bringing to life: top trends in fresh foods march 11-13, … · match your own or pre-pack activate...

March 11-13, 2019

Retail

BRINGING TO LIFE: TOP TRENDS IN FRESH FOODS

Balancing the Consumer Pendulum

© 2019 Information Resources Inc. (IRI). Confidential and Proprietary. 2

today’s Sally Lyons WyattEVP & Practice Leader

Jonna ParkerPrincipalIRI Fresh Center of Excellence


Did you know?

2018 • Fresh sales grew only 1% this past year, 3 % points less than 2014

• Center-store sales growth outperformed Fresh Foodsfor the first time in the decade

FUTURE is HERE and is DISRUPTIVE

• Millennials & Gen Z are most culturally diverse ever• Growth lies in impact of the changing U.S. demographic landscape• Generational, multi-cultural and socio-economic lenses reveal a

critical path

CONSUMERS• 3 key targets illustrate growth opportunities of nearly $5B• Its not about wide distribution – its being distributed perfectly • Fresh is increasing in importance – but interest in buying

fresh at alternative channels is also up from past years

• Fresh has added $7Bin sales since 2014

• Health and Convenience continue to be vital, impacting traditional categories

are key

what’sseewe

working


The Dynamics of the Industry Are More Complex Than Ever


2014 2015 2016 2017 Latest 52 Weeks YTD 2018

Food & Beverage (ex Fresh) Fresh Perimeter

Fresh Perimeter Has Grown Over $7B Since 2014, but Growth is Slowing

2.1%

5.0%

2.0%

1.0%

Gap Fresh +2.9 pts F&B Minus Fresh

Gap Fresh -1 pts to F&B Minus Fresh

Source: Total Store View + Perimeter Market Advantage incl. Fixed Weight Fresh, MULO ending 12-2-18


In the Past Five Years, the Growth Slowdown Has Impacted Departments Differently, Pointing Toward Evolving TrendsExample Difference in Dollars % Change vs. Year Ago Trend 2013 to 2018

Dairy+4.7pts

F&B ex FRESH

FRESH

General Food+0.5pts

Deli Prepared-5.1pts

Meat-0.5pts

Source: Total Store View + Perimeter Market Advantage, MULO 2018 is 52-weeks ending 12-2-18 compared to 2013 vs. 2014 Dollars % Change


What Still Holds True is that Consumers Increasingly Look to Fresh for Holistic Health and Convenience SolutionsChange Since 2013+ Dollars | + Units

Lettuce (incl. Salads)+$1.4B | +400M

Avocado+$775M | +365M

Fresh Chicken Breast+$1.3B | +236M

Berries+$1.2B | +235M

Rfg. Packaged Meat+$1.5B | +175M

Deli Prepared Entrees+$1.0B | +136M

Packaged Bakery Snacks+$500M | +322M

Rfg. Side Dishes+$916M | +121M

Source: Total Store View + Perimeter Market Advantage, MULO 52-weeks ending 12-2-18 vs. Calendar Year 201 Ranked on score for both dollar and unit change


Bananas-$205M | -167M

Bulk Ground Beef-$311M | -79M

Fresh Pork Loin-$452M | -47M

Fresh Whole Chicken-$200M | -47M

Apples-$102M | -79M

Pears-$97M | -55M

Beef - Round-$134M | -32M

Fresh Ground Round-$126M | -29M

This Has Led to Declines in Some Traditional Categories; Many Needing More Prep Before CookingChange Since 2013+ Dollars | + Units

Source: Total Store View + Perimeter Market Advantage, MULO 52-weeks ending 12-2-18 vs. Calendar Year 201 Ranked on score for both dollar and unit change


Consumers State that Fresh is Important to Their Daily Eating…

But Where They Buy Their Fresh Products Has Been Changing

70%of consumers say they are buying MORE fresh foods at a traditional grocery store

43%of consumers under 40 primarily buy fresh at a traditional grocery store –compared to 63% of older consumers


Grocery Remains the Lion’s Share of Perishable & Perimeter Food Sales, But Starting to See Purchases Shifting to Other Channels

21%

5% 1%

64%Grocery

(-1.1%)

15%Mass/Supercenter

(+0.6%)

9%Club(-0.4%)

10%All Other

(+0.5%)

1%Conv/Gas

(0.1%)

1%Internet

(0.1%)

Source: IRI HH Panel, 52 weeks ending 12-9-18, Custom Perishable Categories (RW + UPC). All Other includes independent grocers, farmers markets and specialty shops


