Despite uncertainties around rising fuel prices and the overall U.S. economy, retail expectations for sales in 2013 remain optimistic according to Progressive Grocer’s Annual Report of the Grocery Industry. This annual survey of retail executives found that private label, produce, and deli/prepared foods are the top three traffic generators – with the highest expectations being tied to higher produce sales this year.

This optimism was also reflected when respondents ranked the most influential in-store department in terms of driving stores’ overall brand/image:

• Meat/fresh meats: 49.6 percent
• Produce: 28.1 percent
• Deli/prepared foods: 12.6 percent
• Grocery/dry grocery: 10.4 percent
• Bakery: 8.1 percent

One section of the annual report that has grown during the past three years has been the focus on connecting to consumers in new ways (via social media, mobile, etc.). The top five benefits of mobile devices/smartphones listed by respondents were: weekly sale items (68 percent); e-coupons (64 percent); personalized discounts (39 percent); e-recipes (31 percent); and price comparisons (28 percent).

As for social media, it trailed only associate feedback as an extremely/very effective strategy to tap into consumer insights. When it came to retail attitudes on social media, 57 percent of retail respondents characterized it as “challenging,” while others described it as “insightful” (33 percent) and a “blessing” (27 percent).

And wherever there’s a blessing, there’s typically also a “curse” to go with it (with 10 percent of respondents feeling this way).

If you’re a supplier or retailer with the “curse” mindset concerning social media, you may want to put our Fresh Connections: San Diego on your calendar. From June 11-12, we’ll be looking at how to reach the digitally connected consumer and other key trends. Even though it’s about a month out, a number of influential buyers have already registered for this event.

As you know, one of the many issues I blog about here at PMA is sustainability, ranging from new surveys or reports to member sustainability stories. Recently while getting caught up on a short stack of industry magazines, I read Progressive Grocer’s 2013 Sustainability Handbook and came across some interesting statistics and trends that may be of interest:

• The Food Marketing Institute’s 2012 U.S. Grocery Shopper Trends Report found that almost one-third of consumers said products’ environmental sustainability impacts their shopping decisions. More than one-fifth said they consider retailers’ corporate sustainability practices when making purchasing decisions.
• Ninety-two percent of college graduates say they want to eventually work for a sustainable company.
• An Ipsos InnoQuest global survey found consumers are likely to pay more for value-added features that relate to freshness and sustainability in food packaging. Leading these features are “keeps food fresher longer” (55 percent), environmentally friendly packaging (55 percent), reusable packaging (42 percent), and easier-to-use packaging (39 percent).

The handbook also cited a report I mentioned a few months ago: A.T. Kearney’s Buying into the Local Food Movement. This study found consumers embrace local food options because they think doing so helps local economies (66 percent), delivers a broader and better assortment of products (60 percent), and provides healthier alternatives (45 percent). It also recommended that, in order for larger grocers to convince customers to purchase local food, these operators must prove they can offer products of equal or greater quality than standard products, as well as ensure that local products are given adequate shelf space and location.

With regard to the findings from the Ipsos InnoQuest survey, I’m reminded of what we found in our own of consumer packaging preferences toward fresh produce: eco-friendly packaging is important to just fewer than 40 percent of consumers. Our report also recommended that produce companies appeal to the “green” consumer by ensuring that packaging include any relevant information about the packaging or symbols that indicate recyclability (many consumers expressed confusion as to where to locate this information on existing packaging).

To learn more about this resource, visit our packaging study page to view the report and video Podcasts.

What do you think about these trends? Share your thoughts with us in the Sustainability Community on PMA Xchange.

Differentiation is that compelling reason for a customer to bypass other stores to get to yours. Your strategy is your differentiator; it has to be meaningful to the target customer/consumer. Your culture is also a differentiator; it has to be consistent with your company’s values, mission, and vision. Complete your differentiation with execution excellence; be sure you can deliver.

These are the major factors for success, according to Mario Pilozzi, who has retired from Wal-Mart Canada and spoke at the recent Canadian Produce Marketing Association (CPMA) convention. He spoke about companies that have succeeded and some that have failed and urged attendees to watch both. Only by doing that do you learn both what TO do and what NOT to do.

