Supervalu Inc.'s Produce School taught retailers in the 1940s to "think produce" and to "be a better seller." The Minneapolis-based wholesale grocer was a leader in providing training support for independently owned stores. ( The Packer )

The following article from The Packer's “A Century of Produce,” was published in 1993.

As The Packer prepares to publish our 125th-anniversary edition later this year, we are posting some of the writing from previous anniversary publications.

Here, writer Donna Vestal tells how produce made its way from a specialty item to being the focus of the supermarket.

The First-Aisle Department

By Donna Vestal

Early in the 1960s, a group called Operation Inc. invited Palmer Mendelson of Mendelson-Zeller Co. Inc., San Francisco, to speak at its annual conference. The group, a collection of mostly voluntary and cooperative chains, said this was the first time it had invited a produce man to give an address.

But before Mendelson got his chance at the podium, an analyst spoke, forecasting that the average supermarket would drop its floor space for produce to 8 percent in the next year and 6 percent in two years.

“I was ready to leave before we dropped off the chart completely, and finally he smirked and said that eventually 3 percent would probably be the final corner where our commodities would be displayed,” Mendelson recalled later. “Saved on the 3-yard line.”

It was then Mendelson’s turn to address the crowd. He rose in a cold fury. “I understand I am the first produce man you have ever invited to your conference, and from what I just heard it’s damn well about time,” he said, containing himself.

Mendelson then proceeded to his own theme: “that impulse buying never demonstrates itself in front of a frozen cabinet, but that the health-giving nutritional properties of fresh fruits and vegetables, properly displayed, are tremendous.”

Retailers and the consuming public came around to Mendelson’s point of view within a decade or so. Unfortunately, this would not happen before the economist’s predictions proved true. Produce departments in smaller retail stores in the 1970s did indeed drop to the paltry level of 3 percent of physical space. The produce department lived in the shadow of the rest of the supermarket.

“When I started in the ’40s, the trend was toward frozen,” noted Jim Hunt, retired president of Grant J. Hunt Co., an Oakland, Calif., broker. “Fresh was a declining business.”

Noted Joe Obucina, a 20-year veteran of The Kroger Co. who worked there until 1969: “For a while, you heard at the seminars that frozen was going to take over.”

Added Jim Halloran, a former director of produce operations for Red Owl Stores Inc., Hopkins, Minn.: “The produce department was somewhat the semblance of an unwanted stepchild.”

After World War II and into the 1960s, the produce department was not the premier department in the supermarket, agreed Bob Carey, president of the Produce Marketing Association in 1993.

“The director of produce in most of the supermarket chains was exactly that. Meat was king. The person that was in charge of the meat department was generally a vice president. The person in charge of produce was a director of produce,” Carey said. “The director of produce could never be late for an ad meeting because he’d get left out. But the meat guy could come in any time and, basically, all advertising and promotion program of the chain was built around the meat department and certainly groceries.”

To compete, the retail produce department fashioned itself after the frozen and canned sections by packaging everything in sight. But per-capita consumption continued to decline.

Per-capita consumption of fresh vegetables went from 105.7 pounds in 1960 to 97.9 pounds in 1969, or even more significantly from 52.2 percent to 46.2 percent of vegetable sales. For fresh fruit, the drop was even more precipitous.

The industry had reached a critical turning point. L.F. Fadler, president of the Fadler Produce Co., Tulsa, Okla., called it a choice: “to hard sell and educate the consumer on the use of fresh fruits and vegetables, or sit back and take out of the market what we can.”

In other words, merchandise.

As early as 1962 industry leaders were rallying around the theme. Said John M. Fox, executive vice president of United Fruit Co.: “The produce industry is missing opportunities because the rest of the food industry is outdisplaying, outpackaging, outpromoting, outadvertising and outselling it.... Everyone is too preoccupied in wheeling and dealing on the buying end of the business.”

Recognizing the need, The Packer introduced a merchandising section in 1962. Pointing to this new approach as a milestone in the history of industry awareness and advancement, The Packer defined merchandising:

“It is, most certainly, ‘Thinking Retail,’ which, in turn, breaks down into many facets. It is advertising, it is promotion, it is quality control, it is the realization that the ultimate consumer is everybody’s customer -- from producer on through to the retailers. Thus, the merchandising idea should be the guideline of everyone concerned with the production, movement and final consumption of fresh fruits and vegetables.”

Part of the problem was an astounding lack of communication.

Betty Furness, special assistant to President Lyndon Johnson for consumer affairs, toured the lettuce fields of Salinas, Calif., and the bustle of Hunts Point terminal market in New York City in 1967. Her conclusion:

“Somehow among the grower and the packer and the wholesaler, the commission merchant and the retailer, are curious and unsettling gaps in communication. These fissures, I believe, contribute immeasurably to the gulf that separates the consumer and the retail stores. No one seems to know what the next hand in the food assembly line is reaching for.”

