Looking at retail produce pricing strategies, The Packer’s Tom Karst visited July 16 with Mike Mauti, managing partner of Toronto-based Execulytics.
Mauti reviewed retailer strategies on pricing produce as part his series of interviews on Produce Retail 101 featured on Produce Market Guide.
The starting point for pricing of produce at retail is the cost of goods, but Mauti said the process doesn’t end there. Competition in the market is another key factor.
“There’s obviously different kinds of competitors, ones that focus a little bit more on price, and ones that focus a bit more on services,” he said. “So depending on where you fall in that spectrum, you will take a look at some of your like competitors and set your price based on that.”
Retailers typically use both spot buying of produce and contract purchases to create their programs, he said.
“You want to have an assurance that you’re going to have the product available at a cost that you know; just knowing your cost is a very good benefit,” he said. “But you also want to leave a certain amount of of purchasing available for spot market buys or taking advantage of a down market.”
Mauti also dissects the mechanics of adjusting retail produce prices and specific pricing strategies of retailers.