Nielsen Fresh Food Insights: Bakery, Meat, Seafood Shine In Tough Times

What a difference a year makes. Restaurant operators enjoyed a solid 2008, but by mid-year 2009, more than 4,000 had closed and the average guest check plunged more than 8 percent. Where did all the diners go? To grocery stores, supercenters and club stores, of course, to pick up meat, seafood, produce, deli and baked goods for home-shared meals, according to research released by Nielsen this week.
Consistent with findings of Progressive Grocer’s Deli, Bakery, Meat/Seafood and Produce Operations reviews conducted during the last 12 months, total store sales tracked by Nielsen through September 2009 — which includes the Rx, perishables, center store grocery (UPC food & beverage), health & beauty care, and general merchandise departments — are expanding, while perishable departments are growing at an even faster clip than all retail sectors in the total market.
Indeed, sales generated by the five main fresh food departments -- deli, bakery, meat, seafood and produce – are all on the rise, according to the latest Nielsen insights, as the perimeter departments continue to reign as the most productive across the total store.
While nearly half (46 percent) of  U.S. households report eating out less, value-priced meals at retail are posting double-digit increases in supermarkets, supercenters and club stores. Not surprisingly, supermarkets hold a dominant 70 percent share of the meat and seafood market.
Promotions continue to factor heavily in fueling sales in the fresh food departments, says Nielsen research, which found 51 percent of meat and seafood purchased on sale via prominent circular placement.
While consumers tend to favor traditional grocery stores’ fresh food departments, alternative channels continue to angle mightily for a bigger piece of the perishables pie. Supercenters in particular are advancing their perishables formats, growing both the purchase size and frequency of purchases, particularly in the meat and seafood departments.
While supermarkets currently account for 50 percent of the deli business, smaller formats (c-stores, delicatessens, etc.) that offer “in and out” convenience are posing the biggest threat to traditional supermarkets.
Further, after years of languishing as a “necessary evil” for many grocers, in-store bakery departments are posting the most significant growth of any perishable department. Supercenters, which account for almost 16 percent of the market, are seeing especially strong fresh bakery sales vs. any other perimeter department.
Word to Retailers: To maximize meat and seafood sales, offer shoppers ideas to enhance the dinner menu with add-ons such as marinades, sauces and seasonings, which are posting double-digit increases. To pique produce, play up continued opportunities to build your health-and-wellness equity and market position here.

For deluxe deli sales, continue exploring ways to differentiate your store’s brand and image via a department where service counts and personality shines. The deli department, incidentally, is generally considered to be the most underdeveloped driver of brand equity across the whole store.

Progressive Grocer is a unit of The Nielsen Company.
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