In today’s hectic marketplace, there’s no shortage of places for consumers to buy their favorite fresh foods. And with more consumers trying to buy healthier foods and willing to pay more, it’s worth examining wellness trends and the impact that the fresh department can have on the bottom line.
According to a recent Nielsen survey, 64% of Americans are trying to eat healthier, and 60% say quality trumps price. Further, 55% are willing to back up that statement by paying more for healthier choices. And when it comes to the attributes that consumers associate most with healthier foods, “made from vegetables/fruits” ranks the highest. “High in protein,” “whole grain” and “high in fiber” are also strong influencers. Given these recent trends, it’s no surprise that fresh foods are playing a big role in how consumers are striving to meet their goals—and the retailers that help them are reaping the benefits.
Overall, retailers that provide consumers with fresh items (bakery, deli, meat, produce and seafood) and meal solutions are performing better than their competition across the total store. Not only do today’s top-performing grocery retailers lead the way with fresh product sales, they also outperform in sales across the entire store. In fact, total fresh sales account for 50% of total food sales at top-performing retailers, and total food sales at these retailers increased 10% from 2014 to 2015. In contrast, fresh sales at low-performing retailers only account for 30% of total food sales, and total food sales declined 6% in 2015 compared to 2014. With fresh sales in U.S. grocery stores totalling more than $146 billion in sales in the year ended May 28, 2016, all retailers would be wise to increase their attention on fresh food sales.
So what are best-in-fresh retailers doing differently? First, they stock more fresh items. In fact, top-fresh retailers carry 57% more fresh products than the lowest-performing fresh stores. For top-performing retailers, success depends on having the right products working the hardest for every dollar. Deli plays an oversized role at best-in-class-fresh retailers, accounting for 30% of fresh dollar sales, compared with 11% at low-performing retailers. Prepared deli items differentiate best-in-class fresh retailers, while meat department categories—particularly processed meat—have an oversized share at low fresh velocity retailers. Top fresh retailers also sell a larger share of organic products across fresh departments, with produce and meat as the main contributors.
Top-performing retailers also have some tricks up their sleeves in the individual departments. Within the deli department, top retailers emphasize deli prepared foods with a variety of products from salad bars to rice bowls, and various dine-in options that make the store’s deli a destination. The bestselling meat retailers put significant attention on fresh meat items available at the deli counter. Top fresh retailers highlight specialty and cooking and focus less on traditional fruits and vegetables. Top fresh retailers focus on everyday baking occasions through bulk varieties.
With consumers’ dollars at stake enhancing the fresh offerings in grocery stores is a sure-fire way to boost the bottom line.
The information detailed was derived from the following sources: