Convenience. Health and wellbeing. Transparency. They’re all huge trends in themselves. Put them together, and you have a force to be reckoned with — and a vision for the grocery fresh perimeter that’s very bright indeed.
“We see all of these converging in the world of fresh,” said Rick Stein, vice president of fresh for Arlington, Va.-based FMI – The Food Industry Association.
The rise of Generation Z is one big reason why, Stein said. As older Gen Zers start to make their own purchasing decisions, grocery retailers are starting to take notice, and adjust not only their fresh SKUs but the entire fresh perimeter experience.
“That segment is really going to drive a lot of fresh departments over next five to ten years, and our members seem to know that,” Stein said. “They talk about investing in fresh, about how that’s the area of the store that’s really being the decision maker for these folks.”
The differences between Gen Z and their immediate generational predecessors, the Millennials, are larger than many people think. Stein recalls Millennials rolling their collective eyes at he and his fellow Baby Boomers. Now, he said, many Gen Zers have a similar reaction to much Millennial behavior.
“The Millennials were very cynical about what you told them. If you’re green-washing or being disingenuous, you lose them completely. And they rely heavily on social media or friends” to get their information and form their beliefs, Stein said.
Gen Zers, by contrast, are more likely to make up their minds for themselves. They’re not as cynical — but they’re also much more demanding.
“We’ll have to explain where their food comes from. Social responsibility, animal welfare, sustainability and climate are very important to Gen Z.”
The path is clear, but that doesn’t mean it will be navigate. The youngest shoppers are committed to convenience, health and wellbeing and transparency, but they don’t always know how to translate those wants and needs into real world activities like buying groceries.
“They don’t know how to engage with fresh,” Stein said. “What we’ll see in the next few years will be new ways to communicate with them. Electronic recipes. Information on where product comes from, farm to shelf, ingredients and nutrients.”
Challenges — and opportunities
While the fresh food industry has stabilized since the peak COVID-related disruptions, the challenges of supply chain, labor, and record inflation will continue to impact the industry for the near future, said Whitney Atkins, vice president of marketing for the Madison, Wis.-based International Dairy Deli Bakery Association (IDDBA).
“These challenges can make predicting the future five to ten years seem impossible, but what we can do is use the data and consumer behavior trends we have to look forward,” Atkins said.
One trend IDDBA is tracking closely is the increase in at-home dining, which bodes well for the perimeter dairy, deli and bakery departments.
“Rotisserie chicken, sandwiches and pizza sales from the deli continue to grow,” for instance, Atkins said, citing IDDBA data. “Consumers are seeking restaurant equivalent at retail and looking for complete meal options.”
Seventy-eight percent of all meal occasions are prepared at home, according to IDDBA. While down from the early times of the pandemic, the current inflationary period are keeping the food dollar largely at retail.
Nearly a quarter of Americans (24%) say they will eat from restaurants less, and the number is constantly going up: from just August to September, the number of shoppers who said they planned to cook at home more jumped 19%.
“These are important stats for deli prepared,” said Heather Prach, IDDBA’s director of education. “For those times that people are out of time and energy to cook, we often see restaurants win out. Clearly takeout and delivery are now big components of the restaurant convenience and something to consider to help extend sales beyond the in-store engagement.”
FMI and other industry leaders got a vision of the fresh future at the recent White House Conference on Hunger, Nutrition and Health. What fit “right in the bulls eye” of much of what was discussed at the summit, Stein said, was the fresh foods sold in the nation’s grocery stores.
It all points to a future where Stein and other industry experts see center-store shrinking and the fresh perimeter growing.
As digitally minded as the youngest consumers are, they will shop in brick-and-mortar supermarkets, Stein said — particularly for fresh foods. But that doesn’t mean retailers can relax. The departments of the future will have to look considerably different than the departments of today.
“It has to be more than a department, it has to be an experience,” Stein said. “They need to get something that doesn’t exist in ecommerce.”
Providing those experiences requires well-trained employees, something that’s easier said than done in an age of tight labor.
But retailers are doing something about it, Stein said. Ever since the “Great Resignation,” they’ve committed themselves to getting on top of the labor situation. For many, the first step was admitting that they didn’t really know what their employees wanted.
“Many retailers understand their customers better than their employees,” Stein said. “There are a lot of resources now for how to engage with your employees, creating career pathways, figuring out how to reward them.”
That might mean different pay for different shifts, or increasing rewards and other forms of recognition, or giving workers flexibility in setting their schedules.
The omnichannel future
Instore dairy, bakery and deli prepared perimeters have long been the drivers of experience that appeals to consumers’ senses, and that will be even more true in the future, according to IDDBA.
“Coming out of the pandemic, 38% of shoppers are mixing online and instore shopping, making creating omnichannel shopping a must for these departments in the future,” Atkins said.
Convenience and quality also will remain top-of-mind for retail perimeter departments going forward, according to IDDBA’s latest What’s In Store? trends data.
“What we are seeing is the continued growth of perception that retail sourced food is seen as a value and alternative to eating outside the home, and likely driven by the consumer shift to eat at home that occurred as a result of the pandemic,” Atkins said.
Finding new home meal solutions for time-starved consumers must be a priority for grocery fresh departments of the future, she added. And that future needs to start now.
“Now is the time to create the habit of the consumer going to retail bakeries, deli, deli prepared for meal solutions.
Convenience and time has and will continue to be a driver for retail grocery shopper.”
Improving omnichannel shopping and online shopping availabilities, especially in the meal arena, is critical. Easy to order, easy to pick up meals and even delivery options are a must for future success, Atkins said, and the technology and innovation to create a similar restaurant/QSR experience will carry the perimeter departments of the future.
The prepared foods departments of the future — at least the ones that hope to thrive — will generate menus that “are reflective of a restaurant menu,” as Atkins phrases it.