Fresh Food

What’s Driving Perimeter Sales Now

WGB’s annual deep dive into all things fresh with data and insights from IRI
Photograph: Shutterstock

The fresh perimeter has been turned on its head. In the last 52 weeks ending Aug. 9, 2020, sales of deli mainstays like salads, soup and pizza are down vs. a year ago, but sales of crab, lobster, prepared pasta side dishes and potato wedges are through the roof. While these sales trends may seem all over the map, when viewed through the lens of a global pandemic, they make perfect sense.

“It’s impossible to look at 2020 and say the pandemic didn’t change everything,” says Jonna Parker, principal with IRI’s Fresh Center of Excellence. “Sales of meat, seafood and cheese all increased in demand and consumer experimentation.”

In the last 24 weeks, these categories saw unprecedented double-digit growth, leading to elevated sales for the 52 weeks ending Aug. 9, on which this year’s annual WGB Fresh Food Handbook with data, analytics and insights from IRI, is based. (Proceeding data and charts reflect IRI data for those 52 weeks, unless otherwise stated.)

While Parker sees the perimeter trends of the past five years—convenience, health and wellness, and healthy indulgence—continuing in some respects, what consumers crave today has changed. “There are new consumers across the perimeter (except in some areas of hot/ready-to-eat prepared foods) with different wants and needs for products,” she says. “The world is not going back to life pre-pandemic for a while.”

And what of innovation in the age of COVID? Last year’s Fresh Food Handbook identified innovation as the key to the perimeter’s success. “Since March, we haven’t seen innovation as we would classically define it,” says Parker. “CPG was definitely challenged to innovate earlier in the pandemic, as retailers focused on putting products on shelves and the supply side focused on the tried-and-true and producing what was most in demand.”

But that doesn’t mean perimeter innovation in terms of developing creative solutions to meet the changing needs of consumers isn’t alive and well.

“The concept and practice of innovation at the cadence we lived with for so many decades has been very relevant in the pandemic,” notes Parker. From deli prepared foods’ swift shift to grab-and-go to the meat department offering larger portions to feed more family members eating at home to the in-store bakery focusing on items for every day consumption, “innovation born of the moment” has prevailed throughout the pandemic, she adds.

As the majority of consumers continue to work from home and children attend school virtually, demand for fresh food to fuel hungry households remains strong. Chicago-based IRI finds total dollar sales in the fresh perimeter of both random- and fixed-weight products have reached more than $292 billion, with meat leading the pack at $78.5 billion in total dollar sales.

This year’s Fresh Food Handbook also marks the debut of IRI’s Syndicated Integrated Fresh database, which combines random- and fixed-weight products sold at the majority of retailers, as such the numbers and trends published here are not directly comparable to previous annual reports.

Meat on Fire

The pandemic has driven a return to that bedrock of American cuisine—meat and potatoes—in a way the industry could not have anticipated just a year ago. Despite some plant closures and supply hiccups earlier this year, animal proteins including beef, chicken, pork, turkey and lamb have triumphed in recent months.

“So far during the pandemic starting March 15 through Sept. 6, overall meat dollar sales are up 30.1% and volume sales have increased 18% vs. the same period last year,” says Anne-Marie Roerink, president of 210 Analytics, drawing from IRI data. “This translates into an additional $8.9 billion in meat department sales during the pandemic, which includes an additional $4.1 billion for beef, $1.2 billion for chicken and $909 million for pork than the same period in 2019.”

Plant-based meat alternatives are also resonating in the department. IRI finds sales of meat alternatives were up 100.5% for the 52 weeks ending Aug. 9, and up more than 273% for that period vs. three years ago. Without question, consumers have also turned to plant-based options with greater frequency during the pandemic.

“Since the pandemic, we’ve gone through different waves of consumer reaction,” says Pete Swanson, senior consultant with the IRI Fresh Center for Excellence. “At first, no matter what the product, if it was on the shelf, consumers bought it. In the second wave, which saw supply chain disruption and plant closures along with a surplus in foodservice, retailers were scrambling for product.”

In this second chapter, smaller suppliers benefited, notes Swanson. Products from suppliers of no-antibiotics-ever meat, grass-fed beef and organic offerings that had historically struggled to gain shelf space with conventional grocers were suddenly in demand.

Butchers have made further strides with new shoppers cooking at home with greater frequency. “In general, the meat department is seeing a lot of new consumers. They’ve gotten used to cooking more often, they’ve gained confidence, and they’re buying cuts they never would have bought before,” says Swanson.

The most disruptive days in meat may be behind us, continues Swanson. “The supply chain balanced out, got through the plant closures and price hikes, and we’re now settling—at least for the time being—into a new norm,” he adds. Commodity beef and pork decreased 5 cents per pound every week and are now at almost the same price point as a year ago, Swanson says. And while out-of-stocks were predominant in the spring, he finds that product availability in the fresh meat case has returned to the same levels as a year ago. “In any given fresh meat case today, the overall item count is approximately 330. A year ago, it was 335,” he says.

Processed meats are also on the move, with sales up across the board from dinner and breakfast sausage to packaged lunch meat and frankfurters. 

