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Tips to Help Achieve Your Organic Gross Profit in 2024
December 21, 2023
3 Min Read
I'll keep saying this over and over—"It's all about merchandising at the store level and generating the gross profit."
Trying to attain organic produce profit has been a tough road lately due to higher inflation-related costs, labor shortages, and extremely competitive pricing.
The gross profit dollars are even more important and getting tougher to capture because of these handicaps. When product costs start to rise, profit erodes.
There's no getting around it—doing the same things and selling organic produce items at the day-in and day-out level won't work in making a profit today. It may be time for you to change some operating methods just to keep up with the continued organic produce cost increases.
Reviewing where you stand on produce gross profit in your organic program is a good habit to have in order to make money. You should be monitoring the basics to consistently improve profit. If your profit line becomes stagnant, your organic produce operation will not have growth. And nowadays, growth is required in order to survive.
There's no getting around it—doing the same things and selling organic produce items at the day-in and day-out level won't work in making a profit today.
Many factors are drawing the organic produce profit margin down. Here are some tips to protect your gross profit from failing:
Drive Sales—The first thing you want to do is to make sure your displays are fully stocked. Push your best sales drivers with the highest gross profit margins. Once you have identified your most profitable items, you should concentrate on achieving higher sales targets for them. Don't spend a lot of time on low profit items.
Reduce Costs—It’s also a good idea to negotiate with your suppliers, so you can get better prices rather than pay the full cost, which can sometimes be excessive. Work more closely with your suppliers and be fair with them. Strong relationships will lead to lower costs. Work with suppliers to offer promotional advertising and other discounts.
Control Inventory—Do not have more than you can sell on hand before the next delivery. Excess product can easily become shrink. Monitor and control assets by setting reasonable inventory levels.
Eliminate Slow Movers—Know your fast- and slow-moving items. Eliminate items that don't add value to customers and profit to the organic budget, especially items that just sit on displays and do not sell. There are probably a number of items you may like for aesthetic display purposes, but they are not popular with customers.
Strategize Merchandising—Placement of your best-selling organic produce items in a high-traffic location such as an endcap will boost sales and return high gross profit to the category. One of the best strategies is to concentrate on higher profit items and move them out from the normal organic section into the open where they are more exposed to shoppers. That will stimulate more impulse purchasing by customers and rapidly raise the profit.
Raise Retails—Trying to be a low-priced produce leader is an old operating method these days. Not all customers have the same desires. Many will spend extra for the best organic quality, making it possible to increase retails without losing sales. Avoid raising prices across the board. Sometimes it's better to play up superior organic produce quality and increase its retail than to keep selling cheap grade produce.
Are you meeting your organic produce profit line today? What sales volume must it deliver in order to remain profitable? If you cannot answer these two questions, then the days ahead will become difficult.
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