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Why retailers must focus more on delighting consumers

Retailers need to be more consumer-centric, says Stephan Weist, national category director for fruit, vegetables, flowers and plants for Rewe, one of Germany’s leading supermarket chains.

Retailers need to be more consumer-centric, says Stephan Weist, national category director for fruit, vegetables, flowers and plants for Rewe, one of Germany’s leading supermarket chains.

A certain amount of product diversity is important, but it must be meaningful for the consumer, he stressed.

Speaking during a panel discussion at the London Produce Show in June, Weist said achieving a change in a product, such as in the degrees Brix, might be a technological achievement, but if the consumer can’t taste it, it won’t drive sales.

“And that’s what it’s all about.”

Customers are looking for outstanding eating quality and will pay good money for it, but they won’t come back just because of a product’s technical aspects. This is something many retailers in Europe need to pay more attention to. “I see in many places, that the change has to become more consumer-centric,” Weist said.

What has changed in recent years is the ability to better measure consumer data, to find out “whether you delight consumers enough.” So, for example, retailers can adjust package sizes such as of salad so the price is right and the food stays fresher. They are doing this better, but there’s still a lot of room to grow, he said.

Stephan Weist, national category director for fruit, vegetables, flowers and plants for Rewe

Give consumers more choice, but don’t overwhelm them

Speaking to ED after the panel discussion, Weist said tomatoes are an example of a category that has undergone a lot of product diversification in the last decade in terms of different tasting varieties.

“You have tomatoes which are extremely sweet down to a tomato which tastes like almost nothing and we have them all on offer, unfortunately even the ‘bad’ ones, because they serve as a price entry but for cooking they’re still fine.

“Today, if you look in an average shop, you have about 20 different varieties of tomatoes so I think we have to reflect on whether we’re getting too complex for the consumer at the end of the day,” he said. This is particularly important in Germany, where consumers want to be in and out of a shop fast.

Differentiation has also been seen with peppers, with the Padron peppers popular for frying and the longer pointed peppers, with a higher sugar level, enjoyed raw. Weist said Rewe is seeing ‘certain growth’ in pepper sales, adding he thinks “growth comes with meaningful differentiation, but meaningful not for the industry but for the consumer.”

On salads, Weist said what stands out most is the growing assortment of pre-cut salads. But in standard salad ingredients there is only slight growth. “We might see growth in the overall category but because it has become more fragmented into more varieties we don’t necessarily see the old varieties, like iceberg or a standard lettuce, growing.”

Seedless grapes dominate in Germany

Asked about trends in grape demand, Weist said Germany, and most countries of Europe, are leaning strongly towards seedless grapes.

“What we have seen lately is the arrival of new and more interesting varieties, which have a very particular taste, though that’s still more or less on test levels because there’s not a lot of fruit available there yet.”

Overall, the whole family of light-colored seedless grapes are the top-selling grapes in Germany, he said.

Rewe generally offers its grapes in open bags but does use some clam shells for its price entry options. It sources from Europe – mainly Italy and Spain. Weist said better storage technologies and the extension of earlier and late varieties has seen the market share of this European production increase.

Some exotics becoming less ‘exotic’ to Germans

“After years of growing our display, but not necessarily our sales, like most other retailers, I think we have three categories of tropical fruit today,” Weist said.

One covers produce such as avocados, mangoes and pineapples, which have become a daily entry for German households. Excluding bananas, these three are Rewe’s top sellers in tropical produce. Weist said he no longer considers them tropical fruit, “but they still run in the statistics as such.”

“This is a category which we’re extremely happy with. We almost exclusively sell pre-ripened fruit in this segment and it’s running well,” he said.

Then there’s lesser known produce which Weist said is taking off now. “Things like sweet potatoes and all the chili varieties and exotic herbs are becoming increasingly popular. I would still call them exotics, but they are becoming more a standard because people know how to use them. Maybe it’s a spinoff of all the growth in the burger industry right now we see in Germany.”

As for the ‘real’ exotics, such as the kiwano and curuba and so on, Weist said these are products that are “interesting to know but unfortunately not good to sell.” He said that could be because consumers are less familiar with them, or that they look nicer than they taste.

How Rewe aims to be consumer centric

Asked how Rewe has innovated in terms of fruit and vegetables, Weist said it has developed a lot of technical expertise designed to have fresher products on its shelves. “This is not only a refrigerating technique, it’s also distribution technique. It’s about determining the right size of units. Let’s say classical category management work, which we do, and so I think consumer centrism is what it’s all about.

“If we think about what’s important for the consumer, we will find customised solutions in many shops. It is not one solution for every shop but we customize and maybe that’s the innovation you will see in our stores.”

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Berries could help astronauts offset the ravages of outer space

Berries are the basis of a special high-vitamin food developed by China’s Harbin Institute of Technology to help protect astronauts from the extreme conditions of outer space.

Berries feature in a special high-vitamin food to help keep astronauts healthy during long stints in space.

The advent of space stations means longer periods beyond Earth and thus more exposure to extreme conditions – including the effects of space radiation and microgravity. But Chinese scientists says they have developed a vitamin supplement compressed food that will help keep space travellers well and that tastes good, too.

China’s Harbin Institute of Technology – which has unique programs in the field of astronautics – is seeking a patent for the food, which is prepared from freeze-dried blueberry, honeysuckle, strawberry, raspberry, kiwifruit and blackcurrant powder.

It says in its patent application that these fruits are rich in vitamins and a low-temperature compressing technology is used to ensure the vitamins are not destroyed during processing.

