Delegates at The London Produce Show and Conference’s Supplying the UK Market workshop hear why confidence is key in supply-chain relationships as well as where the opportunities lie among the Big Four and beyond
Making sure a winning offer can consistently be put to fresh produce shoppers is vitally important to grocery retailers when it comes to both maintaining and increasing their market share. But, perhaps even more important than having the right price point and quality, is the need to win consumers’ trust. This is the view of Ian Harrison, technical director for fresh produce at Asda’s sourcing and supply subsidiary IPL, who told delegates to the Supplying the UK Market workshop that trust is crucial to making sure shoppers remained loyal to a retailer.
“Trust is so vital – you have the best prices, you can have the best quality, but if customers don’t trust you, you can’t sell, you will go backwards,” he said. “There’s a non-written contract of quality between retailer and customer that we have to deliver on.”
Harrison said that when it comes to selling fresh produce, Asda’s options are quite limited as a supermarket, arguing that there are three “levers” retailers can pull – price, quality and service.
“You’ve got to get your price right, offer a competitive deal and find out where your segment is in the market,” he said.
“In terms of quality, when someone spends their hard-earned cash – if they only have £20 to spend on produce or £12, they want to get value out of that money. You don’t want something that doesn’t taste good or smell good.”
Harrison said price and quality were intertwined, arguing that successful fresh produce retailing is a combination of getting the quality and the price right to provide value.
“Underpinning that is service – when you go into a supermarket you want good service, you want them to make it easy for you, and underpinning all of that is trust,” he added.
As a wholly-owned Asda business, IPL uses a direct procurement model to source from growers, handles logistics and has six packhouses around the UK, doing everything from ripening bananas to packing potatoes or fruit.
IPL, which has been active for the past 11 years, does not only supply fresh produce, but has integrated other Asda food supply chains in into its business over the past five years including wine bottling, nuts, dried fruit, house plants and flowers, making IPL Asda’s biggest supplier. In fact, 10-15% of all the retailer’s food is now sourced through IPL. As part of Walmart, IPL also procures directly on behalf of other wider Walmart businesses, including South African citrus for Walmart Japan and Dutch peppers for its Canadian outlets.
With a turnover estimated at $3billion, Harrison claimed IPL was one of the biggest food companies in the UK and quite possibly the largest fresh produce company in the country.
Of course, Harrison says such achievements can be undermined if a retailer loses consumer trust, arguing that years of building a brand reputation can be lost if a company fails to make sure its suppliers are acting responsibly. “Things that can wrong range all the way from horse in beef burgers all the way to modern slavery to water courses being driven down by over-production,” he said. “We can spend years and years building up a brand reputation, but if you get one of these wrong it has undermined all of that.”
To avoid such potential dangers, Harrison says Asda takes an active part in the Red Tractor and GlobalGAP standards, while working hard with growers to make sure they have sustainable businesses and can manage their resources.
Harrison also spoke of the need for retailers to “stay one step ahead of the curve”, explaining that it is important to anticipate changing consumer tastes by working closely with growers and seed companies to develop new products. “We are very aware that people’s tastes change over time. We sell some things now that we didn’t even stock three years ago. We’ve always got to be one step ahead of the curve on that,” he said.
FPC’s Sian Thomas: price remains the key driver for UK shopping choices
Sian Thomas, communications manager at the Fresh Produce Consortium (FPC), which liaises with the government on regulatory issues, argued there was massive opportunity for growth in the UK, with most consumers eating well below the recommended five portions of fruit and vegetables a day.
“There is a fabulous opportunity (for the sector) because we import over 65% of fresh fruit and vegetables,” she said. “The majority of that is coming from within the EU, but we have a massive appetite for exotic fruit in particular, so the door is open.”
Thomas said the UK, which imported 8.7 million tonnes of fresh fruit and vegetables in 2014 according to the most recently available Defra figures, is far from self-sufficient when it comes to fresh produce. At around 34% of total volumes, this relatively low figure is reflected by the growth in imports, she said.
However, price remained the key driver for shopping choices, she said, arguing that although consumers were benefiting from low prices for fresh produce, the phenomenon continued to be a massive challenge for the sector.
“It’s good for the consumer and we hope that it could be balanced by increased consumption of fresh produce,” Thomas added. “There’s a massive opportunity there to do so.”
Thomas also called on exporters to look beyond major retailers to other sales opportunities in the UK, especially in foodservice.
“So often we hear from exporters and they are totally focused on the major retailers and how to get into them and we have to keep saying to them, look elsewhere as well, open your eyes and see what other chances there are for you to get into the market,” she said.
“Here in the UK, we are eating out more and more, and particularly here in London young people eat out a huge amount, and that’s an opportunity again for our industry for this particular sector.”