For the past two years, sales growth in fresh has lagged behind that of the center store, making it clear that the methods of old are no longer enough to succeed. But a new report from Daymon called “What’s Next in Fresh” outlines not only the key trends driving sales in fresh, but also the actions retailers must take to innovate and lead the way in 2020 and beyond. Here, Daymon’s director of category solutions Andrew Moberly outlines the top four trends and weighs in on how natural food retailers can capitalize on them.
Private label fresh food sales are up
According to the report, leading retailers generate 43% of their overall sales from perishable foods, as opposed to the industry average of 32%. What these leaders have in common, Daymon found, was that they use their private brands to make waves in the fresh aisles. “Natural independents need to play to their strengths and core customers which means focusing on the areas that have made them famous so far—and that includes their fresh programs,” Moberly says. “The great news for independents is that most unlabeled fresh items are inherently considered private brand, so they are likely getting substantial credit already.” This can include immediate consumption items, such as juices and smoothies, or general foodservice.
More plant-based options (and education) will keep flexitarian shoppers happy
The report found that more than 50% of meat eaters purchase plant-based proteins, as large manufacturers acquire plant-based startups and foodservice goes all in on plant-based. Tapping into this trend will put retailers in a good position to increase sales of their fresh food items. Stores winning in this area will focus on the supply side (whether that’s through larger or start-up brands) and position plant-based as a mission statement of the store. “Consumers are learning that just because a product is plant-based, that does not necessarily mean it is healthier or better for the environment,” Moberly says. “Setting up a standard of how, why and what plant-based means will go much further than the current haphazard approaches.”
The great news for independent natural retailers, he adds, is that they have been involved in this space for decades and already have credibility here. “However, now that mainstream retail is jumping in, independent natural retailers need to continue to highlight their points of differentiation,” he says, “whether it be connection to the local community, highlighting a long-standing commitment to organic or healthy, or education on plant-based eating.”
'Craft'-quality fresh foods are where small independents shine
Most retailers are lagging in “craft” quality and need to quickly adapt to the changing landscape by applying it to all areas of the fresh department. This is an area where even smaller independents are poised to succeed, says Moberly. “Creating in-store destinations and signature craft experiences is far easier to execute on a smaller scale and is much more believable,” he says, adding that authenticity is key when promoting craft experiences and products like juice bars or in-store-made pasta. “Independents can thrive in this environment with passionate employee engagements and demonstrating the distinctiveness of what they offer. Natural independents should not be intimidated by larger chains—instead they should be evaluating (from a food and culture standpoint) what is important to their local community, what are they experts at doing, and how can they leverage both to create a craft solution.”
Foodservice has entered the digital age—and you should, too
Today’s shoppers are treating their grocery stores' prepared foods and foodservice departments as extensions of meal planning, the report found. The good news for independent natural retailers, said Moberly, is that this is an area they’ve dominated for some time. Those looking to get in the game or up their offerings should consider the three steps to success identified in the report. Firstly, stores need to establish the basics and be good at them before jumping into elaborate cuisines (and for those that already have the basics in place, they might consider leveraging craft and foodservice in a bigger way by creating a private brand solution). Secondly, “be easy to shop,” Moberly says. In other words, make the prices very easy to figure out and make the food easy to customize. Thirdly, “don’t be afraid of partnerships,” he explains. “Even the most developed retailer should still consider partnering with third parties to be successful in foodservice, and they will still get credit for authenticity.”