+8% in trips+6% in trips

+10% in trips +3% in trips +7% in trips+20% in trips

+5% in trips

Non-Traditional Outlets are Emerging as the Big Winners for Perishable Foods, Delivering on Experience, Price and Uniqueness% of HH’s Buying Perishable Food

23% 10% 11% 8%

24%28%71%

Source: IRI HH Panel, 52 weeks ending 12-9-18, Custom Perishable Categories (RW + UPC), 52 weeks ending 12-9-18


The Pendulum is ShiftingFinding Balance and Identifying Growth Today, Tomorrow and in the Future


In the U.S., We Have the Most Diverse and Different Consumer Landscape Ever

02ECONOMIC DIVIDE


These Mega-Trends Are Not Disparate, But Blend to Create New Households

Requires different tactics to BALANCE what’s needed for the new U.S. consumers

HOUSEHOLD

Economic

Cultural

Geography

Generation

Attitudes

HouseholdMake-up

HOUSEHOLD


Fresh Opportunity

HOUSEHOLD

01 | Buying Across CHANNELS

02 | Spending on FRESH FOODS

03 | Spending on FOOD & BEV

04 | Spending TRENDS

05 | Projected POPULATION GROWTH

Data and Insights Help Us Find, Understand & Influence These New Households

HOUSEHOLD

Economic

Cultural

Geography

Generation

Attitudes

HouseholdMake-up

HOUSEHOLD


HIGH INCOME MULTI-GENERATION

4.6% of U.S. Households11.4% of Fresh Dollars11.1% of Food & Bev Dollars

Declining spend in both fresh and center-store food & bev

SMALL URBAN HOUSEHOLDS


Increasing spend in bothfresh and center-store food & bev

DIVERSE MIDDLE CLASS FAMILIES


Flat in center-store food & bev and slight increase in fresh spending


Over-Index on Fresh and Center-Store, But Spending for Both Declining Year Over Year Within Supermarkets

Multi-Generational Upper Income


Multi-Generational Upper Income Households Shop the New MarketplaceRisk Leaving Traditional Supermarkets to Specialty Markets

Grocery / Supermarkets

Natural Markets

Specialty Grocers

Premium Grocers

Key Store Formats Over-IndexingLargest Share

Source: ShopperSights Share of Total Store ACV by Channel for the Custom Multi-Generational Mid-to-Upper Income Household Cluster

Where do they shop?


They are Looking for Value and Variety in Regards to Fresh

Source: 2019 IRI Fresh Survey; IRI Shopper Loyalty trip trends for Multi-Generational Mid-to-Upper Income Household Cluster, 52 weeks ending 12-2-18

Where do they buy?

Multi-Generational Upper Income Households have a higher rate of:• seeking good value for the price• health and wellness benefits• online delivery / curbside pickup


They Seek Online Offers Connected to In-Store Experiences

“A store’s environment will impact where I shop”

“I plan my shopping trips online”

“I use mobile coupon applications”

Source: ShopperSights Influencing Marketing Tactics for the Custom Multi-Generational Mid-to-Upper Income Household Cluster

How can we influence them?


Swing the Pendulum Toward Growth for These Households by Tying Growing Fresh Categories to the Rest of Fresh

Fresh Meat Alternatives

Fresh Seafood

Fresh Pork & Ribs

Deli American Cheese

Categories increasing spend Also in the basket…

Actions to Boost Baskets:Serve Online Recipe Ideas for 4+ PortionsOffer Mobile Coupon to Boost Meat & Deli Basket

Source: IRI Shopper Loyalty basket affinity for Multi-Generational Mid-to-Upper Income Household Cluster, 52 weeks ending 12-2-18

What’s in their basket?


When Produce Juices are in the Basket, They are 5x More Likelyto Buy Specialty Fruits, Deli Cheeses and Try New Recipes

Fresh Juices

Categories Increasing Spend

Bulk Spices & Spice Master

Party-ready deli cheese trays with pairing

suggestions and in-store Cheese Monger

Produce Butcher – value-added produce by the pound, either mix and

match your own or pre-pack

Activate In-Store Experiences They Crave

Source: IRI Shopper Loyalty basket affinity for Multi-Generational Mid-to-Upper Income Household Cluster, 52 weeks ending 12-2-18



The Opportunity for Fresh for Upper Income Multi-Generational Households

Annual projected population growth

4%Current fresh spending per

household annually

$1.1BIncremental fresh dollars in three years, if we can retain fresh spending levels

Maintain

Source: IRI Custom Analytics Projection, 2019


• Cluster Spend on Both Fresh; Center-Store on Par with National Average

• Spending in Supermarkets Flat Year Over Year

MIDDLE CLASS DIVERSE FAMILIES


Middle Class Diverse Families Split Spending Across Retail Food FormatsUnique Assortment, Price and Convenience of the Local Store are Primary Trip Drivers

These households have also been earlyadopters in online grocery delivery, compared to the general population

Mass / Supercenter

Discount Grocers

Ethnic GrocersGrocery / Supermarkets

Key Store Formats Over-IndexingLargest Share

Source: ShopperSights Share of Total Store ACV by Channel for the Custom Middle Class Diverse Families Household Cluster, 2019 IRI Fresh Foods Survey

Where do they shop?


