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Retailers are facing supply chain issues that can lead to food inventory shortages. Amidst many other issues like rising costs and labor shortages, low inventory is the last thing retailers want to deal with. Thankfully, there are ways to prevent this, according to Marketman…
By Lori London
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Produce Isn't Impossible: Fresh and Healthy in Convenience
In 2013, fresh produce sales in the United States reached an estimated $43 billion1. As consumers continue to seek out healthier meal options, this number continues to rise. Unfortunately, while convenience stores make up 33.9% of all retail locations in the U.S., they account for less than 1% of the fresh produce sales1. However, today’s consumers are interested in adding more trips to small convenient stores to their regular shopping, which presents a major growth opportunity for c-stores. As the USDA and other government agencies are pushing for those in underserved communities or recipients of government assistance like SNAP to have access to healthier foods, convenience stores that serve these customers are expected to make the shift. Although the opportunity has presented itself, many store owners are having a hard time taking advantage due to the limitations in the c-store industry.
Luckily, advocates in the convenience industry are steadily building the case for increased produce sales in c-stores to the suppliers and distributors that make it possible. Despite the challenges in stocking and selling fresh fruits and vegetables, getting started has become much easier.
Getting Products Delivered
Keeping a steady inventory of fresh produce has been a major pain point for convenience stores because of infrequent deliveries. To successfully sell fruits and vegetables, c-stores would need twice weekly drops. Unfortunately, the small order size for these retailers don’t make sense for most distributors. Direct store deliveries (DSD) from manufacturers or wholesale deliveries often have a minimum order size requirement and fees associated with splitting cases, which can make ordering product cost prohibitive for small business owners.
Because of the difficulties associated with store produce deliveries, many c-stores are choosing “cash and carry” solutions. By purchasing fruit and vegetables from other retailers like Walmart or Costco, store owners have better control over their produce inventory while also saving money. However, cash and carry options are time consuming, and may present a number of food safety issues.
The outlook for delivery is improving. 63% of all convenience stores are single location businesses. As these smaller operations continue to build their produce revenue, new wholesale and direct delivery options will become available to them. Some companies have even entered the business as specialized wholesalers to specifically serve small stores. For stores that already use produce items in their foodservice operations, or that have a flower distributor, fresh produce inventory could be obtained as a bonus through those channels.
Keeping Products Fresh
The last thing a store owner wants is to sell spoiled produce to a consumer. Store owners don’t want to throw away more product than they sell either. The potential for high shrink rates is a definite risk associated with carrying produce in the average convenience store. Due to spatial limitations and budget, many small c-store owners are unable to make use of open air coolers to properly maintain the cold chain for fresh produce. While many stores utilize wicker basket merchandising sets, these units only store about six to twelve pieces of fruit per basket, and don’t allow for much variety.
To overcome these obstacles, single location and small convenience or grocery store owners are being encouraged to commit to a fresher and healthier inventory. By dedicating a specific amount of space and money to produce inventory, store owners can ensure that their overall business goals are still being met without stressing over shrink. If fresh produce is treated as a priority in the business, the risk of employee mishandling of product during storage or display is also minimized. Also, by using a distribution model that maintains the integrity of the cold chain, store owners can better guarantee freshness.
Don’t Miss Out
- According to Nielsen, 100% of all households purchase produce.
- On average, $337 is spend on produce per household, per year.
- Basket size with produce is $56 - much higher than the average basket size of just $35.
Statistics show that healthier eating is clearly driving higher profit margins for many retailers, an opportunity no c-store owner should turn down. The opportunity to sell more to families with limited access to larger grocery outlets, especially those with SNAP benefits, makes c-stores a great asset to the communities they serve. With firm goals in place and a strategy that maximizes growth opportunity, even small c-stores can build a lucrative fresh produce program that will keep consumers coming back for more! If you’re looking for ideas on carrying produce you can view “Building the Business Case for Produce at Convenience Stores”, a report by NACS and United Fresh.
