Why organics could be eating away your profit and what you can do about it

Can you guess the top 5 hard to identify produce items at US supermarkets?*

  1. Every loose organic fruit and veggie item in the department  
  1. Broccoli crowns vs. broccoli bunches  
  1. Coriander vs. Italian parsley vs. curly parsley  
  1. Sweet onions vs. yellow onions  
  1. Radicchio vs. red cabbage  

Demand for organic fruit and vegetables is increasing in Australia. On track to reach 5% of the Aussie market, the sector accounted for 15% in Germany** and $61.9 billion in the US in 2020*. All the major supermarkets are seeing this increase. As you can see from the list above, retailers can't account for their organic sales correctly at the checkout, and that can be a big problem.  

We take a look at what can happen to your bottom line with ongoing, significant organics misidentification and what you can do about it.  

Loss of potential profit  

Retailers lose out on potential profit at the checkout when organics are scanned as their cheaper, non-organic cousin. The resulting shrink affects your bottom line.  

Scott Schuette, VP of produce at Fresh Thyme, says, "Ringing up an organic avocado as a conventional avocado can cost you upwards of 50 cents per unit in sales and 25–35 cents in margin—these are two areas that we cannot afford to lose in."***

These items look identical. So, to make it easier to tell them apart, grocers can do a few things to help differentiate the items, like organic tape and stickers. But with new varieties coming in all the time, seasonal changes and even fraud, the potential for picking the wrong item is high. And it's all in the multiplication.  

One of Tiliter Retail's customers ran a study to see just how much potential profit they would lose on one misidentified organic product line. The result was alarming.  

The 200 store retailer could experience a loss of $1.4MILLION potential profit per year per 2000lb of organic bananas misidentified at the checkout as regular bananas. If you apply this model to your entire organics range, you can see that the potential loss is significant.  

Check out the details of the study here.  

Operational inefficiencies in the supermarket

Whether it's the shopper intentionally picking the cheaper item at the self-checkout, or because they don't know the difference, or your pickers choosing the wrong item, misidentification is common. This affects your inventory management and accuracy in the produce or bulk foods department and can be frustrating for your staff and customers.  

The data gathered from your scanners at the checkout gives you essential information for reordering, sorting, and displaying organics. If this data is inaccurate, your stock will be out of whack pretty quickly. This is not ideal when dealing with items with a short shelf-life and could negatively impact your sales.  

The majority of customers are honest and want to pay for what they're chosen. Making sure your scanners can identify what shoppers are buying and correctly charging for them is good for brand trust and customer loyalty. Just as much as for your inventory.  

Solving the 'organics problem'

Staff training is an ongoing process. Your cashiers, floor staff, and produce team needs to know exactly what categories are in stock and keep up with the seasonal changes and new product lines. They need to know a vast number of produce items and be highly trained on spotting slight differences and checking for labels and other organic markings.  

Australian organic produce is usually tagged with tape, netting, bright labels or a sticker. This helps cashiers, customers, and staff instantly recognise if the item is from the organic range and enter the correct PLU or choose the right item.  

Signage, messaging, and display box imagery can also help customers and floor staff easily identify organic from non-organic.  

Upgrade your supermarket tech for the best results

As consumer preference for organic produce continues to rise, supermarkets and retailers will need strategies to ensure their produce is identified correctly every time. You can't afford to incorrectly identify items at all, let alone for entire categories.  

Every dollar counts in the retail industry. And that's where Tiliter Retail can help you.  

Our smart retail scales are made for supermarkets. They help retailers tackle loss from misidentified organics because they can recognise if an organic marking is present on the item being purchased.  

The process is simple. Using computer vision, the AI Scale automatically weighs and identifies produce and bulk items without the need for barcodes. Shoppers or staff place their produce item on the Scale, and the corresponding barcode shows on the screen. The Scale user can either scan the barcode with their phone app or scanner or print it and attach it to the produce for scanning at the checkout. This gives you the peace of mind that your customers are paying for the correctly priced organic item, which helps to reduce shrink and maximise profit.  

The Scale is easy to use, highly accurate and helps you reduce plastic wrapping. So it's an eco-friendly option. Smart, right!  

If you're over losing potential profit from misidentifying organic produce, take a closer look at Tiliter AI Scale here.

References:

*Produce Market Guide

**ABC

*** Organic Produce Network