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Retail View: Don’t forget the 10-pound bag of potatoes

With organic produce sales on the rise, convenience offerings finding favor and the value-added category garnering more shelf space, retailers are looking for areas in the produce department to dial back.

A disturbing trend for the potato industry is the elimination of the 10-pound bag of russets, reduction in space or “hiding” the SKU on a bottom shelf under a wet rack or a dry table.10lb bag russet

Ross Johnson, global marketing manager for Potatoes USA, told The Produce News that retailers taking this route are doing so at their own peril. There are a couple of reasons that a retailer might think the 10 pound bag is optional. Seemingly smaller families buy in smaller configurations and the No. 1 seller is the five-pounder, which is an alternative and a consumer can always buy two of those.

“But they are not doing that,” said Johnson, adding that a recent study shows that if a store eliminates 10-pound bags, 14 out of 100 shoppers leave the store without shopping the category. Instead, they often go to another store to buy a 10-pound bag or an even larger one.

Johnson had a theory that the loss of the 10-pound bag was cutting into overall sales, so he tested the hypothesis by hiring a third-party firm to study scan data. Looking at frequent shopper card data from 50 million households, the study was able to track the purchasing habits of shoppers as it related to the potato category.

The potato industry executive said it is no secret that promotions on 10-pound bags of potatoes have dropped and often sales have declined as well. For example, in June sales of 10-pound bags of potatoes dropped 6 percent. But before a conclusion can be drawn from that, it is interesting to note that purchases of greater than 10-pound bags — typically 15- or 20-pounders — grew by 6.3 percent during that same month.

Johnson said a deep dive into those two categories for the entire year shows a correlation. As fewer retailers carry 10-pound bags, sales drop. But consumers appear to be heading to club stores and other formats to pick up their large bags of potatoes as opposed to just buying two five-pounders.

Johnson said the scan data combined with shelf space studies reveal that retailers often are misallocating space for potatoes, using too much real estate for specialty potatoes and an insufficient amount for the bagged category.

“Specialty potatoes and convenience packs are taking up 61 percent of the shelf space but only delivering 30 percent of the sales,” he said.

On the other hand, the bagged potatoes and traditional potato displays occupy 39 percent of the shelf space devoted to the category and generate 70 percent of dollar sales.

Johnson believes the category is becoming oversaturated with specialty potatoes, crowding out the big sellers. He also railed against a merchandising technique that places bagged potatoes under the shelf. He said they need to be at eye level to encourage sales, and said it makes more sense to devote the lion’s share of the department to the traditional russets, reds and yellows, and utilize a much smaller amount of the space for the specialty potatoes.

Johnson argues that in the potato category “velocity is king.” There is no doubt the specialty potatoes are higher priced and return a greater margin, but sales just don’t compare. He has been sharing this information with retailers and making converts, and in fact said that one retailer who had totally eliminated the 10-pound bag of russets looked at the study and determined he needs to add that SKU once again.

Johnson said the study, which he characterized as a “RichMix analysis” of the scan data, has one main message: “Don’t forget the 10-pounders!”