Last updated on March 2nd, 2023 at 05:53 pm
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For retailers, nothing is more important than having ripe bananas on display each and every day. But as we all know, ripening rooms are a major investment. They require warehouse floor space, a well-trained staff and the establishment of policies and procedures to ensure success on a daily basis. How can something as simple as having ripe bananas and avocados on display justify this level of investment? Few can answer that question better than Gary Campisi, former head of quality control for produce, floral, meat and seafood at Walmart and Sam’s Club.
Working with Bruce Petersen, Campisi was instrumental in the development and rollout of ripening operations during Walmart’s national supercenter expansion from processing 15,000 cases of bananas per week in one distribution center to more than 825,000 cases per week in 40 distribution centers. Today, Campisi consults for some of North America’s largest grocery retailers, works closely with UC Davis and is widely considered one of the industry’s foremost experts in commercial ripening. He is also an independent engineering and training consultant for Thermal Technologies, the global leader in commercial ripening room design and construction.
Q: What’s so important about having ripe bananas, avocados and other fruit on display that it can justify the investment in ripening rooms?
Campisi: First and foremost, it’s really important to give your customers what they want. Let’s start with bananas. Every customer expects you to have ripe bananas at the retail level. We all expect it – every time we shop – even those of us in the industry. As a retailer, the only way to truly meet that expectation in my opinion is to have your own ripening rooms with the internal process and procedures necessary to ensure success on a daily basis.
Bananas are the most important and profitable item in the produce section and sometimes in the entire store. So having poor or inconsistent bananas on display not only costs you sales and profit of your most profitable item, it reduces sales across the entire produce department and is proven to be a prime motivator for customers deciding to shop elsewhere. So to me, being able to control banana quality is the cornerstone of being able to control your destiny as a retailer.
Q: What specific criteria are used to justify the initial capital investment and ongoing expense of ripening room ownership?
Campisi: Listen, it’s all about control, savings and sales. Back in the early 1990s, when Walmart first decided to look into ripening rooms, we had to justify the expense like anyone else. Pressurized ripening rooms were in their infancy and there were only a couple of major players producing them. We were already using tarp-style rooms from Cool Care, but when Thermal Technologies invited us up to see the new ‘tarpless’ rooms they installed for Jewell-Osco in Chicago, we were pretty impressed so we decided to test the rooms side-by-side. The results of that test are pretty well known.
Along with major energy savings, testing showed that bananas ripened in the Cool Care rooms came out weighing a quarter pound less per box after ripening. The boxes in the Thermal Tech rooms, which used ultrasonic humidification, came out the same weight after ripening. They also looked better and had a longer shelf life. While a quarter pound per box in weight savings may not sound like much – even back then, with lower retail prices and when we’re only processing 15,000 cases per week at a single distribution center, that still added up to more than $100,000 in annual retail value.
Along with the energy savings, that was more than enough to justify investment in the Thermal Tech rooms. Simply being able to buy green fruit at contract prices and then ripen it according to our own specifications at pennies per box had a huge impact on our margins. And having ripe bananas on display at every Walmart Supercenter – well, you can’t argue with success.
By the time I left Walmart in January of 2018 after more than 25 years, internal studies showed our ripening rooms had an average ROI just under 18 months per room. Over that same period, we went from processing 15,000 cases of bananas per week in one distribution center to more than 825,000 cases per week in 40 distribution centers.
Most interesting of all, throughout this entire period, bananas were (and I believe still are) the number one dollar sales item at Walmart Supercenters. One percent of total sales and 9 percent of total produce department sales. When factored in with the efficiencies and savings of doing all that ripening in-house, the profit margins become truly astounding, but you have to have tight control over the quality of your fruit to make it happen.
Q: Do these economies work and provide the same ROI for everyone?
Campisi: Every company is different of course, but buying green bananas at contract pricing and ripening at 15 to 20 cents per box using your own ripening rooms? That alone is going to justify the investment. Particularly when compared to the alternative: buying bananas at market price and paying a buck, buck-fifty a box to have them ripened. Again, everyone is different. That model works for plenty of companies and is a great profit center for wholesalers and growers who have made the investment in ripening rooms themselves for that specific purpose.
But let’s not lose focus. On a retail level, the key is to make sure you meet your customer’s expectation of having the highest quality fruit on display day in and day out. In my experience, you’re simply not going to have the flexibility and control to consistently meet those needs in the same way spot buying from a variety of wholesalers and growers.
So to reference what I said earlier, the real payback in ripening room ownership is having control over the quality of your produce, the ability to keep your customer’s expectations met and thereby control your own destiny as a retailer. To me, that goes well beyond dollars and cents.
Q: What about the cost of training and developing the process, procedures and protocols necessary to operate a successful ripening program?
Campisi: The proof is in the pudding, right? Our internal audits consistently showed a cost below 15 cents a box for ripening; that includes labor, energy, everything! Of course, we had economies of scale, but the fact that our rooms all operated exactly the same way allowed us to create successful protocols company-wide. This made training easier while standardizing our ripening operations to the point that we could depend on having the same consistent, high quality fruit on display at every Walmart Superstore. Thermal Tech’s on-site training at the startup of each installation also proved invaluable.
As I said before, return-on-investment for ripening rooms goes well beyond dollars and cents, although the dollar and cents part is abundantly clear. The real value for the retailer is being able to provide your customers exactly what they expect, exactly what they want, exactly what they need day in and day out at every store location. Having that kind of control is the real ROI for ripening rooms.
For Walmart, it was a no-brainer. We expanded to ripening pears in 2001 which increased pear sales by 66 percent; while sales of avocados and mangoes skyrocketed after we began ripening those two commodities in 2005 and 2012 respectively, all using the same rooms. Today, there are more than 600 ripening rooms in Walmart D.C.’s across the U.S., all designed and installed by Thermal Technologies.
As an independent consultant specializing in commercial ripening, quality control and supply chain issues for major retailers across the country, I continue to work closely with Thermal Tech because they are the best at what they do. Their ripening rooms are so reliable, the quality of workmanship so consistent, their training at startup and support after installation so incredible, that for me, using any other system is out of the question.
Today, one of the main reasons we’re even having a discussion about ripening room ROI is the well-known success of Walmart’s ripening operation using Thermal Tech ripening rooms, which really caused the industry to take notice. It’s great to be able to work with their clients to help them achieve the same results and to be associated with an innovative company whose product I firmly believe in. Again, you can’t argue with success.
Gary Campisi can be reached at [email protected].
