A Fresh Perspective

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A Fresh Perspective

By Rick Stein, Vice President, Fresh Foods, FMI - 03/01/2016

Successful food retailers share common attributes: we're meticulous, we're methodical, we appreciate food and business trends, we respect community, we're competitive and we love our customers. While my priorities have changed slightly in the past few years since coming on board at FMI, my perspective remains intently focused on the future of this industry, and that future is fresh.

As it's often described in our inner grocer circles, "the perimeter" is the new buzz term for increased profits. Fresh foods, inclusive of fresh prepared food offerings, are noted differentiators for the 40,000 stores we represent now, and we see no evidence of that changing anytime soon. This provides our industry with the additional opportunity of demonstrating how the grocery perimeter interacts with center store and enhances profitable fresh food strategies.

My new sounding board is FMI's Fresh Executive Committee, made up of some of the leading authorities in the fresh category. As these seasoned professionals tell me — and our research substantiates — traditional supermarkets should look to prepared foods in order to cater to a discerning consumer.

Perimeter's role in center store

Supermarkets are catering to an increasingly conscious shopper, especially in helping consumers overcome barriers to choosing healthful foods. Grocers are sensitive to the demands of their knowledge-seeking shoppers and they're reinforcing their position as the experts in food and nutrition as substantiated by the fact that more companies and stores are employing supermarket registered dietitians. And speaking of catering, foodservice-type offerings like sushi stations and coffee bars offer cross-merchandising opportunities to encourage a pathway to the center of the store.

Improving profitability with fresh

It's no secret that fresh-oriented categories continue to garner relevance within the store. Retailers told us in our annual operations survey that they would invest more in fresh foods — dairy, produce, meat, seafood and bakery — as well as prepared food programs in 2015. Fresh growth far outpaces total store, total edibles and center-store growth, with several of the fresh categories showing volume growth along with dollar growth, and deli/fresh prepared sales as a percentage of total sales ranging from 0.5 percent to as much as 35 percent, with an average of 7.4 percent. Hand-in-hand with a focus on fresh is an emphasis on organic products, according to 98 percent of retailer respondents in our annual operations survey. Still, regulatory issues, like country-of-origin labeling, menu labeling and the Food Safety Modernization Act, maintain far-reaching business implications for our industry.

Consumer trends in fresh

Consumer attraction to fresh is influencing their overall expectations of retailers. Subsequent only to low prices, fresh, less-processed goods top the list in retailer attributes that are reported as very important to consumers. Another trend we are watching is the consumer preference for locally produced items. In a direct comparison, local wins out in a fruit-purchasing scenario where conventional, local and organic are all equally priced. Furthermore, 6 in 10 shoppers encourage their stores to add more organic and local items. In all, appearance often beats price in purchasing decisions, according to FMI's Power of Produce 2015.

Shopper trends in fresh prepared foods also suggest some competitive strategies unique to retail, since consumers continue to allocate a large portion of their food spending at foodservice, and retailers can position themselves as a healthier option.

FMI Research Portfolio
Top Trends in Fresh, FMI and IRI

  • The Sophistication of Supermarket Fresh Prepared Foods, FMI & Technomic
  • Power of Meat 2016, FMI, North American Meat Institute and 210 Analytics
  • FMI U.S. Grocery Shopper Trends
  • FMI U.S. Food Retailing Industry Speaks (operations data)
  • Coming Soon to FMI Connect in June: 2016 Power of Produce and Power of Deli

Research is available for download at www.fmi.org/freshfoods