“Because blueberries, indigo honeysuckle, strawberries, raspberries, kiwifruits, blackcurrant and other berries are used as the raw materials for preparing the special compressed food, …(it) can supplement the vitamins and other nutrients and also can well prevent a series of physiological changes of the astronauts due to the change of radiation intensity and gravity in space under long-term flight in extreme conditions, and particularly the extreme-environment induced oxidative damage to the bodies of the astronauts,” it says in the application, published by the World Intellectual Property Organization.

Blueberries, raspberries and strawberries are also among fruits NASA lists as among its baseline space shuttle food.

The issue of astronaut nutrition was in the news this week with images of astronauts eating red romaine lettuce grown aboard the International Space Station as part of NASA’s VEG-01 experiment (nicknamed “VEGGIE”).

Image: Computer-generated artist’s rendering of the completed International Space Station (2006), by NASA [Public domain], via Wikimedia Commons

 

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Secrets to Reynolds’ success supplying the UK foodservice market

" Historically, our business has been quite heavily weighted towards restaurants and restaurant groups, supported by a good amount of hotel custom. We're now placing quite a lot of focus on the education sector."

From its origin about 70 years ago as an east London greengrocer, Reynolds has evolved into a national supplier to the catering industry, with annual turnover of £200 million (€281m).

Dedicated to supplying the UK’s foodservice market, it has a particular focus on restaurants – which account for about 60% of its business – and supplies the likes of Pret a Manger, Pizza Express, Carluccio’s and Bill’s. It also serves pubs, hotels, schools, colleges, universities and healthcare establishments.

At the London Produce Show in June, ED spoke to Reynolds’ head of marketing Andy Weir and senior buyer Matt Jones – both based at Reynolds’ National Distribution Centre in Waltham Cross – and started off by asking them what makes such businesses choose Reynolds.

AW: There are a number of reasons they use us. We have a national presence, which obviously means that wherever they open a new store, we can deliver. We have our national distribution center in Hertfordshire, where all of our fresh produce and dairy comes into, and then we truck that to our five satellites. We have one QC team at the office and that means that wherever they’re based, our customers’ outlets get the same produce into their stores – from the same grower, checked by the same people. That means they get absolute product consistency across their stores. That’s really important for any operator building a brand.

MJ: Another key benefit we offer our customers is fixed pricing for 6 month periods, which, because they know their products’ prices are fixed, guarantees their margins. That’s really important because the prices of fruit and vegetables can be quite volatile. So what we do is we lock our prices down with our suppliers and then we pass that security on to our customers. That’s a key difference between us and most of our competitors.

Who are your main competitors?

MJ: There are a couple of other large national produce suppliers in the UK, but they are owned by larger companies, whereas Reynolds is still very much a family owned and run business. There are a whole host of small suppliers, especially in London, within the markets such as Covent Garden.

Where are you making changes?

AW: Historically, our business has been quite heavily weighted towards restaurants and restaurant groups, supported by a good amount of hotel custom. We’re now placing quite a lot of focus on the education sector.
When you’re focusing on one particular market you tend to get sales peaks and troughs. By targeting other markets, such as the education sector, they tend to mirror the rest of the sector quite well. When the schools are off, the restaurants are quite busy, and vice versa. A more diverse mix of business helps us manage our fixed costs better and our technical expertise is very well suited to the education sector, where food safety is clearly very important.

What about in your supply chain?

AW: When our customers order what we call splits, which is single items – a twin pack of peppers, a cucumber, an iceberg lettuce and a punnet of tomatoes, for example – historically they’d all go in one cardboard box or several, depending on the order size. Over the last years we’ve tried to move customers away from disposable packaging and we now use returnable crates.
The driver takes the crate in, leaves the produce with the customer and then takes back the crates on the next delivery. That works really well because our customers have to pay disposal costs to get rid of waste cardboard. I think where we can get any packaging out of the chain completely it’s got to be great for everybody. It saves us money, it saves our customers money and it’s good for the environment.

What’s your biggest challenge?

AW: It’s managing the demand and supply side because we don’t know from one day to the next exactly how much of a single product our customers are going to order. Obviously we don’t want fresh products sitting in the warehouse as shelf life is limited. Equally, our customers expect us to have the appropriate stock levels to meet their demand.
Trying to predict exactly what a customer is going to order, and having the foresight to order the appropriate quantities in advance, is a very difficult balancing act. The average turnaround time in our warehouse is about a day and a half. The idea is that it comes in and goes out. We spend a lot of time fine-tuning our forecasting model to make sure we get that balancing act absolutely right and work closely with customers to understand what drives their demand, such as weather and menu changes.

What are your biggest volume products?

AW: Believe it or not, our biggest selling line overall is milk – because everybody uses it – but for fresh produce tomatoes would probably be number one. We have a couple of dozen different tomato lines, everything from standard round, single M’s, double M’s, Marzaninos, English heritage tomatoes on the vine, and everywhere in-between.

But we don’t just bring these things in and let them sit in the warehouse and hope they sell. We work with our customers to establish what product works best for them. Do you want provenance? Do you want great flavour? Do you want a product that’s going to last a long time? You tell us what you want and we’ll source the right product for you. That’s how the business has evolved.

MJ: On stock at the moment, I’m probably doing about 22 different SKUs, 22 different products of tomatoes. I would say we do 16,000-18,000 boxes a week on tomato, across all the ranges.

What else is big?

AW: Avocados are another line that’s really important for us and for our customers. Obviously when they get the avocados delivered to their store, they need to know they’re ready to eat and ready to prepare, they’ve got to be at absolute peak ripeness. If they’re too hard and they can’t use them, well they don’t have the storage space to leave them out or leave them in the fridge for a few days. It’s really important that we get that absolutely perfect. So yes, we sell an awful lot of avocados and again, we’ve got quite a few different lines depending on customer requirements.

