ELMWOOD PARK, N.J. - Fresh-focused retailers are gaining appeal not just because of their lush and plentiful fruit and vegetable offerings but their eclectic Center Store assortment, industry watcher Bill Bishop said.
The president of consulting firm Willard Bishop uses the term "fresh format" to describe such retailers, which include natural, ethnic and independent stores like The Fresh Market, H.E. Butt Grocery's Central Market, Whole Foods, Giant Eagle's new Market District format, and Caputo's Fresh Markets. The format captures less than 1% of annual grocery and consumable sales, but is one of few that the firm says is growing, predicting its share will rise to 1.2% by 2010.
These stores' center aisles carry a limited number of popular national brands but a wide variety of specialty and ethnic items, Bishop said.
"They'll have the popular national brands, but they'll have one size, and it'll maintain a very modest shelf presence," Bishop said. He discussed the format during the Q&A portion of a recent webinar, "The Future of Food Retailing," put on by The Food Institute here.
"They'll have regional brands, imported products, natural and organic," he added. "When you see a section like that, if you have any interest in the category, there are a substantial number of products you don't recognize."
The typical grocery presentation of a conventional retailer seems humdrum by comparison.
"What I think is plaguing the center of the store in many traditional supermarkets is same old, same old," Bishop said. "These fresh stores seem to avoid it. They show up with brands of products you've never seen before."
He recalled, as an example, finding a Lithuanian brand of ice cream in one such store. "It was tasty, and a good value."
The so-called fresh format started out as a platform to appeal to shoppers with high-end tastes, but has become more mainstream, at least in price, he contended.
"It's becoming much more of a people's store," Bishop said.
During the presentation, Bishop said retailers can challenge fresh formats and other competitors for the food dollar by localizing their offerings, which he said would also improve shelf productivity and the out-of-stock rate. "In today's world, local is much more important than standardized."
Jim Hertel, senior vice president at Willard Bishop and co-presenter with Bishop of the webinar, said the fresh format's growth underscores a broader trend in retail - the need to stand for something in consumers' minds - and requires packaged goods makers to offer product sets that are consistent with the image that fresh formats are trying to present.
On other topics, Bishop also predicted continued growth for natural and organic Center Store products, particularly natural ones, which don't face the production constraints that organics do.
"My feeling is, all-natural and organic has achieved the magic word status that fresh did just a few years ago."
Part of the reason is that people say they buy natural and organic products not just because they're healthier but because they taste better, Hertel added.
"It's a lot more about enjoying the food experience, and that's probably a deeper and broader vein than the narrowly defined proposition," he said.