Arlington, Va.-based FMI – The Food Industry Association is in constant contact with its grocery store members, and one message that has been consistent over the past decade-plus is that retailers are putting more emphasis on fresh, said Rick Stein, FMI’s vice president of fresh.

“Retailers see fresh as a real way to differentiate themselves,” Stein said. “The quality of their fresh departments can be what sets them apart.”

COVID arrested that progress somewhat, as supermarkets made shrink control their primary focus. But with the pandemic now in the rearview mirror, they’re getting back to a growth mindset, Stein said.

“They’re getting back to expanding more space into fresh,” he said.

Much of that can be traced to the growth in retail in comparison to foodservice. At the height of COVID, restaurants were closed and consumers were discovering their inner home chefs out of necessity.

Dollar sales have bounced back nicely in the foodservice channel post-pandemic, but unit sales are still down, Stein said. Retail foodservice and other areas of the grocery perimeter continue to benefit from that tipping of the scales toward retail.

One perfect example is the growth of value-added products in the fresh produce department, many of which are used to make meals that, in previous years, consumers have eaten away from home.

“What in the past may have been a 6- or 9-foot value-added case with bagged salads now also has cut veg and fruit and is 40 feet of refrigerated gondola,” Stein said.

A big part of that value-added equation is a surge in demand for all things snacking-related, he added. It’s not uncommon these days to see merchandisers slap a “Snacking” sign on top of their value-added produce gondola.

Fresh seafood merchandising, meanwhile, has adapted to the new reality with meal-ready products of their own, Stein said.

“Retailers have done a great job with things like stuffed salmon, cooked shrimp, marinated products.”

Next door to seafood, meat departments have made merchandising changes like stocking ground products, which have been more popular during the recent inflationary times, together.

“Grind sets have become really popular,” Stein said. “As recently as three years ago, you’d have ground beef in one place, ground pork or turkey in another. Now they’re together in one big area.”

ISBs, meanwhile, are enjoying a “renaissance,” Stein said, after too many years of getting a bad rap from the anti-carb crowd. The big winner, he said, has been single-serve desserts and other baked goods. 

“There used to be just a smattering of single-serve, now it’s predominantly single-serve,” he said.

And of course retail foodservice, last but not least, has enjoyed enormous growth, and merchandisers have responded to the post-COVID world with meal solutions — not necessarily meal kits, Stein said, but all of the elements for consumers to put together their own meal quickly.

Fresh features

• Three-fourths of food retailers are planning to increase the space they allocate to foodservice aspects such as fresh-prepared grab-and-go options.
• 74% of retailers say they’ll increase grab-and-go in the next two years.
• 49% are planning to devote additional space to more organic produce.

Now hiring?

• 38% of retailers are planning to increase labor allocation in areas such as foodservice.
• 24% plan to add specialty help by department, which entails hiring employees such as in-store butchers, produce butchers, cheese mongers, and trained or certified chefs.

Lead with "local"

• 88% of retailers used local assortments throughout the store as a key product differentiation strategy in 2022.
• Many found this approach highly effective. More than 70% of retailers are increasing SKU allocation (in-store or online) to locally sourced products.

Source: FMI - The Food Industry Association

Redefining value 

One of the biggest changes in recent years in retail merchandising, Stein said, is the increased attention on appealing to consumers’ sense of value. More often these days, focusing on price isn’t enough.

One way grocers are creating value that will keep shoppers coming to their stores is through creating experiences for shoppers, Stein said. That’s often done with lighting, fixtures and other means to create an ambiance. In the deli, that could be a restaurant ambiance; in the produce department, a farmers market ambiance.

Successful merchandising also often means putting the product where shoppers can’t help but see it, then presenting it in such a way that they don’t have to think too much or walk to far to get what they need.

For instance, retailers can put refrigerated cases at the front of the store filled with meal replacement items, and flanked with center-store items to also add to the meal, Stein said. Some stores will even merchandise the kitchen tools needed to make the meal in the same display.

“It’s kind of a one-stop shop right in their lobby,” he said. 

A lot of the merchandising ideas Stein and others endorse sound like they’d be labor-intensive, but that’s not necessarily the case.

Suppliers are doing a lot to help retailers faced with labor shortages, Stein said. And it’s nothing new. He cited the example of deli meat specialist Dietz and Watson, which began shipping pre-sliced meats to its retail deli customers.

“Now they all do it,” Stein said of Dietz and Watson’s competitors in the space. “There are lots of things suppliers are doing to take labor costs down for retailers.”

Picking up the pace in e-commerce

Most retailers do a good or even great job of merchandising fresh foods in their brick-and-mortar stores.

But they have a way to go when it comes to merchandising on their e-commerce sits, Stein said.

For too many sites, it’s just “click and put it in the cart,” Stein said. But things are starting to change. More retailers are using algorithms where clicking on one items will suggest other items that go well with it, so shoppers don’t have to do separate searches for every single item.

A great example of this, Stein said, would be a “build your own Super Bowl cart” option, where consumers shopping online for the Big Game would immediately be presented with a variety of go-to items, making their shopping experience pleasant and easy.

Fresh or perimeter departments now account for an average of about half of food retailers' total online sales. Meat and produce continue to lead in sales per labor hour.

Ecommerce sites are also a great way for grocers to educate their customers. FMI research has found that shoppers are usually not willing to take a lot of time to educate themselves about what they’re thinking of buying when they’re actually in the brick-and-mortar store. They tend to have a “get in, get out” mentality, Stein said. 

There’s much more opportunity to educate when shoppers are at home, looking at their grocer’s ecommerce site, Stein said.

“The first thing people say to us is that they need to do a better job of educating consumers, and the big opportunity to do this is in ecommerce.” 

This article is an excerpt from the October 2023 issue of Supermarket Perimeter. You can read the entire Merchandising feature and more in the digital edition here.