In the U.S., we know what we like, and usually we’re willing to pay for it. This drive to personalize to suit our lifestyles—to save time, live better and healthier, or indulge—extends to the food we buy in the grocery store. We can purchase products free of gluten or chock full of it, products fortified and labeled with the nutrients, or flavors of our choosing. Craving mocha-flavored chips? Sriracha popcorn? There’s a packaged product for that.
In recent years, the perimeter of the store (meat, produce, deli, bakery and seafood departments) has been catching up with U.S. consumers’ need to differentiate themselves. Consumers can chose from a dizzying amount of products and buy them pre-cut, in varying pack-sizes, or with a dip or some other food pairing. In fact, in departments like produce, certain fresh commodities that have yet to grow and change with consumers’ demands—including bananas, pears and beans—are lagging behind sales of more innovative products like packaged salads and fresh-cut fruits and vegetables.
So while personalization is alive and well in certain perimeter departments, others still have the opportunity to evolve. But what does the future of personalization look like for products that can’t necessarily be flavored with Sriracha?
Pre-cut, packaged or seasoned products have been some of the biggest and most consistent sources of growth in the produce department over the past few years. From 2011-2015, the compound annual growth rates (CAGR) for value-added vegetables and fruit* were 15% and 12%, respectively. But opportunities for customized produce exist beyond value-add. In particular, branding is evolving and allows suppliers to tout the health benefits of products for consumers seeking specific vitamins and nutrients. As for the future? Vegetable butchers could be the next big thing in produce. These trained professionals wash, cut and dice—everything but cook your produce—before it goes to the checkout counter.
With consumers focused on health and wellness, it’s not surprising that items that allow consumers to portion-control or customize their indulgence are driving growth in several bakery categories. In fact, mini pies have seen dollar sales increase 21%. In order to meet the demands of consumers of varying household sizes and preferences, some retailers are offering stand-alone brownie and dessert bar stands or cookie bars where consumers can mix, match and include flavors and portions that reflect the tastes of their whole household, no matter the size. The future of personalization in bakery is looking more experiential, with options to choose from made-to-order offerings, like donuts, dipped fruit and fudge. Consumers can watch live demonstrations, which enhance the perception of fresher food, and then curate their own selection of baked goods.
While fully cooked and prepared products exist in the meat and seafood departments today, these customized items are experiencing comparatively slow sales gains versus other perimeter departments. Fully cooked meat’s dollar and volume sales each grew just 1% during the latest 52 weeks ending May 28, 2016, and had a CAGR of 3% from 2011 to 2015, and prepared seafood increased 5% during this time. Still, these departments have big opportunities to educate consumers on the preparation and health benefits of these products to take personalization to the next level. Retailers can offer services in-store for consumers to bring a fresh cut of meat to the counter and have a staff member prepare it for them as requested, down to the spices, seasonings and cooking method.
From the salad bar to the sandwich counter, customers have long been able to personalize product in the deli. Consumers can mix and match entrees, sides and snacks, and also find restaurant-style in-store dining. Delis can continue to be relevant with consumers looking to personalize a prepared meal by truly understanding them at the store level. In terms of future innovation, the sky’s the limit—we expect to see more variety, more opportunities for personalization and more in-store dining options than ever before.
Not all departments have the ability to be fully functioning restaurants or chop vegetables in front of consumers. However, many are moving in the direction of offering more varied options. And having a firm grasp of the consumer and what they want at the store level is key for success across the fresh perimeter.
*Value-added vegetables includes meal-prep vegetables, side dish vegetables, snacking vegetables, and vegetable trays; value-added fruit includes fresh-cut fruit, fruit jars and cups, and overwrap fruit.