Operational benchmarking on fresh foods departments finds food retailers are actively seeking to expand offerings
Denver, CO – FMI – The Food Industry Association today unveiled its inaugural The State of Fresh Foods report, which highlights findings from the-soon-to-be-released The Food Retailing Industry Speaks 2022 analysis and substantiates unwavering momentum for fresh foods departments in grocery. Retailers surveyed detail investments for fresh foods departments in-store but also report an increase in the amount of fresh foods sales online. Key insights from the report were shared at a keynote address by FMI President and CEO Leslie Sarasin during FMI’s FreshForward event.
“The pandemic changed Americans’ grocery shopping and cooking habits, with more of us enjoying meals at home with family members,” shared Sarasin. “These broad-level changes particularly impacted fresh foods departments, and even as we shift to more in-person activities, shoppers continue to rely on their grocery stores for fresh food items. Food retailers and suppliers are responding to the heightened consumer interest in fresh food items with enhanced, affordable offerings both in-store and online.”
“As we look at fresh foods departments, it’s important to see where businesses are investing and how the food industry is responding to changing consumer trends,” shared Rick Stein, vice president of fresh foods for FMI. “Two important areas stand out. First, the fact that 40% of online sales are being generated by fresh foods departments suggests a major change from previous trends. Second, it is significant to note the emphasis that retailers are putting on foodservice and prepared foods departments.”
Online Share of Sales by Fresh Categories
Fresh food offerings are becoming more prominent players in ecommerce. Fresh or perimeter departments now comprise 40% of all online sales, rivaling dry grocery online sales (41%) and surpassing frozen online sales (11%).
Enhanced Space and Staff for Foodservice
Food retailers are re-envisioning fresh foods departments with enhanced space allocation and increased staff. Eighty-two percent are planning to grow the space allocation for fresh-prepared grab-and-go options, while others are increasing space for fresh-prepared chef made-to-order stations (35%) or fresh-prepared self-service (29%). Retailers are also increasing staff for foodservice (44% of retailers planning), trained or certified chefs (22%), in-store dining (20%), and scratch bakers or pastry chefs (18%).
Food Retailers Experiment with Foodservice Experiences
Food retailers surveyed are getting creative with their service differentiation strategies by experimenting with new consumer touchpoints, like in-store dining (51%), a coffee bar (39%), online ordering and pickup/delivery of foodservice offerings (33%), catering services (30%), a juice bar (20%) and a full-service restaurant (13%). However, the success of these programs has been mixed. Retailers report a success rate of as high as 60% for juice bars to as low as 13% for online ordering and pickup/delivery of foodservice offerings, revealing an opportunity for retailers to explore other specialty options.
Learn more about how fresh departments are performing and evolving by downloading The State of Fresh Foods report.