Pilozzi also talked about partnerships, about how retailers can’t make it without their suppliers. And he mentioned going to consumers’ homes to see how they really lived, to understand their concerns, and to see how they use the products they buy at the store.

He also addressed the changing retail landscape for fresh produce as alternate channels grow in market share. Noting that the industry has not effectively messaged the importance of produce in the diet, Pilozzi said other distribution channels see strong opportunities and demand and are moving to capitalize on that. That competition, he said, will make all of retail better. Change is good, he asserted, and gives you the opportunity to beat the competition.

We hear a lot of talk today about differentiation, about partnerships, and about channel diversification. How does that talk translate to business strategy for you? Let’s talk about it on PMA Xchange.

Yesterday Kathy shared with you some highlights from USDA’s Amber Waves magazine on food choices and consumption trends; today I’d like to share another USDA resource – this time a report on food hubs and locally grown foods titled The Role of Food Hubs in Local Food Marketing.

USDA defines a food hub as: ““a business or organization that actively manages the aggregation, distribution and marketing of source-identified food products primarily from local and regional producers to strengthen their ability to satisfy wholesale, retail, and institutional demand.” USDA also notes that a food hub can also be defined by market efficiency functions, in addition to more abstract goals of building a diversified food culture.

Though the report isn’t specific to fruits and vegetables, it does cite several examples of how producers (e.g. ALBA in Salinas, Oklahoma Food Cooperative, Appalachian Harvest Network) are increasing their sales and connections with consumers through food hubs. For example, producers aligned with the Local Food Hub in Charlottesville, Virginia, says they have increased sales by an average 25 percent by working with the hub, which has reinvested more than $850,000 in the local farming community since its inception.

If you’re interested in reading this report, you can access it via the USDA’s Rural Development website. You can also share your thoughts about it in the Increasing Consumption Community on PMA Xchange.

On a personal note, two of my cousins have decided to get into the locally grown effort this year by growing greenhouse tomatoes. The greenhouse has been built and soon plants will be started. I’ll share updates on this project as I get them – although I’ve heard through the grapevine that the first lesson learned is how quickly the cost of farming has risen, especially with unanticipated expenses.

Joe Glauber, USDA’s chief economist, said the U.S. agricultural economy is strong, despite drought, and 2013 will also be strong. Speaking at the USDA’s Ag Outlook Forum recently, Glauber mainly detailed program crops; there were few (OK only one piece of one data slide) mentions of specialty crops. However, his broader points about U.S. agriculture are an important backdrop for our industry.

He said ag exports are forecast at $142 billion for fiscal year 2013, with imports projected at $112.5 billion, yielding a net trade balance of $29.5 billion. Export values will be up in FY 2013, including for fresh fruits and vegetables. China is projected to be the top destination for U.S. ag exports for the second year in the road (though mainly soybeans and cotton). Canada will come in second again.

On the U.S. demand side, Glauber said the food consumer price index (CPI) will rise in 2013, but not as high as the top levels in 2008 and 2011. He said the Economic Research Service pegs food inflation at 3-4% for this year.

Though some of the breakout sessions included information on fresh produce, the overview sessions and keynotes focused on program crops. I spoke with some industry representatives at the forum, and though they were pleased to see some produce information, they were disappointed that our economic situation still is left out of those overviews.

One mentioned that, with produce responsible for 50 percent of farm gate value, our industry should figure prominently in these types of events.

Recently I read several trade press articles about CF Fresh’s solar initiative, which consists of more than 100 solar panels and four inverters on the roof of their office building in Sedro-Woolley, Washington. Intrigued by this, I reached out to Steve Mackey, executive vice president and chief financial officer of CF Fresh, to learn more about how this conservation effort came to be and how it is paying dividends.

