Why retailers are so demanding
Retailers are focused on satisfying consumers. If they fail, consumers will shop elsewhere and won't come back.
Today's retailers are more demanding of producers than they've ever been, and that's because their strategic thinking starts with satisfying the consumer, says Peter Austin, Canadian sales director for B.C. Tree Fruits, Ltd., in Kelowna, British Columbia, Canada.
"The consumer is all important," Austin explained during the B.C. Fruit Growers' Horticultural Forum, which was held in Penticton last fall.
When retailers buy apples, for example, they want size 80 to 113, full red color, no defects, guaranteed internal condition, and good shelf life. They want to order and pay via the Internet and have the fruit arrive on time at the right temperature in a specific package. They also want food safety certification and bar codes on each apple.
Growers, packers, and sales people all have to work as a team to pull that off, Austin said, but it all starts with good product coming in from the orchard.
Discussing marketing trends and targets, Austin said retailers are extremely concerned about keeping their customers loyal. When they lose customers to their competitors, it's difficult to entice them back.
Competition at retail is increasing as Wal-Mart and club stores like Costco handle more produce. In order to keep consumers in their stores, retailers focus on fulfilling the consumers' needs. They want consumers to receive good quality fruit and have a good eating experience.
Because of concerns about food safety, traceability has come to the forefront and is staying there, Austin said. News about product contamination and recall can spread rapidly on the Internet and in the newspapers. Retailers are concerned about how they would lure customers back in the event of a food safety scare, so they don't want it to happen.
"Retailers responded by demanding third-party food safety audits," he said. "At first, we thought that would be for packing operations, but it goes right back to the grower."
Producers need to provide traceability so any food safety problem can be --isolated very quickly. Austin said.
To satisfy their buyers, packers also need to be concerned about trucking and the logistics of getting the fruit to the buyer in time. Marketers must offer promotions to help drive retail sales. They must have computer experience and be well versed in category management so they know how to build sales of the apple category.
Retailers are demanding that suppliers use new technologies because they see them as a way to increase efficiency and lower costs through the entire marketing chain.
B.C. Tree Fruits has introduced a label for individual fruit pieces that includes a bar code and origin (Product of Canada), variety name, and price look-up code. It is slightly larger than the UPC sticker.
Information on the scannable bar code includes the variety, size, and name of the shipper. It helps retailers ensure that even inexperienced checkers charge the correct amount for high-value items. It also helps them track sales and shrinkage.
Austin said his company's largest customer requires the label, and he expects that all retailers will be demanding it within about two years. "It's going to catch on very, very quickly."
"It takes full service to meet customers' needs," Austin noted. "It's more than just product in this day and age."
Color: The color of the fruit is still important, Austin said. Peaches and nectarines must have red color over the entire surface of each piece of fruit as well as have good shelf life.
"It's tough," he acknowledged, noting that older varieties that don't have full color are on their way out.
With apples, red varieties, such as Red Delicious, must be dark red all the way around. A bicolored apple, such as Gala, also needs to be totally red, though the red can be a lighter shade. What retailers don't want to see is a big green spot down the side of the fruit, Austin said.
Some retailers don't like white lenticels on Granny Smiths, even though B.C. Tree Fruits has pointed out that Granny Smith apples naturally have white lenticels. And some --customers don't like blushed Grannies.
Firmness: The product must be firm and have good shelf life, he said. "In the past, if you got the color, sometimes that was a maturity issue, and the product wasn't as hard as it should be. Now, you need color and shelf life."
Some retailers are doing pressure tests and requiring a minimum of 14 pounds pressure. Anything less, they don't want. Cherries also must be hard. "If they see any softness they just reject them," Austin warned.
Cold chain: Fruit might also be rejected if the temperature is too high. Suppliers are expected to maintain the cold chain all the way from packing until it reaches the retailer's warehouse. Most retailers require a temperature of 39°F and check it with a temperature probe, as they believe cool fruit is better and will reduce shrink and provide a better eating --experience.
"If it's over 39°, they can reject it," Austin said. "It's just a fact of life."
Internal quality: Austin said some Washington State suppliers are offering fruit that's been tested on line for internal quality, such as firmness and soluble solids. "Some retailers like that," he said. "They think that will give that consistency to the consumer, and that's how to do it. That's definitely coming for the future."
Defects: There's also less tolerance for external defects, such as stem punctures. Customers are setting their own standards, which are more stringent than the grade standards. "It's hard to grow perfect fruit, but that's what they're asking for," he said.
Sizes 80 to 113 are the most in demand. "I know you don't just grow 80s and 113s, but that's where the money is coming in," Austin said. "After that, it drops off."
For cherries, 10-1/2 row used to be the standard size. Now, it's 9-1/2 row. "The demand for small sizes is declining very quickly," he said.
Small apples used to be sold in three- or five-pound bags, but it's becoming more difficult to sell them and they're generally discounted.
Packaging: Although there's been increasing demand for consumer packaging, 80 percent of produce is still sold in bulk, Austin reported. A recent survey showed that 75 percent of respondents thought bulk produce was of superior quality and tasted better, though most felt that packaged product was more sanitary and safe.
However, there's been almost a total switch to consumer bags for cherries in the last few years. The clamshell, which B.C. Tree Fruits uses for its best cherries, has a more premium look and brings the highest return per pound.
Packaging requirements vary from retailer to retailer. One of B.C. Tree Fruit's customers who used to prefer bags now wants a more natural presentation --without the use of so much plastic.