Target's 'pay less for old produce' trial has serious risks but even better potential

In a sense, this is the ultimate in transparency, giving shoppers who want to pay for fresher produce that choice.

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Credit: iStockphoto

At South Bay Target in Boston last week, Target ran a trial for a new pricing effort. It charged more for the freshest produce, or, put another way, it offered discounts for older produce. It's an interest pricing twist to see if shoppers will pay more for fresher produce and, if so, how much more. But it runs a sharp risk because it, in effect, highlights how relatively old some of its produce is.

Absent that explicit reminder, a clean, brightly lit produce display might leave some shoppers with the impression that all produce is fresh. And, yes, before I hear from you home-vegetable-gardening people, I'll concede that "grocery store fresh" is a relative term. Still, in retail, perception is reality.

"The raspberries on the shelves at the South Bay Target recently were uniform in appearance — plump and pink and sealed in tidy plastic boxes. Perched in the middle, however, a simple red-and-white sign pointed out a difference," noted a Boston Globe story about the Target effort. "On the left were pints of berries that had arrived in the Dorchester store that same day, priced at $3.99. To the right, fruit that had been on the shelf for four days, offered at a 50-cent discount."

Target deserves kudos for this effort. It has engaged in an ongoing effort to experiment and publicly try new ways of retailing. To the risk-takers goes market share.

Let's look at the best parts of this pay-for-fresh idea. Done properly, the effort simultaneously speaks to two very different segments of the Target shopper base: those who are attracted to the relatively freshest produce (the Whole Foods/Trader Joe's customers who might be attracted to the lower prices and far-more-extensive non-grocery inventory of a Target), and those who want bargains (Walmart shoppers and some grocery shoppers).

The second good point is the flip side of the risk I mentioned earlier. By flagging which products are fresh and which aren't, Target gets some good-behavior points for transparency. Just about everyone knows that some of the produce at any mass-retailer (Whole Foods and Trader Joe's included) is going to be older than others. Give Target points for not only conceding this, but making it explicit.

In a sense, this is the ultimate in transparency, giving shoppers who want to pay for fresher produce that choice. Indeed, the desire for fresher produce will vary based on the item —"fresh" for many is more important for corn, for example, than for carrots — and the situation. For example, if you're preparing a dinner party for your boss you might be more willing to pay extra for fresh than when you are making a soup that will cook for three hours. Giving customers meaningful choices is empowering.

(Aside for those who care about carrot freshness: If freshness is important, always buy carrots with their green leafy tails intact. Those leaves wilt and die quickly, so the existence of bright green means the carrots have to be fresh. The carrots without those leaves could be weeks or more old. See? You never know what you'll learn from this column.)

What some retailers, Target included, have done by means of visibility is allow the shopper to scan a barcode or QR code on the product and learn more about its labeling. That approach is far from optimal. First, it only works for a small percentage of products and, given the power of Murphy's Law, it will never be for the products that the shopper cares about. Secondly, the retailer's control is negligible, but the retailer will be blamed for any errors that a distributor committed. (Yes, life's not fair.) Third, it puts the onus on the shopper to extract the information.

This fresh-for-more-bucks trial avoids all of those problems.

Another plus is that it's a non-intrusive way to better understand what your specific shoppers (at specific stores) care about. The average Target shopper chainwide may have very different preferences than a particular store's typical shopper. This will facilitate much more meaningful shopper preference data, allowing for much more sophisticated decisions.

The risk of flagging how old some of the store's produce is is somewhat mitigated by in-store displays and positioning. For example, at a glance, does it appear that 80% of the merchandise is fresh and only 20% is old? Done that way, this display can not only give shoppers that choice, but it will reinforce the mantra "We offer the freshest produce when you need it and lower cost produce when you want it. And unlike your local grocer, we tell you which is which."

All in all, it's a very interesting retail experiment that opens the door to hundreds of variations. Many food companies throw out a huge amount of prepared products. Sadly, many communities lack a practical ability for stores to donate those items, even though they are often perfectly usable. It's not only food. Flowers, for example, are also often thrown out while they still have days of life left.

If donation is not viable, why not use a variation of this technique to see if your customers will be willing to purchase them at a steep discount? I do note that the Target discount referenced in The Boston Globe piece was hardly a steep discount, but that's part of what they are trying to figure out. For items that are about to thrown away, even a steep discount is more profitable than nothing.

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