The impetus for the solar project came to Steve a few years ago after seeing solar panel systems on display at the Seattle Home Show. After listening to presentations on these systems, he began analyzing the viability of producing electricity from solar for CF Fresh. In this process, he sought answers to some key financial considerations:

• Would a solar installation add to the value of the building? After consulting some contacts in real estate, he learned that a “rule of thumb” value for solar panel systems was $20 for every $1 of energy saved, and since solar installers generally rate the systems they market by kilowatt hours (KWH) generated, the estimated increased value of the building was easy to calculate.
• Would the local utility allow them to install a grid-tied system? CF Fresh was allowed to run its electric meter backwards and sell excess electricity back into the grid (a practice known as net metering), thereby eliminating any issue with what to do with more electricity than CF Fresh could utilize from its 130 solar panels.
• Was there any government support available? CF Fresh used an available federal tax credit available to reduce the project’s cost by 30 percent. In addition, all equipment purchased for solar installations are exempt from Washington’s state sales tax. When Steve evaluated the project, there was a State Production Credit for electricity; he estimated that CF Fresh would qualify for the maximum incentive allowed.
• How would depreciation be handled? As a business, CF Fresh was allowed to depreciate the cost of the solar array installation and this was factored in when determining a payback period.

Steve also shared that he estimated a present value cost recovery of less than 10 years - if the cost of electricity did not increase. He told me that the cost of electricity has increased by more than 30 percent to 9.8 cents per KWH since those initial calculations were completed. Subsequently, their incentive check from the state has more than doubled. CF Fresh has already recovered the cost of the project after just five years.

What are you doing in the sustainability arena? Let us know and, in the meantime, you can read other PMA members’ sustainability stories by visiting our website. We also have a Sustainability Community on PMA Xchange.

Last week in a Field to Fork post, I offered information on sustainability claims and how the U.S. Federal Trade Commission (FTC) looks at them. As part of an FTC staff attorney’s presentation I attended, she also discussed certifications, logos, and seals related to sustainability or “green” marketing. She noted that use of these is huge in the marketplace, and FTC’s Green Guides have a section devoted to certifications and seals of approval.

She noted that virtually all products impact the environment. Because the seal or logo may not provide enough information on the packaging or marketing materials, a marketer may provide backup elsewhere. One example she gave was: “For details on which attributes we evaluated, go to [website discussing product].”

If you have a seal of approval, consumers will see that as an endorsement, and they likely will think an independent third party checked out and “passed” your product. It’s important to check the endorsements section of the guide to be sure you understand how best to convey the information so that consumers understand what the seal means and what it does not mean. Even with a certification, you will have to substantiate the claims (direct or implied). And you will want to make a clear and prominent qualification that refers only to specific, limited, environmental benefit.

Consumers are interested in a variety of sustainability topics, and you can get information on that through PMA consumer trends research. Because they are interested, it’s important that you tell your sustainability story. We’re interested as well. We tell members’ stories to inspire other members to move forward on sustainability and to have a central location for media and others to see the strides produce marketers are making in sustainability. So let us know what you’re up to. We’re also talking about sustainability on PMA Xchange.

Here at Field to Fork, we often call out members’ sustainability stories and urge you to send yours in to us. I was recently at a meeting of sustainability staff from various associations, and we heard from a staff attorney from the U.S. Federal Trade Commission (FTC). The FTC’s mission, as you likely know, is “to prevent business practices that are anticompetitive or deceptive or unfair to consumers; to enhance informed consumer choice and public understanding of the competitive process; and to accomplish this without unduly burdening legitimate business activity.”

During the meeting the attorney reviewed FTC’s Green Guides, which “are designed to help marketers ensure that the claims they make about the environmental attributes of their products are truthful and non-deceptive.” One of her key messages was that FTC looks at claims as the consumer would, and it is how the consumer perceives the claim that matters. She said that marketers must tell the truth and be able to substantiate all express and implied claims. Even if a marketer is using the scientific or technical term or has phrased a claim in a way that makes sense to them, it still may not pass muster if that is not how a reasonable consumers perceives the claim. The Green Guides can help marketers comply.

She said the basics cover how consumers, not the marketers, understand claims. All forms of marketing are covered, B2C as well as B2B. And the claim may be direct or implied in a variety of places: online, on packaging, signs, brochures, even materials used at a trade show. She offered general principles about making these claims:

• Consumer perception controls.
• Be specific: This is the most important. If your claim is not clear you are responsible for consumer interpretations – whether you intended them or not.
• Don’t overstate attributes.
• On comparative claims: Be clear about the basis for a comparison (e.g. be specific about whether “improved recycled content” in your product is in relation to your previous product or to someone else’s product).
• Use clear, prominent qualifications when needed to limit the claim (not small on the back of a package, not on the internet). Make them understandable: Use plain language, sufficiently large type, close proximity to the qualified claim.

