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Supermarket Spending
What is the Fresh Produce Cut of a Grocery Store's Volume?
Hi, James,
I've got a question. How much do supermarkets spend on fresh agricultural produce as a percentage of their total spending? It came up at my job, and I figured you would know if anyone does.
Baruch, the standard cut in the Baltimore metro region has traditionally been 10% for produce. However, this includes non fresh merchandise, such as bottled juice, canned nuts, caramel for apples, dip mixes, dip, etc.
What I have below is the out-the-door cut. Keep in mind that produce has higher mark up, lower labor and minimal shrink [as it can be reworked and used in other departments] than grocery or meat, so the purchase number would be less. If we are also to cut out non-fresh items, lets just round the below cuts down 2% to account for the purchasing cut.
In the suburbs, 10% is about the norm.
In the ghetto 6% is the norm.
In the working class city you are looking at 8%.
On the waterfront in the deep suburbs we are doing 12-15%, but as low as 9%, depending on the season.
Any independent will sell more fresh produce as their buyers have latitude and are not stuck choking on centralized purchases.
A grocer in an affluent enclave out of town could go as high as 20%.
These numbers I just threw out there are highly sensitive to buying and merchandising initiatives. I could double the cut of any produce department I ran within the first month. When one deals in produce the buyer is the volume driver, which goes to show you that people want more fresh produce than they usually have access to at prices they can afford. This is ironic, as produce is the cheapest way to eat and the easiest merchandise to handle.
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