Managing the fresh produce aisle is a race against time, but traditional discounting methods often do more harm than good to a grocer’s bottom line. Alex Considine Tong, chief product officer of Retail Insight, says that legacy markdown practices simply lack the granularity required for highly perishable fresh foods.
“What has gone wrong traditionally is that grocers sometimes leave markdowns until the last minute — waiting until the very last day to mark something down — or apply a discount earlier, but without a lot of nuance,” Considine Tong says. “They apply it across a whole category or food type. They’ll apply it across peaches, rather than specifically to this type of peach in these types of stores.”
Broad-brush discounting fails both the grocer and the shopper when it comes to highly perishable goods, she says.
“It obviously erodes margin for grocers, but it also disappoints customers,” Considine Tong says. “Customers want to get a discount, but they want to make sure they can still use that product — especially fresh produce. They want to take it home and use it over the next couple of days; they don’t necessarily want it all expiring that evening.”
Item-Level Precision in the Produce Aisle
Because fresh produce behaves differently based on variety, season and store location, pricing strategies must adapt dynamically to specific shelf-life profiles.
“Depending on the different drivers, you can take a different markdown approach, and that’s why we describe our solution as dynamic,” Considine Tong says. “It’s not just set. It depends on how much inventory you have, what your store is like and what we expect your sales to look like over the next seven to 14 days. What are stores in your area doing? Do you have big upcoming events or competitors nearby who might be discounting the same items? And is it because you have a glut or because the produce is damaged?”
Precision discounting allows grocers to balance consumer savings with profit recovery on delicate items.
“What we do is make it very precise down to the item at store level, so that again you get that balance of the consumer gets a good deal and the retailer is maintaining as much margin as they possibly can,” Considine Tong says.
Avoiding ‘Discount Hunters’ in the Fresh Department
Grocers often worry that frequent markdowns on fresh items will condition consumers to stop buying full-price produce. Preventing this requires varying the timing and strategic placement of marked-down produce.
“Consumers love markdowns because they’re the opposite of surge pricing, and consumers are really smart,” Considine Tong says. “We try to help grocers avoid too much patterning if they feel that’s a risk. We don’t say, ‘Do all your markdowns at 8 p.m.’ On certain days of the week, you’d actually be better off doing your markdowns a little earlier or a little later.”
How marked-down produce is merchandised also impacts buyer behavior, she says.
“When you move things to a separate area, that tends to get that kind of ‘moth to a flame’-type impact that consumers buzz there ... Whereas when you leave it on the shelf, you might not get that buzz that brings people to it, but people are surprised and delighted by it at the same time,” Considine Tong says.
Managing the Complete Fresh Produce Life Cycle
A dynamic approach helps grocers navigate the life cycle of fresh produce — determining when to mark down early, when to apply aggressive pricing and when to pivot to food donations before expiration limits kick in.
“You can look at an entire category and say, ‘We’re going to do an advance discount on these items because we know there’s going to be a glut,’ while other items in that category might sell well until the final week, where you apply a more rigorous discount,” Considine Tong explains. “Once you get down to two days, if they’re probably not going to sell, you donate them. Even within the same category, you can use different strategies along that timeline based on complex mathematics that deliver the best outcome — one that is legally compliant, surprises and delights your customers and maintains your margin.”
