By Leslie G. Sarasin, President and CEO, FMI
I am sure you will remember from your science classes Sir Isaac Newton's three laws of motion:
- Every object in a state of uniform motion will remain in that state of motion unless an external force acts on it.
- Force = mass X acceleration.
- For every action there is an equal and opposite reaction.
Basically, his laws explain inertia, acceleration, momentum, action and reaction when a net force is applied to an object. Now hang on to those Newtonian notions of inertia, acceleration or momentum, and action and reactions because they are important concepts for us to consider as we explore the State of Fresh.
We know that fresh is enjoying a good ride, being one of the most popular and profitable sections of the grocery store. Case in point: Eighty-five percent of retailers used fresh prepared/foodservice programs in 2022 as a product differentiation strategy – up from 75% the year before. And we all know how precious space allocation is in the retail industry, so nothing says something is important more than dedicating more square footage to it. Indeed, three-quarters of retailers are planning to increase the space they allocate to foodservice aspects such as fresh-prepared grab-and-go options.
So clearly, based on all external measures, fresh food departments are enjoying some accelerated momentum.
What I am suggesting to you is that currently fresh has great momentum, but the only way to keep it is to remain critically aware of the potential external forces that would act as agents of inertia – slowing down progress – and identify those external forces that are potential momentum accelerators. The trick is to identify which is which and set aggressive goals to amplify one and mitigate the other.
The Fresh Factor
Consumers' focus on nutrition, health and wellbeing was identified by 72% of grocers as having a positive impact on business, and no one identified it as having a negative influence. Likewise, leveraging food to manage and avoid health issues was seen as almost exclusively positive with 59% seeing it as a plus and only 4% noting that it has a negative influence as well. Shifting consumer behaviors in these areas are influencing fresh's momentum and should be areas we watch carefully. For today's shoppers, value embodies a complex set of motivations reaching well beyond price and quantity. Shoppers' notions of value have become more nuanced and sophisticated, shifting from a simple price-quantity ratio to a more complex matrix of personal values, needs and priorities. This results in some new emerging dimensions of value forming a complex matrix including quality, relevance, experience and our old friend, convenience.
Monitoring External Forces
At 65% industry turnover, along with high department manager vacancy rates, another threat to fresh's momentum is the ongoing labor issue, which all of us in the industry are frantically seeking to solve. Note that this area, once successfully resolved, would turn into a momentum contributor.
What's notable is that nearly 25% of retailers are increasing labor allocation to in-store specialty help by department. We are also keeping a watchful eye on shrink, which has continued to be significant, particularly in fresh departments.
Fresh Gets Straight A's
At 85%, retailers told us that their top differentiation strategy was implementing fresh prepared and foodservice programs, and more than half felt that was successful. Seventy-four percent tried an enhanced produce program, such as produce butchers, specialty produce, and organic, as a way of separating from the competition, and 63% rated they were successful in that endeavor. Two-thirds used instore bakery as a distinguishing strategy, and more than half deemed that successful. The State of Fresh Foods 2023 reveals that meat and poultry programs had a matching 68% engagement and success rating. And 58% witnessed their seafood department as a point of distinction, and half felt they were successful in their efforts.
Service Area Labor Investments
But the true tale of time regarding where retailers are banking on fresh's momentum accelerating gets revealed in the service area labor investments they plan to increase or decrease this year: 38% are bulking up their foodservice at retail staffing and only 3% are cutting back. Specialty help by department and employing trained and certified chefs are both areas seeing increased use, with a few decreasing those services.
To maintain the momentum or even accelerate it means not only doing the day-to-day work of maintaining food safety standards, offering quality products, and providing outstanding customer service but also paying eagle eye attention to the myriad external forces potentially affecting the momentum. Addressed to the customer's satisfaction, these forces can become momentum accelerators; inadequately addressed or worse, ignored, these external forces quickly become instruments of inertia.
Remember, it was Sir Isaac Newton who observed an apple fall from a tree. He could have ignored that happening; he could have picked up the apple and eaten it; he could have observed, "well, that's interesting," and kept going. Instead, he studied, reflected, experimented, worked, and remained curious about it. As a result, he accelerated the momentum of scientific discovery and knowledge. And the rest, as they say, is history.