MJ: We do about 13,000 boxes of avocado a week, which I believe is up there with some of the larger retailers. It’s a product that’s heavily used in our industry, around sandwich manufacture, guacamole, etc.

Where do you source your avocados from?

AW: It very much depends on the time of year. At the moment they will be predominantly Peruvian, supported by some South African fruit. On a product like avocados we tend to let our supplier partners manage that decision-making process for us. That’s what they’re best at and we stick to what we’re best at, which is distributing short shelf-life chilled products to our customers.

Please tell us what you do in grapes.

MJ: In grapes we just run two lines, a red and a white grape year-round. We run through about 8 seasons over the year and it’s controlled by one supply base, which manages the Brix, colour and the size of berry, according to our specifications.

What varieties are they?

MJ: Multiple. It could be Superior to Thompson. It could be anything all the way through. We take the best grapes for the time of the year, for the customer base.

AW: Having said that, there are certain customers, like maybe 5 star hotels in London, that want something different. So we do obtain specialty varieties for them, and obviously they cost a lot more than the standard red or white grape. Again it’s back down to what the customer wants, and we can source pretty much anything they want, as long as it is in season somewhere in the world. With our connections and extensive supply base we’ll find it for you.

How is demand for tropical fruit such as pineapple? What kind of volumes do you do in pineapple?

MJ: I do two types of pineapple. I do an extra sweet size 6, a large pineapple, which I do about 1,200 boxes, and a 10, which is a smaller pineapple, at about 600 boxes. About 1,800-2,000 boxes a week in total.

What are your top sellers in salad?

MJ: Cucumber would probably be the biggest, at about 6,000 boxes a week. Peppers would be next, probably roughly around 3,500 boxes of peppers a week, across the three colors, and a little bit in orange and black.

Foodservice is often where emerging culinary trends are seen first. What are you noticing?

AW: More and more demand for provenance. For the majority of our customers it’s about British produce and it’s well-known that consumers like to know now – particularly post Horsegate – where the food on their plate comes from. Whether it’s Kentish strawberries or asparagus from Hampshire, it all about menu appeal and authenticity.
Our food development team spend a lot of their time advising customers on where their produce comes from, so they can market it to consumers. If you take for example, Bill’s, which is one of the fastest growing restaurant groups in the UK – they’re one of our customers – they do a fantastic job at promoting great British produce. If you look on the menu you’ll see the appropriate product for the time of year. At the moment, there’s kale on there, and there’s strawberries, but they don’t have strawberries on there at Christmas time.
We work closely with our customers to help them map out what’s going to look good, what’s going to be appropriate on the menu in three months, in six months’ time, because these operators need to plan in advance exactly what they’re going to have on their menu and if they put something on their menu for the summer and it’s not available, obviously that’s not great for anybody. So we play a large part in advising them on what’s going to be best at what time of year, what’s going to be in season, what’s going to be British, to make sure that they satisfy their consumers’ appetite for fresh, seasonal produce.

Reynolds: http://www.reynolds-cs.com/
London Produce Show http://londonproduceshow.co.uk/

JB

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Exploring Waitrose’s biggest store – Canary Wharf

About 15% of turnover at Waitrose’s Canary Wharf branch is from sales of fruit, vegetables, salads and flowers.

Waitrose’s three-storey, 73,000 sq ft. Canary Wharf branch is its biggest store and the one with the highest sales.

Officially a ‘Food, Fashion & Home’ store, it also has one of the biggest fruit and vegetable sections of all Waitrose branches. About 15% of the store’s turnover is from sales of fruit, vegetables, salads and flowers.

ED toured this Waitrose flagship store in early June as part of the London Produce Show and spoke to Buying Manager for fruit Jocelyn Clarke and Department Manager Anselm Colom.

Clarke said Waitrose is doing particularly well in produce, highlighting that while the retailer holds about a 5% share of the UK grocery market overall, its market share for fresh produce is higher, typically around 8%. “In terms of location we’ve got the best of all worlds here,” Colom told ED about the Canary Wharf branch, “we’ve got many customers who do a big shop, and hundreds of thousands who do small top-up shops, we’ve got people passing by, local residents, workers, people travelling into London – all sorts of different demographics.

“Our biggest challenge is physically trying to stock all the shelves all the time – it’s absolutely relentless but a nice problem to have.”

A big focus on fresh produce

Fresh produce is one of 13 sections in the store and includes the food-to-go offering. Clarke said there is saying in retail that if you don’t get produce right then customers go no further. At Canary Wharf, the fruit and vegetables section sits at the front of the store and there is a big focus on it, she said.

There are typically two layouts for the fruit and vegetable section – a summer and a winter one. The summer layout started in mid-April with soft fruit moved to the front, apples and citrus cut back a little and moved to the back, and more space for exotic and stone fruit and less for vegetables. “But we wouldn’t dream of moving potatoes, bananas or salads, they stay where they are all the time,” Colom said.

The top sellers: berries and citrus

Clarke said that over the course of a year, the branch’s top sellers are berries but at Christmas, citrus is the clear-cut best seller, as in the UK it is traditional to include some in Christmas stockings. The UK, Spain and South Africa are the main sources of the fruit in the store.

The berries cooler, located on the right at the very front of the store over summer, was rarely without a customer during ED’s visit and is replenished several times during open hours. Clarke said there is still a lot of opportunity to expand sales of berries – particularly blueberries – as the household penetration of this product is still relatively low.

Organic produce has small but loyal customer following

Organic produce accounted for 5-6% of total produce sales in the week ED visited. Colom said it used to generally be a bit higher but some weeks can still get up to about 12%.

