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Jeff
Gregori
Director
Consumer
Information Retail Services
ACNielsen
In retail, fresh is where the action is. Propelled by the
food pyramid, popular low-carb diets and food safety/nutrition
concerns, consumers are turning to organic, fresh and so-called
“natural” products, with a heavy emphasis on perishable
items.
There’s nothing fleeting about the consistent upturn
in perishable product sales. ACNielsen Homescan data shows
perishable sales increasing 2% in the aggregate during the
2002–2003 period. Deli wrapped up the top slot with
a 4% annual sales increase followed by a crisp performance
in produce at 3%, while meat and bakery goods cooked up increases
at 1% each.
Seafood surfaced as the only perishables category to report
sinking sales, a dismal 5% year-to-year loss in 2003. The
recent controversy over acceptable mercury levels in seafood
may have contributed to this decline. However, given seafood’s
terrific nutritional profile as a high-protein/low-carb food,
it may just be a matter of time before consumers begin to
make waves in the seafood department.
Raising the Bar Code
Random weight is only part of the perishable picture. As the
UPC code becomes more prevalent in perishables, random weight
accounts for a smaller share of all perishable categories,
representing 77% of meat products (down 2% in a year), 58%
of produce (another 2% decline), 46% of deli and 15% of bakery
products, losing 1% of sales in the latter two categories.
That the universal product code has expanded the footprint
of its imprint into perishables is an expected by-product
of the branding trend and advances in packaging. Bagged value-add
salads were among the first produce items to feature a typical
consumer packaged goods brand graphic treatment along with
the barcode imprint. Bundled vegetables like asparagus or
broccoli often feature a hang tag with stamped barcode and
prominent logo as well.
Getting a Read on Random
However, random weight measurement is still a major element
of the fresh products picture. To address an industry need
for insights-driven perishable data that combines both random
weight and barcoded products for a total sales view, ACNielsen
recently announced a business alliance with The Perishables
Group. Designed to provide perishables suppliers and retailers
with insights powered by point-of-sale scanner data from 30,000
census stores, the alliance will deliver the most comprehensive
suite of fresh foods information across all major markets
and all major retailers.
Tim Callahan, president, ACNielsen North America, notes that
“this changes the retail geography of category management.
Clients will now be able to transfer their category management
processes from the center of the store to perishables at the
perimeter.” Among the metrics that will be available
to random weight marketers and retailers are measures of distribution,
movement, market share, price, promotion effectiveness and
similar market-sensitive information.
The Root of the Matter
Produce market leaders like Coastal Berry Company and Grimmway
Farms applaud the move toward more precise metrics based on
accurate point-of-sale scanner data, versus the price look-up
(PLU) system that was riddled with inconsistencies. Coastal
Berry Company president John Gargiulo considers the rise of
scanner-based analytics a critical success factor in his company’s
expansion drive.
A graduate of the consumer packaged goods realm, Grimmway
Farms’ Phil Gruszka welcomes the opportunity to apply
classic brand management techniques to the produce venue.
“From an operations perspective, produce is infinitely
more complex than CPG will ever be, but there are key learnings
on the marketing side of the house that can be put into play
today.”
Historically, one of the roadblocks to marketers in the perishables
world was the fact that so many major players are privately
held companies. As a result, financial and sales data were
rarely, if ever, disclosed, making it virtually impossible
to piece together accurate movement and share information.
This new initiative from ACNielsen and The Perishables Group
replaces guesstimates and interpolation with reliable facts
based on consumer information gathered at the register.
Popular Perishables
What’s the big dust-up over perishables? It’s
all in the numbers. Consider the fact that perishables enjoy
virtually 100% household penetration across 110 million U.S.
households, with the sole exception of seafood. Analysts believe
that once consumers quell their concern regarding seafood
safety and conquer their fear of frying, broiling or poaching,
seafood sales will enjoy smooth sailing.
Retailers looking to build traffic would do well to deploy
perishables as a major draw. High annual purchase frequencies
(40.2 times for bakery products, 38.2 purchases for produce
and 33.9 deli buys per year) translate into a corresponding
consumer need for in-store convenience. In addition to displaying
oft-purchased perishables in accessible areas that facilitate
quick consumer pick-ups, retailers might consider merchandising
perishable products beyond the perimeter to stimulate impulse
purchases [See chart 1].
