Don't Cut Back on Organic Produce Variety

I have a friend Larry who was seeking to cut back on his diet and drop a few pounds at the start of last year. When I heard of his decision, I knew that one of the most frequent results of this common New Year's resolution is that it usually doesn't last long.

Larry overstepped the bounds on his eating habits by cutting back on food to such an extreme that it caused him to suffer malnutrition. Subsequently, he became nervous, irritable, and overbearing.

In fact, decreasing his food intake by such a substantial amount was actually harming his job, and his weight loss issue was upending his work performance, which ultimately led him to return to his old eating habits and regain any weight he'd lost.

This story is similar to what we do in business—taking drastic measures to improve gross profit rates.. Then the cutbacks, like labor reduction, come into play. As management demands a higher gross profit—at all costs—it almost always endangers sales.

A number of produce directors I have spoken with have indicated they are being instructed to increase their gross profit as high as an additional 3 percent on their 2022 budget. This is a tremendous lift to accomplish, especially under the twin pressures of an ongoing pandemic and inflation.

"I was told to get 2 percent more on produce gross this year. With the trucking charges up so high, our costs to the stores are through the roof,” one produce director who requested anonymity told me. “This makes it difficult because our boss frowns on raising retails due to the strong competition in our market. I don't know how much more we can get out of shrink and other areas. We'll have to look at what sells best and start to cut out the slow movers."

A number of produce directors I have spoken with have indicated they are being instructed to increase their gross profit as high as an additional t3 percent on their 2022 budget.

As the challenges deepen, what do you think produce directors will eventually do as they scratch their way to meet those high gross profit demands? Do they gamble on raising retails and live with being criticized? Or, on the other hand, do they begin to reduce produce variety and abate sales for the sake of gross profit? It's like my friend Larry's overly ambitious diet that backfired on his health.

After other measures have been implemented, the next step will be to work on lowering the shrink. This often places a burden on the produce managers. Whenever there is a determined campaign to lower shrink, it reaches merchandising on the sales floor. Slimming the product inventory eventually slackens building displays, which curbs sales.

If a produce director cuts slower moving organic varieties, what will happen? I don't know about you, but the word "cutback" only means one thing to me—decreasing sales. When the list of organic items is cut, it's the same as creating out-of-stocks.

A great deal of progress has been made in the growth and expansion of organic produce sections, and to phase out items now would only set back that well-earned progress.

Removing items can have serious consequences with customers if they suddenly discover their favorite organic choices are now unavailable. There is a great risk of losing your loyal shoppers to your competitors who retain their full organic variety.

A great deal of progress has been made in the growth and expansion of organic produce sections, and to phase out items now would only set back that well-earned progress.

These are difficult times to earn a net profit in the grocery business, especially in the produce department. 

And while they may seem like a solution, cutbacks can have unfortunate side effects and often produce the opposite of their intended effect.