Fresh produce sales aren’t as strong as they were in the middle of the 2010’s, but they’re bouncing back, and the future looks strong.
That’s one of the many takeaways of the annual Power of Produce report, a joint production of the Arlington, Va.-based FMI – The Food Industry Association and San Antonio-based 210 Analytics.
Anne-Marie Roerink, 210 Analytics’ president, and Rick Stein, FMI’s vice president of fresh foods, presented the results of the 2020 edition of the Power of Produce in a July 21 webinar.
The research for this year’s report was conducted before COVID-19 hit, but as Stein said, the information is still very relevant to the current fresh produce climate.
The aim of The Power of Produce, Roerink said, is to find “the why behind the sales numbers.” FMI and 210 Analytics surveyed 1,500 shoppers throughout the country to gauge their fresh produce buying, channel, consumption, packaging and other preferences.
In the middle of the previous decade, fresh produce sales growth averaged about 4% annually. Departments aren’t notching those gains now, Roerink said, but they are in the middle of something like a mini-comeback. In 2019, sales saw a 1.2% increase across all channels.
“We have seen better years, but I would definitely label 2019 as a comeback year, and 2020 looks very good,” she said. “Fruits are seeing pressure from strong vegetable performance.”
Fruit had “a bit of a challenging year,” Roerink said, but fresh vegetable sales had a very strong year, with dollar sales up 3.5% and volumes and units sold also up.
FMI and 210 Analytics partner on “Power” reports throughout the fresh perimeter, but in the case of produce, Roerink said, the word is particularly apt.
“Fresh produce has an enormous impact on grocery,” she said. “It’s the No. 1 reason why people shop one store over another. It not only generates big sales, it’s also a basket and trip driver.”
While produce sales did tick up last year and are expected to do so again in 2020, fresh produce departments, like all retail fresh perimeter departments, have been negatively affected by growing sales of frozen product, Roerink said.
Keys to future growth
When it comes to growing fresh produce sales at retail, there’s not much to be done in one of the traditional key areas of growth stimulation: the number of people who buy them. That’s because 99% of those consumers surveyed said they buy fresh produce.
The area where real improvement can be made, Roerink said, is in frequency of purchase and how big their baskets are.
“There’s a lot of growth in getting people to try items they haven’t bought before,” she said. “That’s a great way grow penetration.”
Trips to the produce department have been ticking up in recent years, but there’s been little pressure on spend per buyer, Roerink said.
Produce is still “very unique,” Roerink said, in that it’s still very much a planned purchase for most consumers. That also creates opportunity, with plenty of room, she said, for growth in impulse sales.
Sixty-three percent of consumers told FMI and 210 Analytics that their meals are based on routine items they buy over and over. Giving those routine meals a little twist with fresh produce, Roerink said, is a great way to drive growth.
The closer you can bring the meal inspiration to the actual produce purchase, the better, Roerink said. Nearly eight in ten consumers (79%) make a plan to buy their produce, and 55% list specific items.
“Being a part of that pre-trip planning is critical,” Roerink said.
Fifty-nine percent of those surveyed said they buy fresh produce and then take four or five days to eat it all. Roerink said there’s a huge opportunity to get people who buy produce once a week or less to add a trip or two per week.
“Some buy fresh early in the week, then switch to frozen later in the week,” she said.
One way to change that is to better educate consumers on shelf life so they know which items to buy that will stay fresh longer.
“Virtually everyone” is trying to eat more fresh produce, Roerink said. In 2020, snacking is overtaking dinner and lunch as the biggest opportunity to eat more produce.
There’s also big opportunity in educating consumers about the carb and protein power of certain fruits and vegetables. (Squash and cauliflower replacing traditional grain-based pasta, or beans and legumes replacing meat, e.g.)
Promote, promote, promote
Forty-three percent of total fresh produce dollar sales were made when promotions took place, so merchandising, Roerink said, is “incredibly important.” (By contrast, 33% of meat sales were on promoted items, and just 15% of deli sales.)
And more than two out of three shoppers (68%) look at what fresh fruits and vegetables are on sale at different stores before deciding where and what to purchase, according to the study.