Waitrose has a high market share in organic which is going from strength to strength. The new Waitrose Duchy Organic design was seen in store on berries. Clarke said this design would be seen on other fruits in the coming weeks.

Private labels and provenance

While private label – also known as own brand – products account for about 45% of Waitrose products overall, in the case of fresh produce this soars to 90-95%. Some brands are seen in salads, then there is also co-branding of Waitrose and Pink Lady, which sells well. Otherwise it is all about the Waitrose brand

Clarke said that Waitrose branches in country locations do see interest in local produce, as do stores in Scotland, such as for Scottish-grown strawberries.

Grapes must have crunch, texture, flavour

At the time of speaking to ED, Colom said the grapes on the branch’s shelves included the black seedless Sweet Sapphire, seedless white grapes including Sugraone and Prime,  and Early Sweet, and in red seedless, Flame.

“We look for crunch, great texture and really great flavour – a lot of aromas and sweet/acid balance,” Clarke said. “Cotton Candy was a good seller last year and we’re going to do more of it this year. Sable’s done exceptionally well and Italia is very popular.” She said Waitrose mainly sells seedless grapes, typical of the UK market. It doesn’t sell Red Globe and stocks only a couple of seeded varieties over the course of a year.

Fully automatic ordering

Colom said Waitrose uses an elaborate algorithm-based ordering system based at its head office so people in positions such as his no longer do ordering. The system factors in weather data, sales history, demand, space at a branch, and so on and “works out what we can sell for every single product.”

His priority is to ensure the stock thus ordered indeed reaches the store shelves. “It’s critical to do an off-sale check before we start in the morning, so we know what don’t have.” Also, given the short shelf life of fruit and vegetables, date rotation and quality are critical. “We do quality checks all the time.”

Much attention is also paid to ensuring the country of origin is on the ticket for each item, a legal requirement, “that’s absolutely critical,” he said.

Continuous replenishment

Most of the stock comes into the branch at night. Three deliveries of fruit and vegetables take place then, and another mid-afternoon, as well as 3 ambient deliveries, and various other special and additional deliveries.

A maximum of about 7-8 people in total work in Colom’s Fresh produce section at one time and while the shelves are filled through the night, during open hours they spend most of the time replenishing stock.

Colom said he is proud of the quality of the produce on the shelves and, in particular, of the deep knowledge of some of the partners (staff) on the section, such as on the different fruit and vegetable seasons. If you want to know about new Jersey potatoes in late April/early May, British asparagus in May, strawberries in June, certain apples in June and July, and so on – look for the person wearing the ‘fruit, veg & flowers specialist’ apron.

Waitrose: http://www.waitrose.com/
London Produce Show: http://londonproduceshow.co.uk/
Read more about Waitrose in our article: Waitrose banks on omnichannel strategy

JB

 

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Inside India’s biggest e-grocer – BigBasket

Big Basket is currently India’s biggest online grocery player, clocking an average 12,000 orders a day – 70% of which include fruit and vegetables – and sales growing 10-15% month on month.

BigBasket says fruit exporters have a big chance to grow their brands in India, the world’s 6th largest grocery market e-grocery

Currently India’s biggest online grocery player, BigBasket clocks an average 12,000 orders a day – 70% of which include fruit and vegetables – and sales growing 10-15% month on month.

Even so, that’s just a drop in the ocean of potential grocery e-commerce in India. Against a total F&V market of about US$ 53 billion, modern retail sales of fresh fruit and vegetables contribute around US$ 500 million and online sales around US$ 30 million. So said Vipul Mittal, head of fruit and vegetables for Bangalore-based BigBasket.com.

Speaking to ED from India, Mittal also stressed that e-retail success is “not as simple as it looks.”

“A lot of back end work has gone into this company over the last 3-4 years to make it very powerful. It’s about being a comprehensive service and delivery package and not just a web site.”

And Indian consumers look for value irrespective of the channel through which they buy. Hence constant benchmarking against all competitors takes place to compare prices and ensure value, he said.

E-grocery potential in India

With an estimated 1.27 billion people — and likely to overtake China by 2028 as the world’s most populous country — India also has lowest rate of meat consumption, highest rate of vegetarianism, and a growing affluent class keen to try new cuisines.

According to the Indian daily Business Standard, last year Randstad India – which pegged India as the world’s 6th biggest grocery market – estimated just 1% of the groceries Indians buy are online. By 2020, it expected that to grow to 2%, making India’s online grocery market worth around €9 billion.

Indian households tend to buy fruit and vegetables 2-3 times a week, and the same trend is seen on Bigbasket.

Mittal said e-commerce facilitates insight into consumer buying patterns and allows the offering to be tailored accordingly, for instance running a promo on apples to all mango customers in the off-season (July).

Expansion into ready-to-cook food

The online retailer sells other grocery items apart from food, such as personal hygiene products, but until now, sales of fruit and vegetables have hovered around 14-16% of its total value sales, Mittal said.

However, having built a solid customer base, it now plans to increase its assortment further with many other food products including an imported and gourmet range.

According to recent reports, BigBasket is also set to offer more organic fruit and vegetables and plans to start selling gourmet salads and ready-to-cook meals – initially Thai, Mexican and Italian dishes – that include freshly cut vegetables and other ingredients, and recipes. This it has launched under the brand ‘Happy chef’ – a la Blue Apron.

Technology aids forecasting

Getting supply right is the key to BigBasket’s success, Mittal said. ”We have used a lot of technology for forecasting demand and use a dynamic model to plan capacity and the availability of vehicles.”

“Historical data has limited scope to assist demand forecasting in perishables, especially when the growth is so rapid and there are multiple variables.”

