Fresh foods is one of the brightest stories in food retailing today, and somehow it continues to get better. In SN’s just-published annual Fresh Foods Survey, some 75% of retailers said sales have increased in the past 12 months, and roughly the same percentage expect further gains in the next year.
If you’re surprised by these numbers, then you haven’t been following trends closely enough.
As Liz Webber points out in the feature story in this issue, the activity is consumer-centric; it’s fully driven by shoppers.
Retailers are responding by enhancing assortments, focusing on emerging categories and increasing space devoted to perishables.
What more can we expect in the next 12 months? We asked our survey takers to forecast what’s ahead, and the answers reflect a unique growth curve. Unlike some struggling parts of the store that are reinvented each year, fresh foods is building on its success.
Here’s what to look for:
1. Rolling out successes more widely
Respondents expect to stay the course by expanding programs to more stores. Of course, expansions are easier said than done, as one person remarked, “In our instance there is no more shelf space available unless reconstruction is done.”
2. Giving more runway to natural and organic
Those responding to SN’s survey said natural, organic and better-for-you items will continue to lift sales, and this lines up with forecasts from industry consultants. A case in point is the chicken category. Antibiotic-free chicken could explode to 40% of chicken sales by 2022 from 12% today, said Chris DuBois, principal, IRI. “The change in the meat case will be tremendous,” he emphasized.
3. Enhancing the operations side
Fresh foods doesn’t live by new items alone. One respondent expects “small or no assortment changes” for that company but “improvement in operational consistency” to enable growth. Two “winning recipes” are using shopper insights to customize by store, and building capabilities to both manage costs and create excellent customer experiences, according to a fresh prepared presentation from IRI as part of an ongoing webinar series with Food Marketing Institute.
4. Growing in-store service
Retailers are rising to the challenge of providing improved in-store service for perishables. Asked which service-focused employees they have in stores, 25% said cheesemonger, 28% trained chef, 46% scratch baker, 51% seafood expert, and a surprisingly high 79% cited butchers. This trend will continue, giving supermarkets an improved reputation as a place for fresh foods specialists of all types. “Supermarket fresh prepared departments may be a highly attractive place for the next generation of chefs to work,” IRI’s DuBois observed. “There’s a real chance for chefs to be stars in the supermarket industry.”
My favorite comment came from a survey respondent who is clearly riding the fresh wave: We “did not change assortments much, it’s just what shoppers are buying.”
I have a sense this operator should become more proactive, but the remark underscores the special nature of this segment. For the foreseeable future, it’s hard to go wrong in many fresh foods categories, and building on success is the name of the game.
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