FDBuyer: Reviving Frozen Sales
Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Dairy Buyer magazine.
In 2011, frozen food unit sales dropped to 2008 levels and haven’t been able to bounce back fully.
Although most retailers have seen an increase in frozen food dollar sales, nearly all of these dollar sales increases can be attributed to inflation — not to increased consumer demand.
To delve deeper into these department trends, we recently surveyed frozen food shoppers and discovered a number of interesting root causes challenging the frozen food category. These include:
Seasonality: The frozen food department is seasonal, with traditionally increased activity during the summer months and also in March around National Frozen Food Month. The 2011 summer season, however, was soft from a unit sales perspective. Ice cream and frozen novelties, two of the key summer season categories, experienced lower than normal sales levels than the past few years. Ice cream, pizza and frozen prepared foods (dinners/ entrees) — which contribute more than 40 percent of dollar sales and are key traffic drivers — have seen the largest decreases in demand.
Competition: Increased competition from substitute products has impacted consumer demand for frozen products. For example, Domino’s and others have been discounting heavily.
Pricing: Prices topped the list of reasons shoppers cited for buying less frozen food. On average, prices are up by seven percent across the department versus last year. Promotional activity in the department has also changed. With the increase in everyday prices, promotional discounts in the frozen food department are not as deep as last year.
More Fresh & Doing Without: Shoppers are buying more fresh foods and cooking more fresh foods at home. Consumers in certain categories such as frozen desserts cite dietary concerns as a reason for lower demand. Consumers are also trading frozen vegetables for canned and fresh vegetables, and, in some frozen categories, shoppers are just "doing without."
Lack Of Innovation: In reviewing new item entries into the frozen food categories, manufacturers introduced 22 percent fewer new items in 2011 than in 2009. Frozen breakfast, the one category that showed an increase in new item introductions, was the only frozen category showing an increase in unit sales.
Package Sizes: What used to be a "half-gallon" of ice cream is now often a 48-ounce package. When asked, 33 percent of all frozen food shoppers indicated they recognized the package size reduction.
Fewer Young Shoppers: Compared with 2007, there are 37 percent fewer shoppers under the age of 35 purchasing frozen foods. Of shoppers ages 35-44, a key shopper demographic, 25 percent have left the department since 2007. About 50 percent of frozen pizza is purchased by households whose shoppers are younger than 44, while this same group is responsible for only 33 percent of ice cream sales.
Aisle Confusion: Out of 20 major departments or categories surveyed, frozen foods ranked at No. 18 among the "hardest to shop." Only personal care and candy ranked lower.
Discussion Questions: What steps should be taken to revive frozen food sales, particularly with younger consumers? What lessons do frozen food’s recent challenges offer to other categories?