Power of Produce
Nine ways to harness the power of produce at retail
Aug. 2, 2017 – by Rebekah Schouten
ARLINGTON, VA. — The produce category is outpacing total store sales, making it a force to be reckoned with at retail, according to the Food Marketing Institute’s (F.M.I.) “Power of Produce 2017” report. Produce sales increased 3.3% to reach $63 billion over the 52 weeks ended March 19, and volume grew 2.6% during the same period.
Several factors serve as catalysts for growth in and opportunities for retailers to capture consumer dollars in the produce segment, the report said, including more local offerings and value-added options. But where retailers need to start, F.M.I. said, is focusing on appearance in the aisles.
While price and promotions are important to consumers, appearance is the main driver behind purchasing decisions, F.M.I. said. Fifty-eight per cent of impulse produce purchases are a result of eye-catching displays. Retailers can take advantage of this sight-based shopping with visually appealing presentation, sampling, recipes and cooking demonstrations.
|Rick Stein, vice-president for fresh foods at F.M.I.|
“Consumers continue to look at ads and price when deciding where they plan to shop, but ultimately, when they are in the store, the eyes decide,” said Rick Stein, vice-president for fresh foods at F.M.I. “The final purchase and incremental purchases are based on quality product and eye-catching merchandising.”
Breaking the habit
Fifty per cent of consumers are habit-driven, tending to purchase the same items again and again, F.M.I. said. However, 83% said they welcome advice on unfamiliar items or preparation techniques. To capture these consumers, retailers must offer simple avenues for trying new options.
“Among habitual shoppers with a high trial barrier, product, occasion and preparation tips are the most powerful ways to prompt new product trial,” F.M.I. said. “Among those with a low trial barrier, promotions may drive new dollars.”
Swapping supermarkets for specialty
More and more shoppers, especially millennials, are skipping supermarkets and supercenters in favor of specialty organic stores and farmers’ markets. The main driver for the switch is the availability of special attribute items such as local and organic options, “signaling room to fine-tune assortment by store,” the report said. Eight per cent of millennials said they prefer farmers’ markets when shopping for produce.
“The millennial attraction to formats outside of the supermarket channel should be a red flag for traditional operators,” the report said. “Given the millennial importance as a driver of category growth, capturing the business of the millennial organic shopper will be an important key to growth for either channel.”
Delving into digital
Digital marketing and resources are key for produce shoppers, as more consumers take advantage of in-store digital research to compare prices, find coupons or learn more about where the products originated.
“Digital outreach allows for a more targeted and nimble approach to promotions, such as geotargeting by store or one-day/happy hour sales,” F.M.I. said. “Digital can be leveraged for shopper education, including recipes, product, origin or growing/grower information.”
Going loco for local
Fifty-four per cent of shoppers are hoping for an expanded local selection, F.M.I. said, and local receives preference over organic among many consumers in a direct comparison. To lure in local-seeking consumers, retailers must display prominent messaging about the locality of the produce and ideally tell the story of where each product came from.
“Shoppers’ definition of local is settling on a mile radius and state lines with supporting the local farmers/economy being the top reason for purchasing local,” F.M.I. said.
Opting for organic
Organic makes up 8% of the total produce category, and that number continues to climb. Growth is driven by increased household penetration, greater purchase frequency and growing availability, particularly in fruit, the report said.
“Core organic buyers want to buy organic as often and for as many items as possible, while occasional shoppers pick and choose based on item, occasion or price,” F.M.I. said. “Understanding the differences in behavior, attitudes and demographics is important to drive growth in both audiences.”
Adding value, subtracting questions
Value-added produce and packaged salads saw “robust” growth in the produce section, F.M.I. said, and they are positioned for further success. To win shoppers with these products, retailers may play up the portability, convenience and ease of such offerings while quieting questions about such attributes as freshness and shelf life.
“Value-added produce and packaged salads are ideally positioned for further growth through increasing household penetration and purchase frequency — provided shoppers can overcome the price differential and their perceived drawbacks, including short shelf life and questions about quality, freshness and safety,” F.M.I. said.
Betting on brands
Forty-nine per cent of fresh produce sales was branded in 2016, up from 38% in 2011, F.M.I. said. While half of shoppers said they are not influenced by brands, those with an outright preference said national brands are strongest in processed produce and local/small brands have the edge in unprocessed produce.
“Most of the brand preference comes from a general inclination for buying brands, but brands are also seen as being fresher, higher quality and more consistent,” F.M.I. said.
Heaping on health claims
Although fewer than half of shoppers said they eat fresh produce daily, F.M.I. said, consumers are trying to increase their fresh produce consumption across meal occasions.
“Shoppers link fresh produce consumption to specific benefits, including digestive health, heart health, healthy weight and avoiding empty calories — providing opportunity for targeted health and wellness messaging beyond the overall health halo of fresh produce,” F.M.I. said.