Expert strategies for accurate organic orderingExpert strategies for accurate organic ordering

Accurately predicting organic produce demand is a vital, and increasingly complex, endeavor for merchandisers.

Retailers must have the optimal amount of inventory on hand to best service customers, but the fluid nature of the category makes it difficult to sustain systems that minimize product spoilage and meet shopper interests, analysts report.

“Fresh food is perishable, demand is highly variable and lead times are often uncertain,” according to this article from McKinsey & Co., a New York-based management consulting firm. “Retailers are constantly having to make difficult trade-offs when placing orders with suppliers: order too much, and the food goes to waste; order too little and you lose sales and erode customer loyalty. But with demand fluctuating daily, how can retailers know the right amount to order?

Solutions include having retailers talk with operators from other stores in their chains “to see what is working,” when determining the proper amounts and types of organic produce to offer in outlets, says Jonathan Raduns, founder and partner of Greenville, South Carolina-based Merchandise Food Retail Consulting. “A fellow produce department manager in your region might have stumbled upon a product that is working well,” he says.

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Because an organic produce item might be “an incredible value” compared to the conventional counterpart, retailers can consider only offering the organic option, while using the product’s sales history as a guide for reordering, Raduns notes.

It is important to account for lead times in administering organic produce programs, he says, noting that many organic items require special ordering which may result in arrival delays. “Order to cover the gap in deliveries,” Raduns says.

Human interaction is always recommended when it comes to purchasing activity, but tools can enhance ordering operations, says Jonathon Raduns of Merchandise Food Retail Consulting.

The take on technologies

Automation, including artificial intelligence (AI)-driven suggestions, can also help retailers track and efficiently respond to market demands, he says. Operators can use forecasting and ordering support software to prompt store staff with suggested orders based on former activity, which can save them the time and effort of looking up every item's previous movement, Raduns says.

“The machine can anticipate what might be ordered in the future based upon the past and its knowledge of upcoming factors which might include holidays and weather,” he says.

Technologies that auto-order organic produce also can enhance operations, Raduns says, noting that systems can assemble proposed orders which operators approve and submit in lieu of walking the store and analyzing backstock daily.

Related:Retail strategies to prepare for organic produce supply challenges, shortages

“While human interaction and participation is always recommended, sometimes these tools can speed along and support day-to-day operations,” he notes. “If such tools do not exist, retailers should closely review the sales data from prior years in making ordering decisions and adjust amounts upward or downward in conjunction with the current purchasing activity.”

That includes accounting for seasonality when studying past sales, Raduns says. “Don't just divide annual movement by 52 weeks but instead look at the specific week last year when the sales lifted or did well and order accordingly,” he notes. “Keep in mind any special events, holidays, or nuances that might impact this year's opportunity.”

Invest in inventory management

Accurate forecasting is crucial as ordering too much of a specific organic item can jam coolers and cause waste, Raduns says. Retailers should take prompt action to reduce spoilage from over-ordering, he notes, which can include making pricing adjustments and increasing the amounts of product displays in different store areas. “Don't wait until the potential issues become a reality of hard loss and inefficiency,” Raduns says.

Over-ordering also can contribute to food safety incidents, as sitting an abundance of products on displays might enable the transfer of bacterial growth from one product to another, he says.

“Degraded produce can beget more degraded produce by easily spreading spores to other areas via air flows or when produce comes in contact with contaminated surfaces or products,” Raduns notes.

Forging strong relationships with organic produce shoppers can allow retailers to better anticipate demand for specific items while triggering greater purchasing activity, he says. Operators, for instance, might e-mail customers to announce the availability of newer organic selections while also quizzing the individuals about the types of products they would like to purchase, he says.

“Consider special orders and tell customers about the organic items that the store will be carrying to create interest or a market for the product,” he says, adding that stores can generate further awareness by informing conventional produce shoppers about the products.

It is important, however, that merchandisers “be strategic and not flood the market with too many selections at once,” Raduns states. “People can only eat so many things.”