Produce Takes a Back Seat to Beef

While fresh produce nosed out meat as the No. 1 perimeter sales leader last year, fruits and veggies have played second fiddle to carnivorous inclinations in 2020. Total dollar sales in combined random- and fixed-weight produce reached $66.6 billion in multi-outlet retail, finds IRI.

But Parker sees untapped opportunity in fresh produce as consumers continue to experiment with at-home meal preparation. “People have started cooking and embracing their inner foodie. They also have more time at home on their hands,” she says. “Especially when it comes to millennials and Gen Z, who had been more focused on foodservice. How do we keep them engaged in fresh food after the pandemic?”

And while total dollar sales for the department were up about 8% vs. a year ago, sales of most fruits—with the exception of berries, cherries and citrus—were down. However, shoppers are seeking fruit, such as oranges (up 23% vs. one year ago) that contain vitamin C and other immune-boosting properties.

“The 8% increase in total produce is not as high as in meat, but it’s still higher than usual,” notes Parker, who points to veggies such as peppers, mushrooms, potatoes and cucumbers—all with double-digit sales growth.

Prepared Foods in Flux

“Prepared foods is such a mixed bag,” says Parker. “Consumer demand changed overnight, and the lack of a lunchtime crowd threatened to single-handedly decimate the category.” Salad bars and hot bars were sidelined, packed lunches for offices and schools ceased, and traffic in the department came to a standstill at some stores.

But as the pandemic continues, the deli has become a new destination for refrigerated grab-and-go (particularly with side dishes and breakfast items), presumably as consumers grow tired of preparing their meals at home.  IRI finds that refrigerated packaged breakfasts that require consumers to add an egg or milk are resonating strongly with shoppers. “There’s a healthy halo with refrigerated prepared foods, including breakfast and eggs,” says Parker.

Sales of breakfast items are also strong in the prepared foods and meals category. While sales of entrees (with the exception of prepared meats, including rotisserie and fried chicken), soups, salads, sandwiches and pizza are all down, sales of breakfast items were up 15.6%. Looking at data from the 24 weeks ending Aug. 9, IRI finds that the dollar sales percent change on prepared breakfast items is 165% vs. three years ago. “Eggs are addressing a totally different consumer need now,” says Parker, who sees them as a micro trend in the future of deli prepared.

Meal accompaniments represent another breakout sensation in prepared foods. “Side dishes have done really well in the second stage of the pandemic,” affirms Parker, who points to mashed potatoes, rice, pasta, beans and fries/wedges/onion rings as popular meal accompaniments. “Prepackaged third-party UPC sides merchandised in the deli are also doing well. They don’t have to be hot, but they have to be convenient,” she says. Consumers clearly see value in purchasing a prepared side dish to accompany a main course made from scratch at home.

Looking ahead, Parker sees an opportunity to reinvent the deli once again, should the impending recession take hold. “Fifteen years ago, people thought the supermarket deli was in decline because it was too expensive. Then came the realization that the consumer valued high-quality prepared foods as a value over restaurant food. A convenient, on-the-go in-store experience defined the next years,” she remarks. Grocers will undoubtedly continue to adapt and evolve this category in the months and years ahead with shopper engagement top of mind.

Seafood Back on Higher Ground

Predominantly sold fresh through the seafood counter, finfish and shellfish suffered initially at the start of the pandemic, when shoppers were reluctant to frequent full-service departments, says Swanson of IRI.

“Seafood sales were actually down, as no one wanted to buy from behind the glass,” says Swanson. “We didn’t see seafood sales growth until May, when people felt it was OK to go back and buy. May saw a 40% increase in sales year over- ear. Fresh seafood went from negative sales and just like it ramped up. Even now its operating at a 20% increase year over year.”

But by July, things started to get interesting. That month, IRI’s COVID-19 Weekly Survey of Primary Shoppers found that 49% of shoppers were preparing 91%-100% of their meals at home, with 49% of those surveyed citing finding new mealtime ideas as their biggest challenge to cooking. This coupled with restaurant/foodservice closures across the country led shoppers to splurge at the seafood counter.

While seafood department sales were up 16.5%, with sales of finfish up over 11%, sales of lobster were up 29% and crab, a colossal 49%.

Upside Down Cake

As a result of the pandemic, in-store bakery went from occasion-based to everyday-based, observes Parker. With no one celebrating Mother’s Day, graduations and the Fourth of July with large gatherings, cake sales dried up during what is traditionally its hottest season. But the in-store bakery pivoted and put forth items like breads and rolls, sales of which are up 4.2%, along with offerings like cookies and brownies that aren’t necessarily perceived as special occasion. And while IRI reports sales of specialty desserts are down nearly 20%, sales of English muffins are up by nearly the same percentage.

“It’s similar to what we saw in the 2008 recession, people are willing to spend $3 to $4 on an artisan Asiago freshly baked bread at their local grocer. High-end specialty breads are growing, driven by a desire to elevate the everyday experience,” says Parker. And given that breakfast is doing so well in the perimeter, sales of bagels are also strong.

Through a focus on making each day special with baked goods, the bakery department garnered dollar sales of $33.8 billion for the year ending Aug. 9, according to IRI.

Cheese Please

Cheese is yet another deli and dairy category that is thriving during the pandemic. Total dollar sales of deli cheese were up over 12% to the tune of $6.9 billion in sales. Deli grab-and-go cheese in the deli did a brisk $1.4 billion in business.

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