Compounding the problem was the fact that produce retailing had become routine ... dull, even. There was tendency toward sameness among supermarkets with the domination of more highly processed and standardized foods.

But that very blandness held the key to the industry’s success with merchandising. Bob Bull, director of the Food Business Institute at the University of Delaware, made this prediction in 1969:
“The great achievements in produce distribution in the years ahead will be made by those retailers whose faith in the appeal of fresh has remained unshaken by the shortsighted pessimists who go around wringing their hands and rationalizing (so poorly) their own ineptness as modern produce men. To the men with enthusiasm and confidence will accrue the handsome spoils of a glorious future for produce in their stores, albeit that some of their uninspired peers in other stores will fade into oblivion.”

By the end of the decade, much of the industry had jumped on the merchandising bandwagon. In Southern California, for example, the Fresh Produce Council was formed to help counter the drop in produce sales. With founding members that included retailers, terminal market operators, growers and educators, the FPC worked hard to close the communication gap.

On a national level, the Produce Packaging Association changed its name to the Produce Packaging & Marketing Association to emphasize the group’s switch to a merchandising focus. The United Fresh Fruit and Vegetable Association worked hard to promote its United Merchandising Institute and Fresh for Health foundation, which was started in 1953.

Still, the produce department stalled -- until the health movement of the late 1960s and 1970s. What the fresh produce industry had been preaching decade after decade suddenly was the overriding theme across the land. People began to realize the importance of fresh fruits and vegetables in the diet.

Suddenly produce, not meat, was driving supermarkets. To take advantage of the demand for “natural” foods, the packaged look gave way to bulk.

The supermarket itself was changing dramatically with new supersize formats. These stores began building up produce as the star attraction, with wide-open departments and mass displays.

“Some chains looked ahead and said ‘we need a store with more services.’ More service and one-stop shopping. More elite display, something much more impressive. Above all, you had to have the fresh look,” Halloran said.

“The general consensus was that produce was an important part of that concept. The impressive image part of the store was the produce department,” Halloran added. “The produce department went to first-aisle departments.”

By the end of the 1980s, the produce department was the supermarket’s leading draw, with the vast majority of shoppers ranking the quality and selection of produce as the major factor in determining where they would shop.

And what a selection! In 1980, supermarkets carried an average of 100 different produce items. Just fours years later, the average was 216, and by 1993 it was closer to 250. Imports had turned most every commodity into a year-round offering by the early 1990s and made specialties standard fare. In hand with this, per-capita consumption of fresh vegetables rose 23 percent from 1975 to 1993, while fresh fruit intake was up 8 percent through the 1980s.

It follows that retailers significantly increased the physical space allocated to produce. According to economist Roberta Cook of the University of California-Davis, selling space devoted to produce averaged 15 percent of supermarket floor space in 1989, up from between 3 percent and 4 percent in the smaller stores of the 1970s.

By 1990, the average produce department accounted for 9 percent of total store sales (vs. roughly 6 percent in 1980) and generated a 20 percent contribution to net profit, Cook said.

“There used to be a saying, ‘As goes the meat department, so goes your store,’” Obucina said. “(In 1993) it’s ‘As goes your produce department, so goes your store.’”

The salad bar has been a notable addition to the produce department. In 1983, a Produce Marketing Association survey showed that the salad bar was the trend to watch in innovative produce retailing. By 1990, more than 90 percent of all departments included a salad bar.

Other department innovations in this boom time: cooking demonstrations, melon bars, fresh-squeezed juices, pineapple corers and videos.

Obucina recalled that in Knoxville, Tenn., in 1962, he implemented a demonstration of squash, with product cut up and put on display.

“People wouldn’t buy it,” he said, noting that they would keep the product for only one day before throwing it out or giving it away. “We were ahead of our time.”

He also remembers having a program for young children, cooking product like asparagus and then calling it different names. By 1993, national companies like Dole Food Co. had developed brochures about bringing children in the store.

“A lot of things that some of us tried were too ahead of our time. We didn’t keep pursuing like we should,” Obucina said.

Another plus for the modern-day produce department has been the growth in floral sales.

In 1970, most produce departments either carried no flowers and plants at all or merchandised them only on such holidays as Easter or Mother’s Day. By 1980, however, virtually every retail organization had a year-round plant and floral program, with many even having large, spacious, separate floral departments.

Halloran, who was the first chairman of PMA’s floral committee in the early 1970s, recalls that the trend toward floral departments began in the 1960s with green plants.

“It was experimental and curiosity was aroused. A few of the major chains would go into tremendous weekend promotions of plants,” he said.

