In research, year three is quite the milestone. Us research geeks have a saying: one year is a dot, two years is a line and three years is a trend. For the Food Marketing Institute’s Power of Produce, 2017 marks the third year of tracking the how, where, what and why of produce purchasing and consumption. Now is a perfect opportunity to look at how the market is changing to identify areas of high growth potential.
Produce — A powerful pawn in the grocery war
From the explosion of new formats and new competition to changing consumer habits, the speed of change in U.S. grocery retailing appears to have hit an inflection point. But one thing remains a constant: Produce is among the most successful strategies to build competitive advantages. Consumers look to produce more than any other department when determining store choice and 85% of retailers are responding by allocating more space, SKUs and labor to the crown jewel of the perimeter. Moreover, a review of the traits of the profit leaders in our industry shows a universal focus on fresh, including produce. Profit leaders have an above-average sales contribution by produce, sell at higher margins, feature greater variety and turns, all the while having below-average shrink and out-of-stocks. Simply put, they are a produce destination.
Finding pockets of growth
Traditional retailers aren’t the only ones to realize that produce is a sure winner. E-tailers, farmers markets, dollar, drug, convenience, airport stores and vending machines are all nibbling away at the produce dollar. Let’s look at the four levers the industry has to drive growth:
1. Maximizing participation in terms of household and meal occasion penetration.
2. Driving trips through improved shopper conversion and engagement throughout the path to purchase.
3. Driving an optimized and premium basket to maximize spending per trip.
4. Operational excellence as satisfied shoppers are higher-spending and more loyal.
Bring on the produce!
With household penetration of 99.7%, you’re not going to find all new consumers. However, with only half the population eating fresh produce every day, we can gain a lot from moving the needle on consumption. Shoppers want to eat more fresh produce, particularly when snacking, and with lunch and dinner.
Create reminders and points of interruption all throughout the store by bringing convenient produce solutions into other perimeter departments and center store. Connect beyond the overall health halo, with very specific health benefits, recipes, different preparation ideas, and expand shoppers’ knowledge to a wider variety of items. After all, they are creatures of habit and increased consumption can use a creative retailer hand. >>>
Pre-tailing, retailing and post-tailing: Engage to drive trips
Across outlets, a surprisingly low 56% of trips include fresh produce. As produce remains a well-researched purchase, connect with shoppers all week to inspire trips with happy hour deals or one-day sales events. According to the study, the promotional research funnel is changing rapidly, moving away from the paper circular toward in-store promotions, digital, mobile and social. Leverage this new technology to educate and engage — taking the conversation beyond price alone.
Driving a premium basket
Shopper conversion is step one, driving a premium basket is step two and produce has many opportunities. To start, organic represents about 10% of all fresh produce dollars, but reflects 30% of all growth. Next, 54% of shoppers want more locally sourced items and would pay a price premium. Value-added delivers a much sought-after solution for time-starved consumers. Lastly, brands are making strong inroads in the produce department, recognized for their quality, consistency and safety. For each, don’t leave sales to chance. Educate shoppers about the benefits to expand household penetration and buying frequency.
The cherry on top
Great execution can make you a dollar consumers never planned to spend. No less than 86% of shoppers say they get inspired to buy unplanned produce items by eye-catching displays, sampling, great promotions and an enthusiastic produce clerk. A wow in produce truly is a win all the way around.