With Sales Soaring, Kroger & Walmart Focus on Produce
US grocers are freshening up their produce sections to draw in more health-conscious shoppers, as fruits and vegetables are an increasingly important source of sales growth for US food retailers. They now are eager to capitalize on rising consumer demand for fresh food. Grocers are expanding produce sections, stocking them with new and exotic varieties, and adding such services as juice bars and pre-cut fruit and vegetable packs.
Produce sales in the US rose to $62 billion this year from $60.8 billion in 2018, according to research firm Nielsen. Those sales are a bright spot for an industry facing myriad challenges. Heavy investment in delivery is straining an already-low-margin business model. Cereal, canned soup and other packaged products that historically drove profits are fading out of popularity, forcing grocers to find new ways to attract customers.
“Produce is what creates the trust between customers and neighboring retailers,” said Suzy Monford, vice president of fresh merchandising at Kroger Co. Kroger’s organic-produce business reached $1 billion in sales last year, making the supermarket chain one of the largest organic-food sellers in the country. The Cincinnati-based grocer is offering more seasonal products such as Cosmic Crisp apples, which made their debut this fall. Kroger is also working with start-ups on plans to grow herbs at its stores and make produce last longer.
Walmart Inc. is widening aisles and installing bins to have its produce sections look like farmers markets. An organic grocer, Sprouts Farmers Market Inc., is carrying more specialty items such as Cotton Candy Grapes.
Produce challenges for retailers
Produce presents challenges for retailers. Cold-storage trucks and storage facilities are expensive and complicated to operate. Produce is easily bruised in transit, leading to higher loss rates than for other products.
Still, retailers that are expanding their produce offerings.