Industry Insights

Fresh Foods: Grocery's Newest Trend

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fresh food store worker helping customer

In 2019, the Journal of the American Medical Association (JAMA) published a landmark study that analyzed the dietary trends of nearly 44,000 American men and women between the years of 1999 to 2016. Research found that, slowly but steadily, American diets are becoming healthier.  

In the years since this study was published, health has remained high on the list of priorities for Americans, particularly in a retail context. In fact, health-focused CPG brands have been some of the biggest market disruptors in 2022.  

According to new research from FMI that analyzed 96 food retail and wholesale companies and 22 food product suppliers in 2022, it is apparent that health-conscious shoppers are further shaping food retail trends: fresh foods are on the rise, both in-store and online, and retailers are taking notice.  

Here are the biggest takeaways: 

 

1. Fresh foods are outperforming non-perishables  

In 2021, perishables accounted for 45% of food retailer sales. While non-perishables still account for most food retailer sales, fresh food sales have grown at a faster rate in the past three years.  

Considering that non-perishables take up the majority of a grocery store’s real estate—prime, center-of-the-store real estate at that—this growth performance becomes even more impressive.  

 

2. Retailers are dedicating more floor space to fresh departments  

According to FMI’s survey results, 82% of food retailers plan to increase fresh-prepared grab-and-go space allocation, and 48% plan to increase fresh produce space allocation. Fresh meat (27%) and in-store bakery (24%) are also receiving attention.  

In addition, more than 70% of retailers plan to increase SKU allocation for locally sourced products, which 90% of retailers cited as an important product differentiation strategy, both online and in-store.   

 

3. Retailers are dedicating more labor to fresh departments too 

Given that meat and produce departments dominated store sales per labor hour in 2021 (by as much as +$130 compared to total sales per labor hour), it should come as no surprise that retailers are dedicating more of their workforce toward fresh departments: 

  • More food service labor (44% of retailers) 
  • More specialty department help (25% of retailers) 
  • More chefs (22% of retailers) 
  • More in-store dining labor (20% of retailers) 

 

4. Retailers (and fresh food brands) need better execution technology 

Shrink has long been a problem in retail. In 2022, it costs North American retailers a staggering $349 billion in lost sales.  

Over the past few years, total store shrink rate has hovered around 2.5%, but for fresh departments this number is much higher. Fresh-prepared food shrink (8.8%) and deli shrink (7.6%) are both well above the total store average.  

To combat the occurrence of shrink in fresh departments, retailers are rapidly adopting technology solutions for fresh inventory and demand planning. With an in-store execution software like Movista, store and field teams can more easily and accurately manage on-shelf product, resulting in significant cost savings and improvements in customer satisfaction.  

In-store execution tech can also help food retailers offset another costly problem: labor turnover. It costs retailers approximately $500 to train one employee, and food suppliers an even higher $1,700 per employee.  

But with the right technology solution, retailers and suppliers can better enable their store and field teams by automating and centralizing day-to-day tasks, making it easier (and cheaper) to get new employees up to speed while giving current employees a reason to stay.  

Learn more about how Movista helps retailers and suppliers with their fresh execution.

 

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