Report: Specialty Foods Help Retailers Drive Loyalty, Boost Margins
More than 4 in 10 shoppers make trips to a secondary store seeking specialty food products not carried by their primary grocer, according to results of a consumer survey from the Specialty Food Association (SFA).
Speaking with 1,000 consumers, 44% of respondents said they make an additional trip to another store to find products their regular store does not stock.
"If my favorite store carried a wider selection of specialty food products," said 41% of shoppers surveyed, "I would be less likely to make shopping trips elsewhere."
The SFA estimates these additional trips, along with others made to dedicated specialty stores, represent $1,200 in sales per household per year, sales that retailers could be retaining.
The figures were revealed in SFA’s Understanding the Real Value of Specialty Foods report that spoke with consumers along with 100 retailers.
The report notes that sales of specialty products have grown from $88 billion in 2013 to an estimated $207 billion in 2023, an increase of 149%. With specialty food and beverages now representing 21.6% of all center store grocery sales in the 63 categories measured by SFA, they are no longer regarded as niche products, but a significant driver of growth in the grocery sector.
"There is a general perception of specialty foods as inherently worth more, whether in price or in time shoppers spend to procure them. This updated research proves that perception correct," said Bill Lynch, SFA president. "This has meaningful implications for many SFA members and the industry as a whole. In a time of economic uncertainty and fluctuating prices, we hope this research helps food makers, buyers, brokers, and distributors understand the positive impact that specialty products have on retailers' bottom lines."
The report also found that specialty foods can help boost retailer profits. In addition to sales generated from retaining more trips, specialty foods are disproportionately more profitable on the shelf, according to the report. Specialty food items generate a gross margin dollar return that is 3-4 times higher per unit than mainstream items, which, the report posits, helps to balance out "somewhat slower turns from specialty products."
Given specialty products' higher average prices and gross margin rates, these items deliver more than twice the return on inventory investment (ROI) for retailers: 50.1% compared with 19.8% for non-specialty items, according to this report's data.
The full report is available for purchase in the SFA Learning Center.