Big Basket has developed backward linkages with growers and buys directly from growers wherever possible, giving it better control of quality and enabling delivery of fresher produce by reducing time between harvest and consumption.

Direct sourcing preferred

BigBasket is currently located in six cities – Bangalore, Hyderabad, Mumbai, Pune, Chennai and Delhi – and tries to source what it needs in the vicinity of each.

By the end of this financial year, it will have opened 50 more locations, all in clusters with 5-6 cities around six central locations typically with one central warehouse.

BigBasket has no contracts with growers as yet, but is setting up collection centres to source directly from multiple farmers. It plans to establish linkages to bring safe food to the table with complete traceability, having already set up four such centres in southern India.

“We are currently a very small player with respect to total production in an area. So typically when we go into source areas, there are multiple farmers who can supply us. We create an enabling environment for the farmer to bring his produce to us soon after harvest and provide him the transparency of price and weighment. We have also initiated a pilot to provide extension services to the farmers through our field agronomists.”

BigBasket may also draw on wholesale markets to fill any gaps but prefers not to, Mittal said, because the produce is a step further from harvest, therefore less fresh and more expensive. “Quality and freshness are the driving force rather than price and margin.”

Chance for exporters to build brands

In terms of opportunities to export into India, it is a matter of creating differentiation, which so far has been very limited. BigBasket is looking to stand apart by bringing in different products and varieties, such as seedless watermelon, wider variety of pears and apples, exotic fruit, etc. (Few vegetables are imported by India, mainly due to shelf life reasons.)

Mittal stressed he sees a big – and so far largely untapped – potential for foreign suppliers to harness e-commerce to build their brands.

Most imports into India are channelled through traders and conventional retail channel. Growers/shippers don’t have much opportunity to build their brands because they don’t have much control over distribution channels, as well as other marketing elements. BigBasket, in contrast, can package, display and deliver its imported apples under a brand, for instance.

“It’s a big opportunity to build a brand in India, where ecommerce is still in a very infantile stage but set to expand rapidly,” he said, stressing e-commerce’s power to communicate directly to consumers.

(BigBasket is also said to be looking at launching a data analysis business to offer information on customer trends related to brands.)

Also on imports, Mittal said produce should adhere to global food safety and quality standards but trade with India is “not as tricky” as with the EU and US.

No questions asked returns

BigBasket’s customers mostly order by noon for same day delivery or choose a convenient slot among four options the next day. Insulated boxes are used to maintain the cold chain for temperature sensitive products such as mushrooms.

Its recent acquisition of a a hyperlocal food delivery startup in Bangalore will be act as a springboard to compete with rivals offering hyper-rapid delivery.

Mittal said customers can return produce at the time of delivery if for any reason they don’t like it. The return rate for fresh fruit and vegetables is about 0.5% and the most common reason is a problem with quality caused by transit damage.

Analysis of complaints has led to service improvements, such as in the case of customers finding worms in their cauliflower. Now the company has introduced florets, thus solving the worm problem “and adding value.”

Another big source of complaints was fruit being delivered semi-ripe. Thus, in March, BigBasket set up a ‘freshometer’ – for bananas, mangoes and papayas – on its sales page so consumers know when to eat them. Mittal said this is important because BigBasket tends to ship these fruit to consumers at the semi-ripe stage – to reduce transit damage – so consumers need to know what to expect and when to consumer for best results.

Customers expect Big Basket to be ‘greener’

Mittal said customers’ increasingly expect Big Basket to be environmentally friendly, but e-grocery has its pros and cons in this regard.

On the one hand, all its produce must be pre-packed for home deliveries and till recently only plastic was used. But unlike on retail store shelves, having transparent packaging is not a necessity for home deliveries, so Big Basket is now trying to increase its use of more eco-friendly packaging, such as paper and cardboard boxes. “For example, this season all mangoes were shipped in cardboard boxes,” Mittal said.

BigBasket.com

JB

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How Australia could sell more cucumber, cauliflower and other veg

Cucumber

Emphasise that vegetables like carrots and cucumbers make ideal raw, healthy snacks that can be eaten on the go.

And for other vegetables, highlight the benefits they bring to a meal – like the taste and nutrition of celery, or the variety that pumpkin adds.

These are among tips recently shared by the Australian horticultural body Ausveg, drawing on Nielsen Homescan data.

In a press release this month, Ausveg said Nielsen’s market research identified multi-million dollar opportunities for the Australian vegetable industry via areas with potential for growing vegetable consumption or that could benefit from better product positioning.

For instance, encouraging cucumber-buying households to buy cucumber as frequently as they did a year ago could achieve another (AUD) $4.8 million in sales value, Ausveg spokesperson Kurt Hermann said.

“In some instances, the industry could capitalise on already-increasing sales value – for example, we’ve seen an increase in the value of cauliflower sales on last year, and Nielsen have found an opportunity to gain a further $1.3 million in the senior couples demographic,” he said.

Read the release here.
Cucumber image: by Mgmoscatello (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons
 

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How Australia is tapping fresh produce opportunities in China

"Australia is in quite a nice position to be able to segment the market by focussing on being a niche market player rather than getting caught up against the big volume suppliers."

The importance of suppliers building long term trade relationships with China and adapting to its customers’ tastes was recently stressed by Loren Zhao, co-founder of the country’s rapidly-expanding online fruit retailer, Fruitday.

Speaking as part of the London Produce Show breakfast panel, Zhao singled out Australia and New Zealand as countries doing a good job in this regard. He said that in the future, China “will be consuming most of the global produce” and he said it is looking to these suppliers, which he said are already focusing on India and China. “It’s very important to grow products with the Chinese customer in mind.”