For the first time ever in a Power of Produce study, instore signage topped print circulars as the top way to advertise sales in the fresh produce department. But while instore signage is growing in importance, it also must be done, Roerink said, in such a way that it doesn’t detract from the product itself.
“Visual beauty is very important for produce,” she said. “How do you do the ad without cluttering the department, without creating the ‘NASCAR effect?’”
Print circulars may have lost their spot at the top, but they are still crucial, according to FMI and 210 Analytics. For many retailers, they drive 15-17% of fresh produce sales every week.
“The biggest spenders in producer are still boomers, so walking away from circulars is something retailers want to consider very carefully,” Roerink said.
Millennials, not surprisingly, lean much more heavily digital, so retailers must up their efforts there, as well.
“Digital circulars, email, apps — (use of them) is much higher among millennials, so that will be very important going forward,” she said.
Whether it’s print circulars, instore signage, social media or other media, an integrated marketing campaign is key for retailers, Roerink said — delivering the same message across multiple platforms.
In addition to promoting fresh produce on-ad, other great ways to boost category sales, Roerink said, include selling items in season, creating eye-catching displays and sampling.
Fifty-nine percent of consumers said having seasonal produce to choose from can prompt an unplanned purchase. The importance of displays? “In produce,” Roerink said, “the eyes decide.”
And sampling, as she points out, is “one thing the Internet can’t do.” Constantly rotating in new items and pairing samples with recipes are two ways to help ensure success.
Stein, a retail grocery veteran, said that retailers of today can benefit from these and other data and tips that he and his fellow merchandisers didn’t have as easy access to in the past.
“If I could have told my produce clerks about great signage, color breaks, etc., it really would have reinvigorated my staff, to know that their efforts going to add to incremental purchases,” he said. “Looking at these numbers, it makes me feel like instore conditions are a big factor, and it enables you to talk to stores to create great conditions.”
More channels, more opportunities
The number of channels selling fresh produce continues to multiply, Roerink said.
“Online ordering, vending machines — everybody is jumping into that produce dollar,” she said. “Produce continues to be a huge stronghold, but every year we see a little more pressure on where people buy groceries.”
Supercenters and limited-assortment stores currently come in at No. 2 and No. 3 behind traditional grocery stores when it comes to where consumers choose to buy their fresh fruits and vegetables, according to the survey. Roerink also pointed out an interesting dichotomy in the survey’s findings regarding channel choice: value stores are doing well, but at the other end of the spectrum, so are organic and other specialty retailers.
Forty-seven percent of shoppers say they’ve purchased groceries online. That number, while impressive, is starting to level off bit after several years. Sixteen percent of older millennials order online “very regularly.” Just 3% of boomers do.
In the early years of online grocery shopping, consumers focused most of their purchases on the center store, Roerink said. Now, however, many more are buying items from the fresh perimeter. From 2019 to 2020, the percentage of shoppers buying fresh produce online jumped from 20 to 29%.
Going forward, 58% of shoppers said they expect to buy more produce and other fresh items online.
Grocery retailers looking to boost their produce sales will need to continue to emphasize how produce is grown and to provide more organic, local and seasonal options for consumers, Roerink said.
“How fruits and vegetables are grown is of infinitely more importance with younger consumers. Expect this to have a bigger impact as the boomer dollar shrinks.”
Half of all consumers told FMI and 210 Analytics that they want more assortment in their local and seasonal options, 40% want more organic choices and three in 10 more non-GMO.
Organic, for consumers, is perceived as healthier and a “short cut” to free-from, nutritional value, less environmental impact and water usage and support for family farms, Roerink said.
“Winning with organic is close to winning with fresh produce altogether. Retailers need to continue to educate shoppers, make inroads to drive extra purchases.”
If they can expand the organic beyond “healthy,” they will be more likely to overcome the price gap that still keeps many shoppers from buying organic produce, she added.
“It used to be enough if the produce looked good and had a good price point,” Stein said. “That’s not the case anymore. A lot of consumers are following a certain diet or lifestyle, and they’re really hungry for information. You have to know more about your consumer now.”
If he was still in retailing, Stein said, he’d be spending a lot time educating managers and their staffs about different diets and the impact of different fruits and vegetables on different health needs
This story was featured in the September edition of Supermarket Perimeter. Click here to view the whole issue