TESTING FRESH IDEAS

As fresh-cut produce sheds its aura of novelty, the art and science of merchandising these value-added convenience items remains a work in progress in retail produce departments across the country.In the quest to meet consumer demand for fresh, safe product, retailers continue to experiment with how best to procure, package and merchandise fresh-cut fruits and vegetables. At the same time, they continue

As fresh-cut produce sheds its aura of novelty, the art and science of merchandising these value-added convenience items remains a work in progress in retail produce departments across the country.

In the quest to meet consumer demand for fresh, safe product, retailers continue to experiment with how best to procure, package and merchandise fresh-cut fruits and vegetables. At the same time, they continue searching for an optimum balance from an expanding roster of products, produce executives told SN.

For example, the jury apparently is still out on whether it's wiser for stores to buy fresh-cut from processors or prepare it in-house. While most retailers have opted to use local, regional or source suppliers, some, like Dierbergs Markets, Chesterfield, Mo., have clung to the tradition of preparing and packaging most of their fresh-cut offerings, with the exception of salad mixes, at store level.

"Most of my peers are going out and sourcing from the outside to reduce labor costs, but we've been big believers in doing it right at the store," said produce director Steve Duello. "We do everything we can to ensure product safety, and that's the primary reason why so many have gone outside. But freshness and quality is why we do it this way."

However, Duello said, the retailer plans to eventually shift the majority of existing in-store activity to a central chain commissary, where a more controlled processing environment will help ensure product safety, as well as consistency.

At Bales Thriftway, Portland, Ore., in-store cutting is now limited chiefly to melons, said produce manager Ted Beckman.

"We used to do it all at the store, but it became less cost-efficient and the local health department was getting stricter all the time about where it could be done safely," he said. "It just became logistically impossible."

That's been the case for the vast majority of retailers, said Glenn Sullivan, professor of food marketing and economics at Purdue University, West Lafayette, Ind., who monitors the pulse of retail produce trends via a retained panel of industry executives who share information and insights.

"We're past in-store preparation because of the quality-control issues," he said, adding that the lack of reliable labor has also spurred the decision to outsource much of the category. "Retailers kept hitting the wall when it came to keeping well-trained people in place to do it."

At store level, retailers are also continuing to experiment with different merchandising techniques for fresh-cut products. And, like the sourcing question, this debate, too, is driven by product-safety concerns, as well as a desire to boost appeal.

Heinen's, Warrensville Heights, Ohio, has largely moved away from selling fresh-cut fruit in 1- and 2-pound cups, opting instead to set up fresh fruit bars, separate and apart from traditional salad bars with cut vegetables. Peter Ross, the independent operator's produce buyer/merchandiser, said the move has boosted sales of fresh-cut fruit four-fold.

"We got away from the cups because we felt like we were maybe forcing them to buy some things they didn't want," he said. "This way, they can select what they want, and they know what the cost is per pound."

Despite the fact that it's increasingly shunned for product-safety reasons, some retailers say they continue to merchandise fresh-cut on beds of crushed ice. However, the trend by many larger retailers is still decidedly toward the use of sealed refrigerated display cases.

"For lack of better equipment we still merchandise cut-fruit containers on ice in the refrigerated case, but as we do remodels we hope to go to multideck coolers and get off ice completely so refrigeration will be more consistent," Ross said. "But at this point I think our refrigeration is adequate, and by using dates on our product we know to get rid of something after three days."

Dierbergs stores have gone almost exclusively to multideck cases, said Duello, as has a Dorothy Lane Market store in Dayton, Ohio.

"We don't use ice," said Jack Barker, Dorothy Lane's produce manager. "That's something you want to stay away from."

Sullivan at Purdue said the trend is definitely away from merchandising fresh-cut on ice and toward refrigerated racks that keep temperatures within a narrower range. The fixtures can be outfitted with time/temperature monitoring devices, and this figures into food-safety maintenance, since retailers can record activity in a log book.

"You can dress the case display up with ice beds, but that's mostly just cosmetic," he said.

Beyond better retail handling, Sullivan said, there's also a move on the processor side to develop new and better packaging that may relieve retailers of some of the worries over proper temperature management.

"Cello packs are moving toward being more aseptic," he said. "The technology for doing that has come a long way."

But retailers continue to encounter some of their toughest fresh-cut challenges not on the display shelf, but in the back room, said Sullivan. Breaks in the cold chain that occur prior to the display floor do more to reduce quality, increase shrink and pose safety threats than display-case temperatures that may be less than ideal, he said.

"The biggest problem stores are groping with is keeping their produce people focused on good product-management practices," he said. "With precut, what you see is what you get, and if it's handled in a casual manner and not put immediately on the rack, you can't merchandise it for an adequate amount of time. It's from the receiving dock at the store to the time it's picked up by the consumer that's key."

A retail-level dedication to maximizing the freshness and quality of fresh-cut will be essential to future growth of the category, retailers concede. That's especially true in light of observations by some produce-department executives that there's been a slowdown in the category's torrid growth amidst a proliferation of other value-added, convenience-food products.

"We've experienced substantial growth in the category the past three years, but this year we've finally hit a plateau," said Duello. "It grew by leaps and bounds, up from 20% to 45% for several years running. Now it's not growing at that rate, but it's still at 5% to 10% annually, a figure still above the national average for produce growth."

Much of the present growth in the category is being fueled by fresh-cut fruit, while sales of bagged salads -- the driver behind much of the earlier increases -- have leveled off, said Thriftway's Beckman.

But others say the convenience trend that's caused much of the growth shows no signs of abating and will bode well for steady, if not explosive, expansion of fresh-cut for the foreseeable future. Sullivan, for instance, said cut fruit will continue to grow. He noted an emerging sub-sector of the fast-growing category -- exotic tropicals -- may hold big growth potential that consumers may only want to sample, at least initially.

"I don't think there's any limit to the growth of the category," Ross said. "People want convenience and they're willing to pay for it."

Howard Solganik, president of Solganik & Associates, Dayton, Ohio, a retail consulting firm, said fresh-cut has become almost a mainstream category that may be entering a mature phase.

"Not too many years ago, retailers were thinking about whether to carry fresh-cut or not; it was still an option," he said. "To a certain extent today, having it is no longer an option, but a standard. They've met the basic needs, though, and seem to be handling fewer new products. There are fewer new ideas in this area than we've seen in a while."

The new frontier for fresh-cut produce may be further assimilation into the fresh-meals category and continued integration into other store departments, such as meat, or the teaming of fresh-cut with meats merchandised in the produce section, Solganik said.

"I think there's an opportunity for retailers to do more with produce as a ready-to-cook item in the same way they do ready-to-cook items in the meat department," he said. "Why shouldn't you be able to sell, say, a meat-stuffed pepper in the produce department? There's a lot of opportunity for retailers to extend value-added produce beyond what's being done now. Retailers have just scratched the surface with where they can go with it."