Fresh Fruit and Vegetable Procurement Dynamics: the Role of the Supermarket Buyer
McLaughlin, Edward W.; Perosio, Debra J.
Over the past several decades, the fresh fruit and vegetable industry has been one of the most dynamic sectors in the U. S. food system. Consumer demand has soared to record levels and both suppliers and distributors have responded with impressive new programs, products and technologies. The objective of this report is to provide critical information on one of the most influential but least studied elements of the produce system: the supermarket produce buyer. This buyer represents the gate-keeper between the supply end of the distribution channel and the supermarket shelves. His standard operating practices (SOPs) and decisions have an enormous influence on industry performance. A framework for produce buying and selling SOPs is set forth in Section 2. The methodology employed for this research relied on both secondary information and primary data collection (Section 3). The primary data were gathered from the produce director or buyer in one hundred supermarket chains who responded to an extensive mail survey. Together, these respondents represent approximately 75 percent of overall supermarket chain produce sales. Additionally, several groups of key industry leaders, suppliers and buyers, were interviewed to assist with interpretation of the survey data. The empirical results and analyses of the study are contained in Section 4 and categorized into five principal themes: • Produce buying organization • Produce buying process • New product issues • Produce department management: pricing and performance • Produce department of the future: buyer projections Further, perspectives and strategic implications of these results, particularly from the view of the supplier, are elaborated in Section 4 and summarized in Section 5. Among the key findings: produce buyers are operating under increasing pressure as their stable to declining numbers are now responsible for three times as many items as they were 30 years ago; terminal markets continue to decline as important sources of produce, particularly for larger supermarket companies who currently procure only about 7 percent of their total needs at a terminal; quality and consistency were repeatedly reinforced as being more important than price alone in buyers' purchasing decisions; despite considerable industry urging, DPP has not been widely adopted as a produce department evaluation tool; and, despite POP material being the most frequently available type of promotional material from suppliers, produce buyers report that this is the least influential factor in their new product acceptance decisions. These and other findings present numerous opportunities for positive responses from produce grower/shipper operations. This type of in-depth knowledge of customer behavior and decision-making criteria allows forward-thinking companies to develop successful sales and marketing strategies. This research suggests that closer supplierbuyer relationships and alliances are not simply needed to prosper, but are required to survive.
Charles H. Dyson School of Applied Economics and Management, Cornell University