Deloitte: Fresh food presents ripe opportunity for retailers, manufacturers
A report from Big Four firm Deloitte shows that there is increasing value in fresh food for retailers and manufacturers. “The Future of Fresh” study examined consumer spending and behavior in the category.
Deloitte surveyed 2,000 adults in the US, aged between 18 and 70, each of whom were “influencers” of fresh food – 94% purchased fresh food more than once a month. The firm also interviewed 153 executives of fresh food manufacturers and retailers.
"Despite the prominence given to fresh foods in stores, growth rates are not living up to their potential. Retailers should better understand and centralize management of the fresh food category to help address the issue from not only the consumer demand side, but also the manufacturing and retail side,” Barb Renner, vice chairman and US consumer products leader at Deloitte, said.
In the past two years, the study found, two-third of consumers have increased their spending on fresh food, which includes meat, seafood, fruits, vegetables, dairy products, and deli or in-store that is neither preserved nor spoiled. More than 60% of respondents stated that they spent nearly a third (30%) of their monthly grocery budget on the category. Produce is responsible for the lion’s share of the category’s growth, at 60%, followed by baked goods (19%), deli items (15%), and meat (6%).
This increase opens the door for retailers and manufacturers to capitalize on the trend. But simply stocking or producing more fresh food isn’t necessarily enough. Consumers are also increasingly placing more importance on both sustainability and health, with 80% actively seeking healthier versions of the food they buy, and 77% avoiding food made with chemicals and preservatives. More than half (58%), meanwhile, consider aspects of food production such as local sourcing, water neutrality, and recyclable packaging before making purchase.
The study also placed consumers into three distinct categories: forwards, followers, and neutrals. Followers, who make up the largest portion of consumers (47%), show an interest in both health and sustainability of fresh foods, but do not display the eagerness of “forwards,” who make up 31% of consumers. Forwards are willing to pay higher prices for fresh foods, and place “high value” on sustainability – and choose health over convenience. The “neutral” category – 22% – however, place price and convenience above health and sustainability.
"Retailers and manufacturers have ample opportunity to stimulate consumer demand by targeting 'followers' as well as 'forwards' and highlighting value proposition of fresh food through communication on sourcing, safety, and healthy eating. As companies create additional demand, they should look to implement technologies and analytics that help to deliver on the Fresh promise and improve their costs,” Stephen Rogers, executive director of the Deloitte Insights Consumer Industry Center, said.