These Households Look for Convenience in Regards to Fresh

Freshness, taste and competitive pricing is less of a motivator for these households versus the general population

Pre-prepared convenient meals and organics are more important

Source: IRI Fresh Survey 2019 & IRI Shopper Loyalty trip behavior data for the Custom Middle Class Diverse Families Household Cluster

What are they buying more?


This Segment is Open to Change, Enjoys Shopping and Seeks In-Store Incentives

“I prefer shopping stores that carry more brands”

“I often go out of my way to find new stores”

“I use in or on-pack coupons”

Source: ShopperSights Influencing Marketing Tactics for the Custom Middle Class Diverse Families Household Cluster



Actions to Boost Baskets:Create price incentive to buy fresh chicken & recipe components to create a new, different meal

While Spending at Grocery is Flat, Fresh Chicken and Other Key Categories Can Swing the Pendulum Toward Growth


Critical Category

Fresh Chicken

Spend 2.6x More in store when fresh chicken is in the basket

Source: IRI Shopper Loyalty basket affinity for Middle Class Diverse Families Household Cluster, 52 weeks ending 12-2-18



On-Pack Coupons - Buy Fresh Chicken Breasts, Get A Popular Basket Co-Purchase

Free or Discounted

Offer Meal Solutions and Co-purchase Promotions to Keep this Consumer Segment in Your Stores


Critical Category

Fresh Chicken

Meal Solutions Promotions -Price discount When

All Components in a Recipe are Purchased

Bread Crumbs

Green Beans

Actions to Build Baskets

Source: IRI Shopper Loyalty basket affinity for Middle Class Diverse Families Household Cluster, 52 weeks ending 12-2-18



In-Store Event Opportunity:”Breakfast in Bed” for MomCooking school or decoration station for childrenOffer coupon for breakfast products to participants

The Right Items Can Swing the Pendulum to Build Equity With this SegmentUnique Holidays / Seasons Can Drive Middle Class Diverse Families to Your Store

Week of May 13 is the Highest Spending of any week for this Segment : 14% more than their 52 week average

More Middle Class Families Buy These Items Week of May 13 than Other Households:

Fresh Bakery Bread Berries Breakfast Meats Fresh Bakery Donuts

Source: IRI Shopper Loyalty basket affinity for Middle Class Diverse Families Household Cluster, as of data ending 12-2-18



The Opportunity for Fresh with Diverse Middle Class Families is About Growth in Spending Coupled with Modest Population Projections


3% 2%Growth in fresh

spending annually

$1.8BIncremental total dollars for fresh in three years, if we can boost this group’s spending



• Under-index on Food & Beverage spending at supermarkets

• However, group is increasing their spend in both fresh and center-store Food & Beverage

SMALL URBANHOUSEHOLDS


Small Urban Household Fresh Purchases Are Expanding at Mass, Dollar and C-Stores, Drawing Them Away from Grocery However, Supermarkets That Offer Locality and Discounts are Winning

Discount Grocers

Regional Grocers

5x more likely to shop Dollar Stores than others, even though low share of total ACV spend

Grocery / Supermarkets

Key Store Formats Over-IndexingLargest share

Source: ShopperSights Share of Total Store ACV by Channel for the Custom Mid to Lower Class Urban Small Household Cluster

Where do they shop?


These Households Look for Format and Delivery Innovations to Make Shopping Easier in Regards to Fresh

Source: IRI Fresh Trends Survey

More than half of Small Urban Households seek solutions for fresh foods that make solving the meal and shopping more convenient

What are they buying more?


Small Urban Households Can Be a Loyal Shopper or Drawn Easily Away, as They Still Use Traditional Advertising

“Go out of my way to find new stores and will travel to

my favorites”

“I look at newspaper inserts andretailer website advertisements

to plan where I shop”

“I use coupons more than once a week from a variety of sources –on-pack, mobile, in-store, etc.”

