Fresh Food Ripe with Opportunity

The battle between traditional brick-and-mortar grocery and alternate channels has been heating up of late, with analysts and pundits trying their best to predict who will control the market in the future. Meanwhile, consumers are reaping the benefits of at-home delivery services in the digital world and a store perimeter rich with fresh, healthy, ready-to-eat products in the "real" world.

In fact, some say fresh food might be the single most important differentiator for brick-and-mortar stores as they compete with online grocers and other alternate formats. Fresh food accounts for approximately 29 percent of total store sales, according to Nielsen's Perishables Group. The basket size of shoppers who include fresh food is 1.5 times to 2.1 times larger than that of consumers who don't buy fresh products.

Today's smart retailers are redefining the notion of "fresh food." The category has evolved and expanded beyond meat and produce to include seemingly limitless choices. The past year has seen many nongrocery retailers like Target and Walgreens beef up their fresh offerings with items like hand-rolled sushi for a quick lunch break, or fruit and yogurt for a healthy on-the-go breakfast.

"Fresh is becoming more complex with greater variety in products and package sizes, more private label/brand options and increased value-added products, such as diced vegetables or pre-marinated meats," said Bruce Axtman, president, Nielsen Perishables Group.

Not to be outdone, Amazon announced it would expand its AmazonFresh delivery business to metropolitan Los Angeles. Once an online order has been placed, the service delivers fresh food to shoppers' homes in insulated totes. Historically, delivery only has been available in the Seattle area.

Close to the same time, Walmart announced a fresh produce guarantee in the United States, offering customers a no-questions asked, 100 percent money back guarantee on any produce they're not satisfied with. The offer is the result of significant supply-chain improvements along with a comprehensive training program for 70,000 associates.

Though Nielsen forecasts that grocery will continue to control about 64 percent of fresh food dollar market share in 2016, it also indicates growth in the warehouse club and mass/supercenter channels.

Time will tell how the retail landscape will change along with the role of fresh food in what has become an extremely competitive time for those in the business of selling packaged food.