The Cyclospora outbreak that swept across the U.S. this summer has been declared “over,” but its impact on grocery shopping offers retailers an important lesson: A food-safety problem doesn’t necessarily stop with the product being recalled.
The affected Mexican iceberg lettuce was recalled in July, but more than 12,000 illnesses were reported across 21 states, according to the CDC. By September 11, however, the CDC declared the outbreak over.
For retailers, however, pulling the recalled product from the shelf was only part of the problem. In my view, the larger problem was the change in consumer perception.
Any retailer can identify a recalled SKU and pull it from inventory, but it’s much tougher to convince shoppers that every other package of lettuce or salad on the shelf is safe. It should come as no surprise that, once people associate a food-safety problem with an entire category, the sales impact can spread like wildfire – well beyond the recalled product.
And that’s exactly what the early sales data showed.
Fetch Data, a rewards platform analyzing $212 billion in receipt data, found fresh lettuce sales fell sharply during the height of the outbreak (9% nationally), while salad mixes (down 23%) and salad kits (down 27%) experienced even larger declines in the two weeks after the outbreak. During this period, some consumers shifted their purchases to other vegetables and frozen produce, sparking a 17% increase in sales.
Let me be clear: I’m not calling for a long-term shift from fresh produce to frozen; I know people won’t cut off their love affair with salads, but it’s not hard to see or understand the recall “ripple effect” moving across a grocery store. In other words, consumers didn’t stop their grocery shopping, but they did change what they bought.
We’ve all been around the block enough times to know produce doesn’t exist in a vacuum. A shopper buying lettuce also buys tomatoes, or dressing, or cheese, chicken and other ingredients for a meal. If that shopper decides, “Hmm – maybe I’ll skip the salad,” the retailer is looking at more losses than the margin on a head of lettuce.
Kroger provided a particularly useful window into the financial impact. The company said the Cyclospora outbreak reduced its identical-sales growth by approximately 35 basis points during the quarter.
It’s here where retailers need to be careful about interpreting the numbers.
The sales decline shouldn’t automatically be viewed as evidence that consumers have permanently lost confidence in fresh produce. The CDC has declared the outbreak over and says the contaminated lettuce is no longer available in stores or restaurants.
The real question becomes how quickly shoppers return to their pre-outbreak buying habits – if they do at all. If lettuce, salad mixes and salad kits rebound, the episode will look more like a blip, a temporary disruption.
But if, for whatever reason, shoppers remain reluctant – whether that’s because they don’t trust the FDA, or they’re just not ready, or they’re frustrated – retailers could be looking at a (potentially expensive) longer-term change in purchasing behavior. The challenge will be to anticipate what that change will be, and prepare for it without getting out of position if the chips fall the other way.