With much trial and error, along with strong commitment, floral sales bloomed.

Added Carey: “Some say that the flower children of the ’60s brought floral products into the supermarkets in the 1970s, and profits into the produce departments in the ’80s.”

There were, of course, supermarkets and produce departments before the 1960s. But before the supermarkets and produce departments, there was the fruit store.

As towns developed in the 19th century, so did the general store purveying groceries, nails, tobacco, candy, seed, cloth and information on crop conditions and home medical remedies. Specialty stores, some handling only fresh produce, sprung up as well.

Most people got into the habit of going to the fruit store after their grocery shopping. A clerk weighed the purchases, which were often made on credit. Mom-and-pop grocery stores would also carry some produce, though dry goods were their true domain.

The chain stores, which came into existence in the late 1800s, changed everything.

In 1912, The Great Atlantic & Pacific Tea Co., one of the first food chains, completed the testing of an idea that would electrify the entire food industry. The idea was an economy store designed to enable A&P to sell groceries at the lowest possible prices. A&P boldly eliminated both credit and delivery. These stores were planned as small, one-man operations with low rent and inexpensive fixtures. Produce was included in the offerings.

The housewife responded enthusiastically, and A&P began opening economy stores rapidly. The small size and low cost of the economy stores made them easy to finance and practical for almost every neighborhood.

Then in 1916, Clarence Saunders of Memphis, Tenn., conceived the idea of self-service in food stores on a broad scale. Isolated examples of self-service had appeared before this time (particularly in California), but the Piggly-Wiggly system developed by Saunders started self-service on its remarkable career, though the early efforts limited self-service to the dry grocery department.

In the 1920s, chain store growth passed the 10,000-store mark and chains accounted for up to 22 percent of total retail grocery store sales.

This was truly a golden era for the food chain stores. The Robinson-Patman Act of 1936 didn’t exist. And before this legislation, the chains were notorious for extracting large quantity discounts, advertising allowances, dummy brokerage fees and other concessions from sellers. Though this was mainly noted in the dry grocery area, the produce industry gradually was affected by the practices.

Between 1900 and 1929, the chains moved from an 8 percent share of total grocery store sales to a 32 percent share.

The early chains directed their efforts to the larger cities, where population was concentrated and a large number of stores could be serviced by a central warehouse. As chains took hold, however, they spread into less populous urban areas and into rural shopping communities. By 1930 chains operated in all 48 states.

For the produce trade, the power of the retail chains was a potent, threatening force.

“Get rid of the chain store menace,” one reader urged The Packer in 1930, “and there will be more men in the business.”

William Garfitt, secretary of the Western Fruit Jobbers Association, noted at the 1928 convention that fortunately, the chain stores had not made the inroads in the West and the Midwest that they had in the East.

“It is an indication that there may be time to build up our defenses before it becomes necessary to launch an offensive against a well-entrenched, competitive enemy,” he said.

From the produce industry’s viewpoint, the biggest problem with retail chains was their uncompromising use of loss leaders. That is, selling produce at unrealistically low prices.

For example, one retailer in 1932 advertised this one-day special: 5 pounds of solid tomatoes, one head of fancy Snowball cauliflower, one stalk of celery and 3 pounds of Extra Fancy carrots, all for 10 cents.

Often, the price on products at retail was near the freight charge alone.

While the wholesalers and jobbers continuously blasted this practice, along with worrying about being bypassed by the chains’ buying methods, the chains themselves were having a difficult enough time with produce.

Professor M.P. Rasmussen of Cornell University noted in 1929 that the chain stores’ handling of fruits and vegetables was generally unsatisfactory and usually unprofitable.

“It is one thing to hire a man to sell groceries, which do not deteriorate in packages, the price of which can be fixed by headquarters,” he said. “It is an entirely different proposition to hire a man who has judgment and experience enough to sell a commodity such as fruits and vegetables, which is constantly deteriorating and is greatly affected by daily fluctuations in supply.”

To capitalize on this, the independent grocer began to place more importance on the selling of fresh produce. Unfortunately for the independent retailer, he generally was not able to secure proper information about stocking and merchandising fresh fruits and vegetables.

Otto H. Dreoste of Jageman-Bode Co., Springfield, Ill., in 1937 noted this was one reason independent retailers began affiliating themselves with a good voluntary group.

“I dare say that with few exceptions, the independent retail grocer has received little merchandising help from any wholesale distributor in the fresh fruit and vegetable department excepting those wholesale grocers who are sponsoring a good voluntary group, and operating a fresh fruit and vegetable department,” he said.

Wholesalers and jobbers, especially in the Depression years, were caught up in survival. They had little time for education and merchandising.