Screenshot 2015-07-07 at 12.29.53.png

Zhao said the US and Australia are spending a lot of money in order to change their fruit varieties and grow newer ones in response to demand from Chinese customers. “We see that they also want to invest for the market for us.”

“A lot of exporters just want to trade and they want to sell everything to China but other exporters want to cooperate…like Zespri and Sunkist,” he added.

Promising export future: Australian table grapes and citrus

Speaking to ED at the London show, PMA Australia-New Zealand CEO Michael Worthington said table grapes are a good example of where Australian growers are adapting to Chinese tastes.

“Australia is producing a lot of very good quality red and black grapes which the Chinese love. Crimson seedless has been a very successful variety, because it’s obviously seedless but it also has good Brix. There are some black grapes coming on to the market that have got a very high brix, so very much going for sweetness, which suits the Chinese palate,” he said

“The Chinese very much buy on colour and a sweet taste, so I think Australia is in quite a nice position to be able to segment the market by focussing on being a niche market player rather than getting caught up against the big volume suppliers such as Chile” he said.

“On the citrus side, the Australian navel quality is very good – probably the best in the market – and well-recognised in China, and some of the mandarins that Australia is now producing also fit in very well with Chinese consumers because of their good colour and flavour.”

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“Another real positive is that grapes and citrus fit very well with online sales – you can make nice convenience packs of table grapes. And with online sales booming in China, this is a great area for a niche marketer such as Australia to supply.”

Aussie Cherries also popular in China

Tasmanian cherries provide another example of Australian fresh produce fitting very well with Chinese tastes, Worthington said. “Tasmanian cherries tend to be larger size, very high quality and coming from grower-marketers of a small enough scale that they can go very niche as opposed to being a mass supplier that’s always trying to shift big volumes.”

Hopes FTA will see new protocols expedited

Worthington said it’s hoped the recently signed free trade agreement between China and Australia will speed up quarantine protocols allowing more fruit varieties to be traded between the countries.

“There’s a number in the pipeline both ways, such as stonefruit from mainland Australia and I am confident that as direct trade builds up (as opposed to the traditional “grey channel” supply into China via Hong Kong), we will see more vegetable lines, such as broccoli and carrots, and products such as mangoes and avocadoes exported out of Australia.”

Efficient distribution: key to success in e-retail

On online sales, he said China is doing very well in its ability to get the produce to consumers. “I think in a lot of other countries, particularly western ones, that last mile of logistics is the biggest challenge to growing online sales, whereas in China they’ve got these multiple small distributors on motorbikes and bikes and everything else that can get the product to the consumer.

“It’s a mixture of finding the right product, that is of a high enough value, matched with a distribution system that’s very much more efficient, as opposed to trying to look at it just purely as a price point and keeping the cost of an online sale at or below what you’d pay if buying in a supermarket,” he said.

 

Relief map of Australia by Hans Braxmeier (http://www.maps-for-free.com/) [CC BY-SA 2.5 (http://creativecommons.org/licenses/by-sa/2.5)], via Wikimedia Commons

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Waitrose banks on omnichannel strategy

Last year Waitrose opened another 20 ‘little Waitrose’ convenience shops and 13 new core shops. It now has 339 shops in England, Scotland, Wales and the Channel Islands, including 61 convenience shops.

Upmarket grocer expanding in online and convenience as it braces for more pain in the world’s toughest food market.

In February, Waitrose regained its crown as the best UK supermarket after a year in which its like-for-like sales increased 1.4%, it had an average 400,000 more customer transactions a week, and its slice of the UK grocery market largely stayed above 5%, rising from 4.8% two years before.

Even so, a deflationary market and fierce competition from the fast-growing discounters Aldi and Lidl – forcing it to cut prices and invest in improved service – saw its operating profit tumble 23.4% to £237.4 million. And Waitrose expects returns for the grocery sector “to be materially lower for a period of time.”

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The UK grocery market is rapidly fragmenting and the ‘big four’ – Tesco, Asda, Sainsbury’s and Morrisons – are being squeezed at one end of the price and quality scale by Aldi and Lidl, and at the other end by upscale rivals Marks & Spencer and, particularly, Waitrose.

According to Kantar Worldpanel data on Great Britain’s grocery market, Waitrose’s share has risen from 4.6% in the 12 weeks to October 14, 2012, to 5.1% as at this June 21, while Lidl went from 2.8% to 3.9% and Aldi, overtaking Waitrose, from 3% to 5.5%.

Novel ‘Pick Your Own Offers’ scheme

Fighting back amid the unrelenting price war in the UK, in June Waitrose introduced a new scheme offering loyalty cardholders 20% off their favourite 10 items from an initial list of almost 1,000 lines.

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Waitrose CEO Mark Price described the ‘Pick Your Own Offers’ scheme as ground-breaking but admitted it would be expensive for the grocer. Cherry vine tomatoes have been among the most chosen products so far.

Building online and convenience offer

Being “Britain’s leading omnichannel retailer” is now one of Waitrose’s key strategies, according to the John Lewis PLC financial statements for the year to January 31. The priorities listed under the goal include building Waitrose’s online presence, broadening its convenience offer, and developing compelling reasons to visit shops.

In order to grow its online grocery business, in March Waitrose opened a 90,000 sq ft bespoke e-fullfilment centre in Coulsdon, South London.

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Waitrose e-fullfilment centre in Coulsdon, South London

In regard to its convenience offer, last year Waitrose opened another 20 ‘little Waitrose’ convenience shops and 13 new core shops. It now has 339 shops in England, Scotland, Wales and the Channel Islands, including 61 convenience shops.

