Over the past four years, US fresh food sales have increased five per cent, along with consumer buzz and interest in eating and living well. In fact, according to a recent Nielsen Global Health and Wellness report, a significant portion of respondents interested in losing weight report doing so by eating more fresh foods and even using such foods as medicine.

 

With sales growth in fresh perimeter departments (meat, deli, produce, bakery and seafood) surpassing that of centre-store mainstays (including dry and frozen grocery), the retailer landscape is changing. However, some retailers and suppliers are misinterpreting consumers’ enthusiasm for fresh as the reason behind soft sales in consumer packaged goods (CPG) products and other aisles across the store. Although fresh growth does have implications for the entire store, its relationship with the centre store is often more complicated than simple rivals.

 

Helping retailers differentiate

 

Today's retailers can’t afford to ignore fresh, advises the new Nielsen report. With 99 per cent of US grocery shoppers buying fresh products, fresh perimeter aisles have become key places where grocers can establish their identities. Whether it’s sophisticated restaurant-style foodservice offerings in deli or a wide variety of fresh produce, retailers can use fresh to win consumers within an increasingly crowded retail market.

 

But retailers still need to be strategic in how they add fresh. While assortment is important, retailers must tie their offerings to consumer’s unique priorities.

 

Fresh appeal

 

The recent strong growth in the fresh perimeter departments – particularly when compared to struggling centre store departments – lends context, and hard numbers, to consumers’ desires surrounding fresh foods.

 

Shopper purchase frequency and spending drove the recent success in fresh, advises Nielsen. In 2014, the average American household made more trips for produce and deli products and spent three per cent more across fresh departments than in 2013. Meanwhile, during the same period, US households decreased the number of trips for centre store products by two or more trips, and their spending in the grocery, frozen and dairy departments remained stagnant.

 

But when we dive into the categories with the greatest growth and declines, it becomes clear how consumer habits are driving these changes.

 

In 2014, berries, packaged salad and deli prepared chicken had the largest dollar and volume velocity growth (dollars sold per $1 million in all commodity volume or ACV distribution) year-over-year. Each of these categories has evolved in various ways to stay relevant with consumer demands. Berries’ health messages, easy snacking, quality ingredients and increased availability continue to drive its position as the No. 1 produce category. Packaged salad growth is propelled by creative kits and completes, which – similar to deli-prepared chicken – offer easy, fresh meal solutions.

 

Conversely, categories with the largest dollar and volume velocity declines came from the centre of the store. However, that doesn't mean fresh is taking sales away from these products. In fact, carbonated soft drinks, ready-to-eat cereal and ingredient sugar are far from direct substitutes for the fastest-growing fresh products. In fact, the Nielsen report suggests that by positioning soft drinks as a meal-companion to deli chicken and showcasing cereal products topped with fresh berries, retailers and manufacturers can actually leverage fresh success for their own benefit.

    

Beyond ‘fresh versus centre’

 

So, is fresh really ‘stealing’ sales from centre-store?

 

The impact of fresh growth on the total store is more complicated than the old ‘fresh vs. centre’ myth, says Nielsen’s report, which asserts that fresh’s gain doesn’t always equate to stagnant or declining sales of centre-aisles counterparts.

 

Taking vegetables as an example, the intelligence firm notes that fresh produce vegetables pulled in US$20 billion in the US market in 2014, and grew five per cent compared to the previous year, while canned and frozen veggies are declining slowly.

 

But a vegetable buyer is a vegetable buyer regardless of the aisle, as 88 per cent of all shoppers purchase fresh, frozen and canned vegetables, creating tremendous opportunity for retailers and suppliers for partnerships and creative marketing and promotion strategies across aisles, the report suggests.

 

That’s not to say fresh never cannibalises sales of consumer packaged goods (CPG_ products. Products like frozen dinners and entrees are losing sales to fresh products like ham and ground beef.

 

More than ever before, shoppers don’t shop individual aisles – they shop for solutions or needs across the store. In 2014, 62 per cent of trips to grocery, mass and club stores included items from both the fresh perimeter and centre departments, making ‘fresh versus centre’ a tired storyline.

 

Ultimately, the report notes that fresh can be both friend and foe to CPG products, but the relationship is rarely that simple. Rather than focusing on the ‘fresh vs. centre’ dynamic, retailers and manufacturers can use their understanding of how consumers shop and how various products can solve specific needs to produce a complete solution for the customer.