"Fresh is the last stronghold for brick-and-mortar. Retailers that want to win across the store need to focus on fresh," noted Nielsen in its latest report.
Americans are increasingly heading online to shop for non-perishables, household items and pet products, making the concept of 'stock up' grocery trips a thing of the past for many shoppers, said Nielsen. E-commerce represents just 4% of grocery sales today, but accounts for nearly one-third of total growth.
When it comes to purchasing fresh, perishable items from fruit, vegetables, and herbs to plant-based and animal proteins, the in-store, physical experience remains consumers' preferred shopping method, according to Nielsen.
"Fresh is the growth engine of the store, as gains in these perimeter departments translate to total store success. Retailers with well-established fresh departments provide us with a glimpse into the future, and a roadmap for others."
What makes a standout fresh department?
"For fresh retailers, it’s about consumers craving a destination, not for stocking up. Experience, personalization and convenience win," said Nielsen.
Nielsen analyzed brick-and-mortar retailers based on overall store sales from their fresh food departments and found that the top performers generate 43% of overall sales from perishable foods (compared to an average of 32% for the same measurement across all retailers). Nielsen also found that among the most successful retailers, deli and produce departments provide the greatest contribution to total perishable sales.
According to Nielsen, this trend towards increased spending at the deli and produce departments "likely reflects consumers’ changing wellness needs, as well as their growing demands for convenience. With more than three-fourths of deli sales coming from random weight items, top fresh retailers have honed a more authentic, ready-made feel."
Within bakery, retailers are winning by pulling in consumers in for everyday items (e.g. breads and rolls) rather than just special occasion items such as cakes and pastries.
"Too many stores only focus on the sweets portion of their bakery, missing out on the opportunity to bring consumers in on a daily basis for breads and rolls," said Nielsen.
Consumers still require tactile feel for avocados, tomatoes, apples, herbs, and berries
When it comes to purchasing fresh, perishable items, having the tactile experience of shopping in the produce department is still very valuable to consumers, according to Nielsen.
"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," noted Nielsen.
Across all US retailers, avocado sales are up 8%, and vegetables are succeeding even more than fruit (up 4.9% in sales vs. a slight increase of 0.3% in sales for fruit). As a result, investing in a stronger vegetable supply chain is a smart business strategy, said Nielsen.
Top fresh departments feature 3x as many plant-based meat alternatives
'Next level' fresh departments also know the importance of stocking the right variety of items for shoppers who are increasingly seeking health-conscious and convenient food options.
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 US consumers value dietary balance between plant-based and animal-based foods, said Nielsen.
Nielsen added that "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."