Most independents found that although the produce markets were tremendous facilities for buying, they were not in a position to recognize the retailers’ problems. Their complaints included being unable to secure stocks with which to compete; sometimes having to take what the market offered -- even off-size unsalable merchandise; not having advance information about markets; and no help in advertising and display.

The chains, meanwhile, advertised low prices on produce. They knew the independents couldn’t match their offerings -- or even stock their offerings, despite the difficulty in maintaining the produce department.

“The corporate chains are devoting their best thought and ability along merchandising lines to the selling of fresh fruits and vegetables, realizing that the line properly merchandised, acts as a magnet to draw customers to their stores and also realizing that many of their competitors, large and small, are weak in this department and make little or no effort for this business,” noted J.W. Hershcer of the Hubbard Grocery Co., Charleston, W.Va., in 1937. “Too many individual merchants have failed to grasp the present day consumer trend to fresh foods.”

The answer proved to be the wholesale grocer, who as Garfitt noted in 1932, was just awaking to the promise of handling perishable commodities.

But the chains continued to spread and prosper, until another innovation threw the retail scene out of kilter: the supermarket.

Invented by Michael Cullen in the 1930s, this new approach focused on complete self-service, a full line of food and produce and much, much bigger stores. The first King Kullen store in Long Island, N.Y., had merchandise piled everywhere in what were enormous quantities for that time, and the public was invited to serve themselves and save.

Produce, which was provided by a leased concessionaire, was not a big factor in that first supermarket. Most of the selling space was devoted to grocery, meat, bakery and dairy departments.

Local chain and independent retailers shuddered in disbelief at the low prices. But the consumers loved it and cash registers in the check-out counters resounded to the tune of more than $10,000 a week. By 1932 there were eight King Kullen stores with a total annual grocery volume of $6 million.

Other supermarkets were opening and the threat to the small retailer appeared serious. Retail grocers’ associations condemned the “cheapy” markets and their practice of selling below wholesale cost.

Before long, consumer preference for the new mass merchandising started chains and independents scurrying to open supermarkets of their own.

A&P was one of the first national chains to begin experimenting with the supermarket idea, finally settling on a plan in 1937. Its supermarket stores were in the 8,000- to 10,000-square-foot class, and all the departments -- including produce -- were company-owned for closer control and for planned merchandising.

As for the supermarket’s effect on produce, Ross H. Gast, advertising director of the Western Growers Protective Association, noted in 1937 that the development of larger store units also was expanding the relative space devoted to produce. This resulted in a larger display, which in turn was bringing about increasing sales volumes for most perishable items.

By 1955, chain stores were handling nearly 46 percent of produce sales at retail. The mom-and-pop stores, along with the peddler trade, already were a relic, victims of economies of scale.

By this time, the produce trade had resigned itself to the realities of chain store merchandising, though the touchy subject of the chains’ direct buying would remain a sore point for ... well, forever it would seem.

But no one could deny that the chain stores were the key outlet for fresh produce and looked to remain so for generations to come. Accepting this, the theme at the 1947 United convention was “Think Retail.” Members unanimously agreed that an educational program was needed to assist retailers in setting up green grocery departments as self-contained units of the store. The association’s new United Merchandising Institute worked to develop a retailer education plan to be implemented by wholesalers.

Retailers did need help, as every day was a struggle to keep product in good condition.
When Obucina was store manager in Terre Haute, Ind., in 1949, there were no refrigerated produce racks.

“Every night after we closed the store, we’d bring out the produce barrels and put the hard stuff like cabbage on the bottom and ice it, then celery and ice it, and then the tender stuff and ice and (then we) put the barrel in the back room,” he said.

By the mid-1950s, however, most produce departments had refrigerated racks. And packaged produce was gaining in importance.

The departments weren’t very big. And the produce mix was hardly impressive: cabbage, carrots, cauliflower at times, broccoli at times, celery, some lettuce varieties, green onions, peppers, tomatoes, sweet corn in season and fruits that were available.

“We used to get three or four cartons of avocados and break them down to three to a store,” Obucina said. “It was a specialty item.” Even limes would be broken down to maybe six to a store.
Even the staple products were sold differently. Carrots still had tops because consumers thought that meant they were fresher.

Lettuce would arrive iced down in wooden crates that held 48 heads. “You’d get three or four heads that were all slime,” he said. That problem was answered by the advent of vacuum cooling and 24-count cartons.

Bananas were on stems. Obucina said he was one of the first to get boxed bananas into the stores. And the first time he ordered mangoes, nobody knew what they were.

“It took a little effort to introduce new items,” Obucina recalled, “Now it’s taken for granted that if there’s a new item everybody wants it.”

There has indeed been a revolution in the supermarket.

 
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