Fresh produce competition intensifies in Chicago - The Packer

Fresh produce competition intensifies in Chicago

12/12/2011 10:53:00 AM
Bruce Blythe

CHIGAGO — The Chicago area’s tepid recovery from recession can be boiled down to apples, oranges and grapes, according to local produce merchant Steve Loulousis.

As many households went from two paychecks to one, consumers increasingly sought bargains and discounts at the grocery store and cut back on items such as premium apples and grapes, Loulousis said.

That has led to smaller profit margins for his company, Michael J. Navilio & Son, Inc., one of 20 companies operating out of the Chicago International Produce Market.

“Some of the items we used to sell on a regular basis have become luxury items,” Loulousis, a sales manager for Michael J. Navilio, said in a mid-November interview. “They’ll buy four or five (items), rather than 12.”

Loulousis was among a majority of merchants surveyed at the region’s primary terminal market who had mixed reviews for 2011, saying the business grew increasingly tougher as the limp economy and heightened competition made it difficult to pass along rising costs.

Michael J. Navilio’s 2011 sales probably will be “about the same” as 2010, but profit is down, Loulousis said.

Other merchants expressed similar thoughts, saying sales were tracking similar to or slightly below 2010.

“Everybody is trying to push volume, and when you do that, you lose margin,” Loulousis said. “We’re trying to be more diversified. Competition is so great … To compete, you have to move volume.”

Like most of the rest of the country, Chicago has emerged slowly from the recession. Chicago boasts the third-largest U.S. metropolitan area and a diverse economy that ranges from manufacturing to health care and financial services.

Nonetheless, Chicago and its produce business appear to be faring worse than the rest of the nation, by some readings.

Chicago’s unemployment has remained historically high even as the region added jobs over the past two years. In October, the Chicago metropolitan area’s unemployment rate was 9.7%, up from 8.8% for the same month in 2010 and above the 9% nationwide average, according to government reports.

Retail fresh fruit sales in Chicago and surrounding suburbs totaled $852.7 million during the 52 weeks ending Sept. 24, down 1.5% from the same period a year earlier, according to Perishables Group, a Chicago-based market researcher. Retail vegetable sales fell 0.5% to $752.9 million.

Nationwide, retail fruit sales rose 4.2% during that period, to $32.5 billion, while vegetable sales rose 4.3%, to $33.6 billion, according to Perishables Group. The figures do not include Wal-Mart or club stores.

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