Former Tesco produce director Peter Durose has warned suppliers to watch retailers carefully and adjust their structures and what they offer to bring them in line with what they see.
He laid out his predictions for this year at Fruit Logistica forum on consumer behaviour last week, highlighting that the entire supply chain is faced with the same challenges and that the only way to take effective action is to listen to consumer demand.
But overall, he was positive about how the recession could change the shape of the fresh produce industry.
Durose said: “UK retailers are shedding huge numbers of jobs and their supply base needs to reflect that in their structures. This is not necessarily negative. There are still opportunities for growth - now is the time for innovation and creative thinking. This will not be easy because times are tight, but we need to be investing more than we ever have done…
“It is hard for consumers and hard for suppliers, but it is hard for the retailers to manage their own costs,” he continued. “We have seen this in the UK where they have a new approach to their cost structures. I think produce will be an area that is less affected by the reduction in consumer income, but shoppers will change their shopping pattern as a result of having less to spend and they will switch what they buy and where they buy it…
“They will focus on smaller pack sizes to manage their weekly spend, especially if they shop locally more often and are walking home.
“There will be a higher level of promotional activity and this will reduce the level of loyalty as consumers look for the best deals and shop around more frequently, as a reflection of their tighter budgets. If you are looking for loyalty, buy another dog.”
Durose insisted that “price is still fundamentally the most important factor” in the UK and backed this up by citing Tesco’s new position as “Britain’s biggest discounter”. He questioned the premiums given to local or organic fresh produce, claiming that consumer preference for locally sourced fruit and vegetables “does not give retailers the right to charge a ridiculous premium for it” and that the price for organics is “still too high”.
He predicted that consumers will become more flexible on the appearance of fruit and vegetables and will seek out a more personal service.
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