Just how important is the grocery perimeter to driving store sales and loyalty? According to a new survey of food industry executives, the fresh department is the No. 1 strategic component of their companies' overall revenue growth plans for the next one to three years.
In fact, more than 80% of respondents from 29 food industry companies surveyed by FMI – The Food Industry Association and Deloitte said they're dedicating more floor space for fresh, bringing in expanded fresh product offerings and/or adding fresh-department staff. Heading into 2022, as consumers enter a third year shaped and altered by the COVID-19 pandemic, stores' fresh investments are focused on a re-energized in-store experience, heightened attention to e-commerce marketing and a continued push on fresh meal solutions.
Retailers are looking to revisit both the in-store and online shopping experiences for increasingly omnichannel shoppers, FMI and Deloitte's survey indicated, recognizing that consumers seek a "wow" factor and an element of discovery in-stores as well as easy-to-find (and in-stock) choices online, plus pickup/delivery options that fit their schedules and budgets.
Consumers continue to prefer shopping for their fresh items in-store, FMI and Deloitte noted, with seven in 10 saying they head to physical stores for their fresh foods and beverages. Beating the competition, then, will depend in part on delivering a standout experience—and six in 10 executives said they're investing significantly in the store experience.
"Retailers believe these efforts will drive revenue growth not just in fresh but also across categories," the study's authors wrote.
Leading measures for improving the in-store experience include helping fresh department team members be more responsive, remodeling physical spaces and creating strong in-store themes. "However," the authors noted, "recruiting and retaining skilled labor is a major challenge to successfully using these tactics for eight in 10 retailers."
Reflecting shifting e-commerce capabilities and a desire to better manage costs and consumer experiences with online channels, 60% of survey respondents said they plan to rely more on their own e-commerce channels vs. those of third-party providers in the coming years. A helping hand from suppliers also could provide a meaningful boost when it comes to selling "fresh" online, survey respondents suggested: Packaging designed specifically for the online channel, better online content for products and stepped-up social media engagement around fresh could help retailers gain traction around their fresh offerings, according to respondents.
Finally, as consumers continue to eat around 4 in 5 of their meals at home, more variety in fresh meal solutions can be a valuable differentiator and a driver of repeat visits, the study's authors indicated. "Customers’ lives may still be home-centered, but that doesn't mean those lives aren’t becoming increasingly hectic," they wrote. "Consumers are looking for faster meal solutions and more variety in what they prepare at home." Ninety percent of retailers surveyed said fresh meal solutions are an important growth segment, and areas of focus in the year ahead are innovations in products/flavors and packaging as well as pricing and quality consistency.
"One thing seems quite clear," the authors concluded. "Food retailers and product suppliers are likely going to need to depend on each other and work more closely together than ever."