Central London was the focus for the new ‘little Waitrose’ openings last year but this year Waitrose has said it will go further afield in Greater London for its planned 7 new ‘little Waitrose’ shops.

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The ‘little Waitrose’ shops range from 3,000-7,000 sq ft, in comparison to an average sales area of 20,000 sq ft for traditional Waitrose branches. In August last year, in a bid to attract ‘transumers’ – the fast-growing market of travelling consumers – Waitrose opened the first of its railway station outlets, a 2,500 sq ft ‘little Waitrose’ store at King’s Cross in central London.  

And among measures to encourage visits to stores and respond to changing shopping habits, Waitrose has introduced new services, hospitality – such as opening more in-store cafes – and grazing areas where shoppers can try food and drink. “Branches like Salisbury are tapping into growth in casual dining with a wine and tapas bar.”

Responding to food trends

In its Food & Drink Report 2014, Waitrose reported on its response to food trends including “a huge surge” in flexitarianism – where someone follows a plant-based diet but occasionally eats meat products.

“Shoppers are choosing a ‘hero’ vegetable – such as a stuffed mushroom or a spiced aubergine – and adding a sprinkling of bacon chunks or chorizo pieces. To meet this growing demand we have launched new vegetable meals, such as our mushroom and spinach filo parcel and a new baby kale and butternut squash microsteam pack to save time for our flexitarian shoppers.”

Waitrose also said consumers’ taste buds are demanding new, exotic flavours and increasingly there’s a mix-and-match approach, using ingredients associated with one country in dishes from another. “Yuzu, a Japanese citrus fruit, is now often used in French dressings, and Kimchi, fermented cabbage from Korea, is employed as a burger dressing.”

The same report said that compared to 2013:

  • Exotic fruit online sales were up 81%
  • Stuffed mushrooms sales were up 22%
  • Stuffed pepper sales were up 17%

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Inside Waitrose, Canary Wharf

Summer brings higher salad, fruit sales

According to recent weekly trade updates by Waitrose, it is seeing strong increases in its sales of salad bowls and British asparagus, which for the week to June 6 were up 43% and 41% respectively on the same week last year, while frozen fruit surged 26% and soft fruit saw an 11% uplift. And for the week to July 3, it said the start of Wimbledon saw strawberry sales up 15%. Amid the good weather, its ‘food to go’ range was up 10%, with salads proving particularly popular, at 21% higher than last year​. Waitrose has also reported that with the bumper UK cherry harvest this year it has 20% more of this fruit on sale.

sources: various, including Waitrose, Kantar Worldpanel

JB

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What Europe’s new retail landscape means for fresh produce

Planet Retail’s Bianca Casertano on how Europe’s changing retail sector will affect the fresh fruit and vegetables category.

Planet Retail’s Bianca Casertano on how Europe’s changing retail sector will affect the fresh fruit and vegetables category

Yesterday we shared the Frankfurt-based retail analyst’s analysis of the key shifts in grocery retail in Western Europe. Casertano charted the rise of the discounter and convenience stores, the demographic changes behind the decline of big box stores, and the blurring of lines between hypermarkets, discounters and convenience stores. Here, in part two, read Eurofresh Distribution’s interview with Casertano after her presentation on this topic at the  AECOC Fruit and Vegetable Congress in Valencia in June as she discusses the fresh fruit and vegetables category.

What do these changes imply for the fresh produce assortment in stores?

What is really interesting to know is that the shift from big box formats to small box formats, and online, means a change in product ranges. What you had in the past, this huge volume of fruit and vegetables on offer, will decrease both in volume and product diversity.
In city locations with a small sales area, you have to choose which fruit and vegetables you offer. Normally you choose the convenience oriented things, and focus on less variety. You can’t offer all the exotic fruit and vegetables anymore, as in hypermarkets.
For example, in a hypermarket or in a normal supermarket you can find carrots with some greenery on them. In convenience stores, maybe baby carrots is the product you need, because it’s ready to eat and there’s another package size. The shift towards small, inner city locations will have a huge impact on these product groups.

Could you share an example of innovation you’ve seen?

Demand is growing for pre-prepared and pre-washed products, because people don’t want to spend much time on that. There are some convenience store where you can wash your fruit so you can eat it right after you buy it. I think that is a genius idea. It costs almost nothing and it helps you increase the sale of fruit and vegetables. How often do you enter a store and you would like to have an apple or a peach right now? And some ICA stores in Sweden allow you to make your own smoothie onsite from pre-cut fruit and vegetables you buy there. These are small examples of innovative things that can increase sales for this segment.

What should the sector bear in mind amid the changing retail landscape?

That multi channel is on the rise. They are not straight borders anymore, the formats will merge, and this means more complexity. For retailers that means more investments but these high investments will definitely pay off in the end. Because at the moment, if as a hypermarket operator you say, “No, I don’t want to launch ‘click and collect’, e-commerce is another sector and I don’t want to have to do something with it,” then you will fail, because people expect to at least have the possibility of. Although it’s not profitable for the retailer, they have to react to this trend. Also, because of the demographic changes I talked about, retailers need to go more into the inner city locations, not the outskirts anymore.

Is a move to less loose and more pre-packed product inevitable?

I see a trend in Germany towards more of these products, packaged products, or already washed products, because people don’t have time anymore to prepare their food. They want to have it ready to eat, and therefore I think this will increase in the future.

How might the growth of e-commerce affect producer prices?

As far as the online trend is concerned, I think you can’t offer fruit and vegetables online for a higher price just to get the right margin. Grocery e-commerce is very cost intensive and people won’t pay a higher price just because the system is more expensive. I don’t think that prices will go up, because people won’t accept that. What we currently see in Germany is that prices for groceries have really decreased but people don’t have the feeling, because overall they think they have to spend more for everything, but this is not true for groceries.

