Supermarkets Losing Produce Sales to Other Channels: FMI

According to the Food Marketing Institute’s (FMI) just released “The Power of Produce 2019” report, which explores produce consumers’ influence on the $60 billion grocery category, produce is still a major profit center food retailers, but younger shoppers are increasingly looking to other channels for their fresh fruit and veggie purchases.

“The new study aims to reinvigorate the produce category and serve as a reminder to grocery retailers that they can’t get too comfortable as the leader in sales,” noted Rick Stein, VP, fresh foods at Arlington, Va.-based FMI. “Specifically, the study suggests a need for a renewed focus on strategies for continued growth, including organic, locally grown produce, value-added produce for time-starved customers, produce-based beverages and private-branded produce.”

The report found that 55 percent of grocery trips include fresh produce, and half of all shoppers named a full-service supermarket as their main outlet when making such a purchase. While traditional grocery retains a large lead in sales, younger consumers are more likely to shop for produce at supercenters and alternative channels, such as dollar stores, convenience stores and farmers’ markets. Indeed, just 34 percent of older Millennials said that a supermarket was their primary store for buying produce.

“Since produce is becoming more widely available as subscriptions, and available across drug and dollar, or even at the airport, the opportunity to differentiate the produce category in grocery is ripe for consideration,” observed Stein.

In response to this trend, supermarkets can do the following:

• As 53 percent of consumer respondents to FMI’s “The Power of Produce" survey want a greater local assortment, defining the term on average as an 88-mile radius, grocers should come up their own consistent and store-wide definition of local.
• Grocery stores should stock plenty of value-added produce to help out time-starved customers, sweetening the deal by offering competitive pricing for such items and touting their longer shelf life.
• With 36 percent of shoppers eating fresh produce only about three times a week or less, grocers can provide guidance on incorporating produce into different meal occasions.
• A more premium basket featuring value-added, locally sourced and organic products will meet the needs of the consumer and influence grocers’ bottom lines.
• Grocers need to tell a better story than competing channels about produce items’ freshness, the farms they come from, their uses and nutritional profiles, and also provide an element of discovery for shoppers.   

"The Power of Produce," conducted by San Antonio-based 210 Analytics and supported by data from IRI and Nielsen, was made possible by the support of Burris Logistics, Yerecic Label and Southeast Produce Council.