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SPOILER ALERT! 2017 Industry Outlook

Trends, insight, and analysis you need to know
MS_Spoiler Alert

Additionally, like water-strapped growers, Totta sees movement toward hardier storage crops like potatoes, carrots, onions, and sweet potatoes as farmers shy away from riskier, more perishable crops like cilantro, spinach, bell peppers, and lettuce.

Don Goforth, director of sales and marketing at Reedley, CA-based Family Tree Farms Marketing, LLC, shared similar concerns. “Labor and water make doing business here very difficult. We’re expanding across our borders and going to other countries to produce. It’s the reality of the economics of agriculture.”

On the Horizon
Looking to the future, Nassif says work on the 2018 farm bill should begin sooner rather than later. “One of the things we’re fighting for is to make sure the government walks the walk when it says ‘half your plate’ should be filled with fresh produce. The fresh produce industry gets very little from the farm bill in comparison to other commodities.”

On the retail side, Mike Kienzlen, owner of Arizona-based Retail Profit Solutions, considers labor a grocer’s “largest controllable expense.” Similar to growers adapting with less, he predicts technology will continue to lead the way. Retailers will be forced to break old habits of simply scheduling employees for a certain number of hours, and instead use software to calculate how much profit is obtained from every activity, from stocking shelves to breaking down cardboard boxes.

Retail Reboot?
In addition to labor issues affecting the retail scene, other technology applications and generational changes are leaving their mark on this highly competitive landscape. From how grocers track data to how consumers access information—everything is moving faster now.

“It appears our industry has gone through an evolution of data analysis,” asserts Kienzlen. “People are maturing in their understanding of how to use data to drive business. One area where this is most evident is in shrink—measuring the amount of product retailers are discounting or throwing away—a major factor in the perishables industry. Tools such as mobile apps and hand-held scanners are helping grocers gather data far more quickly. “Analysis of this data is helping retailers see the problem: shrink is always bigger than you think—you think you have 1 percent and it turns out you have 3 percent.”

Brian Numainville, principal at Retail Feedback Group (RFG) based in Lake Success, NY, says new technologies are not just for the selling side of the equation. “As younger shoppers move more into the ‘shopping mainstream’ over the coming years, there will be more demand for a variety of shopping options, including online.”

The Online Conundrum
And there’s one of the year’s biggest gambits for grocers: to increase online ordering systems and delivery or pickup options, or to begin offering these services if not already in place. Both options are expensive endeavors, but can have a handsome payoff if handled correctly.