It’s important that marketers promote the sustainable qualities of their products. It’s equally important to do so in ways that clearly and specifically communicate to consumers.

If you’ve ever wanted to know more about the Perishable Agricultural Act’s (PACA) Trust provision, you have an opportunity to hear from USDA experts next week. From 2:00-3:30 p.m. Eastern on January 24, USDA’s Agricultural Marketing Service will hold a free webcast on the PACA Trust.

The PACA Trust provision gives sellers of fresh and frozen fruits and vegetables priority status in recovering funds owed by buyers who become insolvent or file for bankruptcy protection. Through the trust, produce suppliers have received hundreds of millions of dollars that they were owed. Webinar speakers will provide information on three specific areas:

• Josephine Jenkins, Chief of the Investigative Enforcement Branch, AMS PACA Division, will explain the statutory foundations and basic steps you must take to protect your business.
• Jason Klinowski, agricultural and food law attorney, will discuss the PACA Trust from the private practitioner’s viewpoint and share current case law. He represents PACA Trust claimants in civil and bankruptcy courts.
• Karla Whalen, AMS PACA Division director, will provide an update on the U.S.’ efforts to gain financial protection for U.S. produce shippers selling into the Canadian market under the Regulatory Cooperation Council (RCC).

While the USDA PACA Trust webcast is free, space is limited. To register, go here.

USDA says more webcasts will be scheduled throughout 2013. Here at PMA, I often use USDA’s information services as I research members’ questions. Members can also use our navigating regulatory agencies page to learn more about USDA, FDA, and Customs.

Last week, I had an opportunity to participate in Progressive Grocer’s Retail 3.0: Mobile Technology Provides New Ways for Retailers to Connect with Consumers Webinar. Speaking were Colin Haig from SAP Retail and Pierre Bourbonniere, chief marketing officer for Société de transport de Montréal (STM is Montreal’s public transportation authority).

Mr. Haig noted some key mobile trends that are affecting retailers’ relationships with their customers. Last year, more than half a billion smartphones were shipped; there are actually more smartphones in the world than there are toothbrushes. There are more than one billion users on Twitter and Facebook combined. And according to Cisco, there is nearly a zetabyte of information travelling over the Internet.

As a result of trends like these, Web and mobile consumers’ expectations have changed. They want immediate access to information, personalized experiences, instant gratification, and social connection. Consumers are also seeking value. Forty-five percent of Millenials want retailers to understand their preferences, and more than 70 percent of this demographic carry loyalty or rewards cards.

In response, Mr. Haig believes that retailers need to engage in what he calls “precision retailing.” That is, retailing which is based on 1-to-1 personalization at the point of decision and delivers consumer value by helping them save time and money and helps them find the right products. This strategy also delivers business value by generating more store traffic, increasing average basket size and customer loyalty as well as conversion rates.

Mr. Bourbonniere then shared some insights into a mobile program STM launched to generate additional ridership (fare revenue) and non-fare revenues (subway concessions and advertising partners) on Montreal’s public transportation system. STM partnered with SAP Retail to create the Opus smart card and mobile app, which utilized the user’s purchasing behavior history, crossed with declared preferences and interest, to create geo-localized, real-time offers from partners provided via consumers’ mobile devices.

Once on the bus, an Opus cardholder can open up the app on their mobile devices and learn about upcoming events, as well as special deals for businesses once off the bus. It also has a route-planning tool that maps the best way to travel by public transportation – which also tells the user how many trees have been saved by choosing public transport.

For the produce industry, I continue to see more marketers using QR codes and social media in their efforts to reach consumers; you may recall we took a look at mobile sales opportunities for fresh produce at Fresh Summit 2012.

What do you think about mobile sales for fresh produce? Share your thoughts in the Increasing Consumption Community on PMA Xchange.