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09/26/2019

Why fresh is the growth engine of the store

U.S. consumers are increasingly heading online to shop for nonperishables, household items and pet products, a reason why e-commerce is growing and represents one-third of total grocery growth. But bricks-and mortar stores are still viable and popular, and the growth in fresh has much to do with that, according to a recent Nielsen report, "Fresh and Focused: The U.S. Retailer Path to Winning Brick and Mortar."

The fresh departments (bakery, deli, meat, produce and seafood) are still luring people into physical stores. As more category sales continue to shift online, retailers need a way to differentiate themselves in stores, and fresh is the perfect place to do it, according to Nielsen. Fresh is the growth engine of the store, as gains in these perimeter departments translate to total store success.

Nielsen said it segmented stores based on the percentage of overall store sales from their fresh food departments, and top performers generated 43% of overall sales from perishable foods (compared to an average of 32% for the same measurement across all retailers).

“They’re succeeding by taking “freshness” to the next level,” according to Nielsen.

Deli and produce departments provide the greatest contribution to total perishable sales for the most successful retailers, Nielsen said.

“This debunks the longstanding belief that the meat department contributes the highest impact to the success of the perimeter of the store. And it likely reflects consumers’ changing wellness needs, as well as their growing demands for convenience,” according to Nielsen. “With more than three-fourths of deli sales coming from random weight items, top fresh retailers have honed a more authentic, ready-made feel.

For retailers as a whole, the fresh seafood and deli departments continue to rise in-store.

“Investment in fresh should take priority,” Nielsen stated.

For fresh retail superstars, success hasn’t come from carrying more or fewer items, but from having the right items in fresh, Nielsen noted.

“Today’s consumers value health-conscious food options, and top-performing fresh retailers have responded by featuring nearly three times as many different plant-based meat alternative offerings as lesser performers — a savvy move, considering nearly 60% of U.S. consumers value dietary balance between animal and plant foods," Nielsen said.

Nielsen pointed out that produce purchasing remains a necessarily tactile, in-person experience for many consumers.

It’s important to remember that produce purchasing remains a necessarily tactile, in-person experience for many consumers. Leading fresh retailers understand this, significantly outperforming lesser performers in avocados, tomatoes, apples, herbs and berries. These produce items in particular are ones where consumers look or feel to confirm freshness, Nielsen said.