You have stressed there are risks in over-generalising and that not every market follows the convenience trend. How does your home market of Germany vary?

In Germany you don’t have so many hypermarkets. you have a high density of discounters. Everywhere you have a small shop within the cities, so if you want to buy something you can buy it anywhere. And in Germany margins for grocery food are so low that it’s very difficult to have a profitable online business for grocery. German shoppers are quite conservative, as well.

A last word of advice?

Suppliers often bank on countries in emerging markets and not on cities. This is a huge mistake because there are so many huge cities in emerging markets, cities with more than 5 million inhabitants.

Just as an example, there are 40 countries in the EU which have less population than Moscow. As a retailer, and also as a supplier, you have to focus on these mega cities, not on the country. This is an area in which Planet Retail has invested significant research.

JB

Read part 1

Photo: (top) Bianca Casertano during AECOC conference, by Roger Castellón

See some of our photos from this year’s AECOC Fruit and Vegetable Congress

 

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Tudespensa earns a staunch customer base in Spain

“Our most loyal customers are those who buy fresh produce from us.” Juan Carlos Chillaron

One of Spain’s first exclusively online supermarkets, Tudespensa.com was launched in October 2012 and now has 80,000 registered customers with 30% growth expected this year.

Tudespensa– which translates as ‘Your pantry’ – aims to set the benchmark for quality and freshness in fresh produce e-commerce in Spain. Head of fresh produce procurement and pricing, Juan Carlos Chillaron, explains how.

What is your fresh produce strategy?

Fresh produce is the most important part of the www.tudespensa.com online supermarket and so we always aim to exceed our customers’ expectations in terms of the quality of our produce. This applies to all kinds of fresh produce, but in the case of fruit implies achieving this amid the idiosyncrasies of these products, where the quality perceived by the customer is not just influenced by freshness, but by other factors such as the calibre of the fruit and, above all, the ripeness of each piece fruit, as well as the packaging and labelling. For all our fresh produce we aim to keep the supply chain as short as possible, selecting and packing the product for delivery the same day or at the most the next morning, giving the customer the maximum possible product life – these are our competitive advantages.

How are you able to offer competitive prices, particularly when you have to factor in delivery costs?

You have to bear in mind that all our products arrive in fully labelled packaging, ensuring product traceability, and via refrigerated transport. They are kept in conditions of maximum food safety until they reach our customers’ fridges. Also, the formats for each of our products are adapted so they meet the needs of all our customers, without having to buy too little or too much of something, with the above-mentioned food safety guarantee, and every tray must carry full product information, such as on origin, category and weight. As well, every product has its own information sheet customers can view online while making a purchase. Taking into account all these factors, our pricing policy is based on a comparison with our online competitors selling comparable – of the same quality and calibre – labelled and pre-packaged products. We try to keep a balance, as do all retailers, in trying to offer the best prices while also achieving the margins the company needs.

What is the biggest challenge in selling fruit and vegetables online?

It’s the same for all online food retailers, it’s getting consumers to change their shopping habits, with the additional factor that we will be selecting their fruit and vegetables for them. The immediacy expected of online sales adds other challenges, such as the need to not only have the produce available, but of the desired quality and as soon as possible, as well as to offer a very wide range. For all these reasons, the rigour we require of ourselves at www.tudespensa. com must reflect that demanded by the customer, but without incurring very high costs as they also want competitive prices.

How many of your first-time customers return?

Nearly two-thirds of customers stay with Tudespensa after trying us the first time and we are especially pleased that 9 out of 10 customers recommend us to their friends and acquaintances. Another positive aspect is that our most loyal customers are those who buy fresh produce from us. Indeed, 81% of all orders include something from the fresh produce department, and 28% involve something from every section. We think this indicates that most of our customers understand and appreciate the complexity of doing their shopping for them, and the daily effort that goes into picking and delivering the best products in a timely manner, and their loyalty is the best possible response and biggest asset we could have. Although there will always be some consumers who want to keep buying these products in a traditional way, we have developed different ways to show them how much more convenient it is to not have to go to a store and carry heavy weights. One is the site www. valoratutiempo.es (assess your time), which we launched to prove to customers that doing their own shopping ends up being more expensive, and which has already been used by 8,500 people.

Where is your logistics platform?

For fresh produce, we are strategically located right near Mercamadrid, one of the biggest fresh produce markets in Europe, where our partners in the supply of meat, fruit, vegetables and fish are also based. Every day before 9am they deliver produce – packaged and labelled – to our automated warehouse, where it is soon dispatched to fulfil our customers’ orders. 
 

KEY FACTS

Turnover 2014: €8.9 million (expecting +30% 2015)
Expected to break even for first time this year  
Average customer spend: €115
Total assortment: more than 7,000 products
Fruit & vegetable items: 158 (including pre-prepared products): fruit 69, vegetables 89
Current top-selling fruit: bananas, oranges, mandarins
Current top-selling vegetables: potatoes, onions, courgettes
Fruit & vegetables imported: 25% of total (due to off-season produce & big tropical range)
Orders including some fresh produce: 81%
Delivery: 98% of orders delivered within customer’s chosen 2-hour slot
Logistics base: more than 8,000 m2  (incl. automated warehouse) beside Mercamadrid
Coverage: Madrid, Barcelona, Toledo, Guadalajara
Main competitors: Ulabox (100% online) plus retail chains Mercadona, Carrefour, El Corte Inglés
Forecast growth in food e-commerce in Spain: 18% by 2017

JB