Source: ShopperSights Influencing Marketing Tactics for the Custom Mid to Lower Class Urban Small Household Cluster



Small Urban Households Use Promotions Advertised Out of Store, and Select Categories Are Critical to Driving Foot Traffic

Shelf Stable Juices

52% more trips

Carbonated Soft Drinks

25% more trips

Fresh Pork

23% more trips

Purchased More Often Also in the Basket

Packaged Lunch Meats

Canned Fruits and Vegetables

Fresh ChickenBreasts

Baskets Average

1.6-2.6x largerSmall urban households spend more than the average household across the entire store

16% greater than the average HH when fresh pork is in the basket

When These Categories Are in Their Baskets..

Source: IRI Shopper Loyalty basket affinity for Mid to Lower Class Urban Small Household Cluster, as of data ending 12-2-18

What’s intheir basket?


AdvertiseUse fresh seafood front and center in weekly ads and digital communications for urban areas

PromoteOffer coupons for other fresh departments on seafood packages and mobile applications

Drive Traffic Personalized mailer showcasing freshness and variety seafood

Seafood is a Destination Category for This Segment and is Key to Increasing Shopper Engagement and Basket Size

Fresh Seafood

Destination category Differentiate your store with actions within the fresh seafood department

Source: IRI Shopper Loyalty over-indexing dollar spend categories for Mid to Lower Class Urban Small Household Cluster, as of data ending 12-2-18

What’s intheir basket?


The Opportunity for Fresh with Small Urban Households is Continuing Their Strong Fresh Spending Growth Into the Next Decade


Flat 9%Maintain fresh total dollar sales

growth as seen from 2017 to 2018

$1.7BIncremental future fresh dollars in three years, if we keep this cluster’s fresh spending up



Fresh Deli Desserts Frozen Prepared Vegetables

Dried Fruit Snacks Deli Prepared Meats

Packaged Frankfurters Smoked Ham

Since Refrigerated Meals are Increasing Across all Segments, There are Additional Opportunities You Can ExecuteSolutions, Not Silos For Each Segment

Refrigerated MealsIncludes Entrees, Side Dishes,

Pasta and Lunches

Source: IRI Shopper Loyalty high indexing dollar spend categories and basket affinity for Custom Fresh Opportunity Household Clusters, as of data ending 12-2-18

Multi-Generational Upper IncomeMobile Coupon for:

Middle Class Diverse FamiliesOn-Pack Coupon for:

Small Urban HouseholdsOmnichannel Coupon for:


Consumer Pendulum Summary

2 | CONSUMERS STILL WANT FRESH

Consumption is the same, if not more, but traditional supermarkets are losing the battle to new players

1 | THINGS ARE CHANGING RAPIDLY

What worked before is unlikely to be relevant to today’s more complex environment

4 | OPPORTUNITY IS RIPE FOR THE TAKING

One size fits none. Uncover and focus on the needs of the multi-faceted household clusters to swing the pendulum back toward growth

3 | IDENTIFYING GROWTH IS COMPLEX

Use shopper metrics to simplify down to key areas that can affect change


1 | CONNECT FRESH ACROSS THE STORE

Consumers seek solutions, not silos. Communicate personally beyond the store in digital and print. Cross-department collaboration in the store to keep shoppers from leaking to new channels.

Click to watch video https://www.facebook.com/watch/?v=10155934031538920

Source: Weavers Way Co-op Ambler Pennsylvania

Retailer Priorities to Consider

https://www.facebook.com/watch/?v=10155934031538920


Ingredient Convenience


2 | DEFINE VALUE IN MULTIPLE WAYS

Price is not the only way to compete –engage fresh opportunity shoppers through different promotions linked to what they buy most often.




3 | DEVELOP FRESH IDENTITIES FOR YOUR STORES

All fresh opportunity consumers seek unique food options matched to their lifestyle. Help them find these solutions with signage and placement.


Quick Pick Up Areas

Develop Fresh Identities for Your Stores


Showcase Sustainability and Local Connections



4 | PROMOTIONS REMAIN CRITICAL –BUT GET CREATIVE

Fresh is typically behind CPG in embracing technology – yet drives baskets. Personalized offers can swing the pendulum… and profitably.


Personalized Experiences for Beverages, Olive Oil, Syrup and Honey


2019 Fresh Trends Educational Plan

The Store Size Pendulum

How do large, medium and small size

footprints fare in fresh?

The Total Store Pendulum

How can both fresh and center-storewin consumers?

The Geographic Pendulum

How have different regions and marketssucceeded in fresh?

The Consumer Pendulum

2019 Fresh Trends –Balancing the Consumer

Pendulum

MAY 23

JUL 25

OCT 24

May 23 July 25 October 24

bringing to life: top trends in fresh foods march 11-13, … · match your own or pre-pack activate...

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