Value is the name of the game for consumers today. Rick Stein, VP of fresh foods for FMI – The Food Industry Association, recently spoke about trends in fresh with The Griffin Report’s Maggie Kaeppel.
Stein said FMI research shows that “value isn’t just what it used to be.” Instead of solely a price point, consumers are thinking of value in terms of quality, experience and relevancy, and they are making decisions based on what they see as value.
Stein said mass stores are picking up some share of business “because they’re synonymous with value.” Specialty stores also are doing well.
Convenience also is important to shoppers. With the average consumer spending less than five minutes making lunch and about 15 minutes making dinner, shoppers are buying some of their food fully or partially prepared. Stein said one of the growth engines in supermarkets is the deli foodservice area. The bakery departments also are seeing growth.
Another macro trend is health and well-being. This area was brought into focus for consumers as a result of the COVID-19 pandemic. The high cost of healthcare also has led people to better manage their own health. Stein said one of the best ways to do that is to look at what you are eating.
“This health and well-being has really penetrated into all the areas of fresh, and fresh plays well for that.”
Stein said volumes are down. While inflation has decreased overall, consumers’ perception is that prices remain high.
Companies are trying to drive growth, but Stein said it is difficult. “Consumers are just buying less.” They are more price conscious and are trying to reduce their waste. He said produce is a great example.
Instead of buying two pints of strawberries, a shopper may just buy one. Instead of buying three bags of salad because they’re on sale, they just buy one.
“Every time you throw it away, it wasn’t just the fact that you’re wasting food, you’re wasting your dollars … What that’s done is reduce volume.”
Stein said retailers are making adjustments in their stores to address the fact that consumers are buying less. They are changing to vertical sets in the produce department, which can make a strong visual impact. In meat cases, they are changing the depth of shelves.
“It’s less product but not sacrificing the visual, because we know the visual drives sales.”
Consumers also are spending more on services than goods. Stein said this eventually will level out as disposable income gets back to normal levels.
“If you’re reporting to Wall Street, your only opportunity is how do I become more efficient? How do I reduce costs out of the system? So you’ll see a lot of emphasis on shrink management. You’ll see a lot of labor management.”
According to Stein, the labor management can be aided by technology. Instead of employees spending hours writing orders, there are several tech companies that have algorithms to help with that and other time-consuming tasks. Companies may shift more investment into technology to get the efficiencies to help their bottom line, he said.
Retailers also are focusing on food service. Stein said an FMI survey of CEOs showed their desire to “start owning more share of stomach, and they realize convenience is a big play.”
There has been innovation in the foodservice area – grab-and-go sections, different soups and sandwich offerings. Stein also said another way retailers are offering convenience is helping consumers understand the nutritional benefits of fresh items and tips on how to prepare them through QR codes or quick videos.
Workforce challenges remain top of mind. With consumers interested in more services, retailers are asking how they can become more experiential in their stores. The best way is through interaction between the employee and the consumer, Stein said.
Using technology to help employees have more time to serve and engage with customers – such as suggesting products for purchase or how to prepare items – can increase sales.
“When you have a good seafood monger behind the counter, their sales will be 10 times what a non-seafood monger will be,” Stein said.
He said the younger generations don’t have the same cooking skills as older generations. “We have to help them to show quick, easy ways to prepare meals and help them with that meal solution.”
Fresh Foods Leadership Council
Stein leads the Fresh Foods Leadership Council, a national group of senior leaders from retailers of all sizes and shapes, along with suppliers and third-party providers. It was founded in 2014.
When the council began meeting, Stein said they were looking for opportunities. They realized that large CPG companies have access to the c-suite.
“They’re seeing the chief merchants, they’re talking to the CEOs, and they know each other really well because their portfolios are so large.”
In the area of fresh, many of the suppliers, such as farmers, represent a small portion of their business and don’t have those connections. To address this, Stein said FMI created an annual event, Fresh Forward, where they bring in senior leaders of retailers and supply chain. All conversations are geared toward collaboration and action on issues raised at the meeting.
“What are some of the things the industry can be doing from a supply side, retail side, to move this issue forward? We produce an action guide at the end that encapsulates all those great ideas that happened at the event.”
The next FFLC meeting will be Aug. 5-7 in San Diego, California. Topics on the agenda include sustainability and packaging, new consumer trends, technology and artificial intelligence.
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