retailers aren’t the only ones to realize that produce is a sure winner and we see innovation from produce vending machines to monthly produce subscription kits. This means traditional retailers have to be better than ever in finetuning quality, assortment, pricing and service to build strong retailer/customer relationships that can elevate loyalty beyond price. Verwegen: In the EU, discounters have been challenging traditional supermarkets on all four growth principles for years. In Germany, more than half of all vegetables are now sold by discounters with smaller assortments, but sharper prices and higher velocity. Supermarkets have been fighting back by fine-tuning assortment to the local store audience. We increasingly see small ‘on-the-go’ stores, particularly in urban areas, featuring online ordering with delivery or collect options. In Southern Europe, a larger share is still being sold through street markets. This market atmosphere, combined with self-service, is being integrated into the European retail model. However, given the lack of personal customer service, messaging prompting optimized spending has to be superb. The four guiding principles of category growth emerge Participation Tactics aimed at optimising the number of people purchasing fresh produce and encouraging daily consumption across all established and new meal occasions. Trip frequency Prompting shoppers to visit the store often and to purchase produce when in the store regardless of whether they had planned to or not. Greater spending Strategies encouraging greater spending on premium, higher margin items, such as specialty items or organic for a better top and bottom line. Operational excellence High quality produce and eye-catching displays solidify planned purchases and may prompt impulse. Additionally, satisfied shoppers are higherspending and more loyal. 18 | The Partnership The Partnership | 19