A Fresh Approach

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A Fresh Approach

07/19/2016

Retailers can experience tremendous growth in fresh foods, with convenience a driving force.

Chris DuBois,
Senior Vice President, IRI

A store's perimeter has truly become the epicenter of growth in retail. The perimeter's footprint continues to grow, making room for innovations to complement traditional perimeter offerings. The excitement around the proliferation of products and flavors brings consumers of all generations to this region of the store.

Fresh prepared foods are making a huge impact on this trend. Fresh prepared foods lead the path to growth with nearly a 10 percent increase in revenue, according to IRI, with more than $1 billion in new revenue this past year. The "granddaddies" of the perimeter—meats and produce—still fortify the engine, generating $110 billion of the nearly $140 billion realized in this sector of the store.

Convenience Sells

A big contributor to fresh prepared foods' success is their ability to deliver on convenience. Convenience drives newer, innovative perimeter offerings while also impacting the behemoth traditional segments. Thus newer offerings have to deliver what consumers seek today: healthy, tasty and convenient.

Convenience is not a passing fancy—it is a way of life for today's consumers who expect foods that are easy to cook, eat and customize.


Convenience drives eating away from home, but fresh retail offerings can help satisfy demands for interesting, restaurant-quality food, made or prepared easily at home.

58% Eat their evening meal away from home 1-2 times/week

13% Eat their evening meal away from home 3-4 times/week

20% of millennials eat out 3-4 times/week

Source: IRI Convenient Cooking Omnibus April 2016


Market Drivers

Demographics have catalyzed the need for convenient offerings, as lifestyle changes and family composition and economics blur traditional roles. There has been evolution of the U.S. landscape where in the 1950s more than half of all married households had kids, living in a male-dominated, single-income household with mom's "job" to prepare meals. Of course, in today's changing world, only one in five married couples have kids, and singles are three times more likely to live alone compared to 60 years ago. And dual-income households are on the rise, dramatically affecting household income, as well as bending traditional household roles.

Furthermore, consumer behaviors show that recession-induced hesitation to eat away from home has ebbed. Nearly six in 10 people eat meals away from home at least twice a week, while 13 percent are going out at least half the week. Millennials are apt to eat out more than half the week, indicating a big interest in convenience, as well as food variety and interesting cuisine.

When consumers are eating at home, farm-to-table becomes important during this collaborative event. Nearly eight in 10 report they like to use individual ingredients to cook from scratch, but there's also a groundswell of consumers who prefer value-added products that are ready to heat when they get home. Younger millennials embrace this tradition even more, with half preferring ready-to-heat options, according to IRI research.

All of this signals a need for convenience, especially in the perimeter's fresh, interesting, often ready-to-go offerings. Opportunities to convert more of the once-a-week buyers to purchase ready-to-heat or fully prepared meals are abundant, delivering differentiation opportunities for retailers and sales drivers for collaborative manufacturers and retailers.

Trends show that prepared foods can deliver big success. The impact that prepared has on the department and the entire store is astronomical for those retailers who capitalize on this fun and engaging arena.

Opportunities exist to expand consumption to additional days of the week with variety and price

Source: IRI Convenient Cooking Omnibus April 2016


When At Home

79% Use individual ingredients to cook from scratch

Source: IRI Convenient Cooking Omnibus April 2016

$110 billion sales in meats and produce alone

Fresh Drives Growth!

IRI research shows fresh growth driven by five key trends:

Food Transparency: Consumer expectations are for clarity, accuracy and usefulness of food-related information from the companies that produce and sell it.

New Supply Chains: Alternative, local, innovative supply chains have emerged, changing the journey from farm to plate.

Convenience: Consumers demand strategies and tactics that save time and effort.

Fresh/Prepared: This is the fastest-growing segment of the store, primed to satisfy increasing numbers of shoppers and bring new ones.

The Connected Consumer: Digital technology has changed the way consumers gather information, develop attitudes and opinions, shop and consume products.