The
Drive for Size
Pricey meats ($10.05
represents a typical 2003 purchase) and seafood ($8.53 is
an average ticket) prompt consumers to spend more time on
careful item selection to ensure a good value. Clever cross-promotion
with these planned perishable purchases can help inflate basket
size. For example, merchandising approaches might include
featuring special seasonings or marinades for meat or hooking
consumers with samples of the prepared “catch of the
day” or recipe suggestions.
While the grocery channel dominates perishable sales, moving
more than 70% of perishable products on a dollar basis, supercenters
and club stores have taken a bite out of sales. Grocery forfeited
1.5% of perishable dollars in 2003, while supercenters picked
up a corresponding 1.5% of perishable business and club stores
an additional 0.2% of perishable activity.
Specialty shops have carved out a niche in deli and bakery,
slicing off as much as 25% of the $26.6 billion 2003 deli
market and 16% of the $17 billion in bakery dollar sales.
Club stores have extended their renowned value position to
meat and seafood, garnering a 9% and 10% market share, respectively.
A Meaty Opportunity
Random weight beef products comprised 37% of all 2003 retail
meat sales, with UPC meat representing almost one-fourth of
the nearly $30 billion meat market. Food safety issues surfaced
in December, when “mad cow” disease, more formally
known as bovine spongiform encephalopathy (BSE), appeared
in the North American food supply.
Nevertheless, consumers continued to eat meat, particularly
pre-seasoned, pre-packed UPC-coded meats. Their dining preferences
nudged meat sales up a modest 1%. Interestingly, two divergent
trends emerged. On the one hand, the recent emphasis on low-carb,
high-protein dieting should yield tremendous opportunities.
However, food safety is potentially having a counter effect
since being put at the forefront of consumer minds [See chart
2].
Deli as Hot Spot
Big deli sellers that cash in on the low-carb/high-protein
craze are random weight prepared salads (up 13% in 2003),
random weight prepared seafood and specialty cheeses like
brie and gouda (both up 12%) and mozzarella (up 6%). Outlets
like Price Chopper have had great luck with low-carb shelf
signage, while some retailers are opening up facings specifically
to accommodate more low-carb entries. This is a good thing,
considering that total deli sales are up 4% across channels,
but only 1% in grocery.
The Carb Craze
Produce sales inched up 1% at grocery, outpaced by a total
market sales hike of 3%. Teasing apart the data, it became
apparent that more was at work than encroaching alternative
channel sales.
By grouping all Atkins-friendly fruit categories together,
further analysis uncovered the fact that these categories
posted double-digit growth of 14 percent, a pace almost five
times that of the combined fruit market. Fruits with five
carbohydrates or less per serving include avocados, apricots,
cherries, cantaloupes, honeydew melon, pineapples and strawberries.
The same trend held true across total vegetables, with Atkins-friendly
vegetables netting out at 6% sales growth, twice that of total
vegetable performance of just 3%. In-store bakeries and their
random weight output are giving way to pre-packaged goodies.
Total bakery sales from carb-conscious consumers barely moved
the needle at 1% and were down an equivalent amount at grocery.
Organics: A Natural Niche
Organic fruit sales hit the sweet spot in produce, achieving
10% annual growth despite being a niche category (only 17%
of U.S. households purchase organic fruit). With penetration
and purchase frequency remaining flat, sprouting sales can
be attributed to a combination of larger quantities and higher
prices, which bumped the purchase size from $2.43 to $2.86
on average [See chart 3].
Conversely, organic vegetables have achieved mainstream status
in 2003, making a play for pantry space in more than one-quarter
of all U.S. households. While expansion velocity has slowed,
organic vegetables still picked up 2% in year-to-year dollar
sales. Other leading indicators supported the positive trend
including penetration (up 1%).
Thoughts on Perishables
Savvy marketers can leverage trendy perishables to enhance
register rings; turning the carb appeal of fresh offerings
like UPC-coded meats, cheese, fruits and vegetables into bigger
overall baskets. One approach: cross-promoting ingredients
and meal concepts that pull from multiple departments. Another
tack: placing fresh product displays in unexpected areas throughout
the store to visually link perishables with complementary
items.
In addition to allocating more facings to carb-compliant perishables,
retailers can boost sales via clear Atkins-linked nutritional
signage and end aisles prominently featuring healthy choices.
There is a real opportunity for targeted merchandising efforts,
deploying the rich information embedded in store loyalty card
program data to pinpoint Atkins followers based on product
purchase patterns.
With the significant expansion of new data sets, models and
insights from ACNielsen and The Perishables Group, along with
the pent-up demand for recognized brands in the fruit and
vegetable aisles, retailers can address the perishables challenge
armed with more effective category management tools.
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