Good article in The Grocer about Asda’s decision to trial selling only pre-packaged fruit and vegetables. This has apparently caused “outrage” and “uproar”, even hitting the headlines. Some customers in the store where it is being trialled have ripped open the packaging in order to take the exact quantity they want. So what’s going on?
The business case for not selling loose fruit and veg is fairly clear. First, it appears that by standardising package size the overall price will come down. This seems counter intuitive – surely unpackaged items in bulk are less expensive to process than packaged ones? But apparently not. Second, it may slightly speed up check out, as loose items will no longer need to be weighed or counted in order to establish the price at the till. Finally, it is likely to reduce food waste. Fresh products sold loose tend to be sorted by consumers who leave those items that do not conform to their expectations.
The case against only selling pre-packaged product is also fairly clear. First, it is believed prices will go up – because consumers will have no choice but to buy more than they might want. Second, waste will go up. But instead of it being in the supermarket it will occur in the supply chain and in the households. It will occur in the former because there will be huge pressure to produce individual fruits and vegetables that conform to a precise cost standard, as well as a quality standard. So slightly underweight or overweight items will not be packaged. And it will occur in households because they end up buying more fruit or veg than they can consume.
So who is right? From an operations perspective, this is all about a choice here between two different order winners (OWs) – cost or flexibility. Pre-packaging delivers lower cost; loose fruit and veg delivers flexibility. Because Asda are under huge pressure from low cost supermarket chains, and their research suggests that price is a key factor in a consumers decision to shop in their stores, they have favoured delivering on the cost OW and discarded the flexibility OW. They are probably wrong to do so, simply because they have more than one target customer. Their customer base includes hard-up families who may well be cost conscious, but it also includes people living alone, retired couples and so on, all of whom may well prefer flexibility. On this basis, it does not matter which of the two approaches minimises waste and is the most environmentally friendly – both are needed.