The COVID-19 pandemic has profoundly changed the produce industry. Consumers are eating more at home. People are shopping less frequently and stocking up more during shopping trips. They are purchasing healthier foods with “food as medicine” trends driving consumption. The digital marketplace has moved from specialty to mainstream.
A lot is being said about how these profound changes will affect retailer strategies. There are predictions that the produce departments of the future will need to be smaller, the stock-keeping units will decrease significantly, packaging will continue to grow, and brands will become irrelevant.
There are also predictions that technology will profoundly change our industry. This includes predictions that indoor farming will represent the new normal for feeding the world. That a rise in technology will increase productivity on today’s farms. That shelf life will be extended by over 50% on fresh produce and the digital marketplace will become the new normal for marketing produce.
So what will the produce department of the future look like? Let’s take a deeper look at these predictions.
A reduction in the size of produce departments. The basis for this prediction is around two factors. First, that shrink will increase due to less shopping frequency. The second factor is the rise of online shopping and how it will also impact shrink.
Units being stocked will need to decrease significantly. The basis for this is the need for simplification from lack of impulse buys due to the limitations of online shopping and simplification requirements for in-store personnel.
Technology will profoundly change our industry. Through innovation enabled by technology, we will be able to extend the shelf life of produce, increase the yields, make it more sustainable, affordable and local.
Packaging will continue to grow. The basis for this is the ease required for the online marketplace. In addition, there is a growing concern by today’s consumer over sanitation and safety while shopping. Today’s consumers are less willing to browse bulk displays and want to grab a bag and go.
Growth of the digital marketplace. With the advent of the pandemic, the online marketplace has quicklymoved mainstream. All indications are that this will remain a strong area for growth and innovation.
Brands will lose share. This is based on assumptions that today’s produce buyer does not recognize the premium charged by brands, and private-label offerings will continue to grow.
My conclusion is that at all of these factors will be integral parts of each retailer’s unique strategy to satisfy their consumers. I believe that to satisfy this new consumer, retailers will shift their assortment within categories but will not significantly reduce SKUs and department size.
Strategies to satisfy tomorrow’s consumer will also be based on enhancements in technology, led by technology that extends the shelf life of produce, improves quality and in turn reduces shrink.
Lastly, combining online marketing and branded produce will represent a significant differentiating factor among retailers.
Craig Carlson is CEO of Carlson Produce Consulting LLC. Contact him at carlsonproduceconsulting.com.