published Tuesday, June 4th, 2013

Wal-Mart aims to perk up produce sections

A woman shops for produce in a Maumelle, Ark., Wal-Mart Stores Inc., Supercenter store.
A woman shops for produce in a Maumelle, Ark., Wal-Mart Stores Inc., Supercenter store.
Photo by Associated Press /Chattanooga Times Free Press.

NEW YORK — Wal-Mart Stores Inc., which is working to keep its produce aisles fresh, announced steps to improve the quality of its fresh fruits and vegetables.

The nation’s largest grocer and retailer said Monday it is making more changes in its operations, training and sourcing as it looks to increase sales of bananas, lettuce and other produce and instill more confidence among shoppers looking for healthier choices.

Changes include delivering produce from farms to store shelves more quickly by purchasing fruits and vegetables directly from local growers. It’s also conducting independent weekly checks of the produce aisles at its more than 3,400 Supercenters, Neighborhood Markets and Express stores.

Wal-Mart, based in Bentonville, Ark., said it also launched a produce training program for 70,000 associates, including store managers, that teaches them how to better handle fruits and vegetables.

“We’re listening to our customers and delivering on our promise to offer great produce at the most affordable price,” said Jack Sinclair, executive vice president of the grocery business for Wal-Mart’s U.S. division, which garnered 55 percent of its total sales last year in groceries, including produce.

The steps follow several commitments that Wal-Mart has made to make the food it sells healthier and more affordable since 2011. As part of that commitment, Wal-Mart reiterated Monday it’s working closely with local growers and aims to double the company’s sales of local grown produce by December 2015.

So far, the efforts to improve the quality of its produce appear to be working. During the company’s first quarter, Wal-Mart saw mid-single-digit percentage sales increases in its produce business.

The moves come as fresh fruits and vegetables have become the latest battleground in the supermarket wars, fueled by shoppers’ demands for healthier eating and the need for stores to differentiate themselves from rivals. Sinclair told reporters on a conference call Monday that it is seeing demand for healthier food from customers across all demographics.

But analysts say that despite Wal-Mart’s pledge to make its food healthier, its produce often looks tired and well below the quality of rivals like Trader Joe’s, Whole Foods, Costco and Kroger. C. Britt Beemer, chairman of America’s Research Group, says that at Wal-Mart, some of the “produce is fresh, some isn’t.”

“It’s not consistent,” he says, describing some of the fresh fruit as “wilted.”

Burt Flickinger III, president of retail consultancy Strategic Resource Group says it’s key for grocers to make sure they offer the freshest strawberries, cabbage and the like since produce carries 50 percent higher profit margins than canned fruits and vegetables. It also adds a halo to the store brand and fosters shopper loyalty.

“Consumers don’t have confidence in Wal-Mart’s fresh produce the way they have confidence in Whole Foods, Costco and other competitors,” says Flickinger. He and others say that a big factor is that Wal-Mart has cut so much store staff that it doesn’t have as many workers to stock the shelves in a timely manner.

During the call with reporters Monday, Sinclair said that he feels comfortable with the staffing and constantly reviews the issue.

Wal-Mart said Monday it has hired produce experts to work directly with farmers in the key growing regions where the company has produce-buying offices. By eliminating middlemen, Wal-Mart has been able to eliminate one day that the produce is in transit. It said the results from the independent weekly checks will be reported to all levels of store management.

Through this program, Wal-Mart said it’s benchmarking itself with rivals weekly. It also says it plans to promote in ad campaigns its existing 100 percent money back guarantee program that allows shoppers who are not satisfied with their produce to get a cash refund— provided they have a receipt. Shoppers don’t have to return the produce to get the refund.

Shares of Wal-Mart rose 73 cents to $75.57, near the high end of their 52-week range of $65.40 to $79.96.

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