Hot Food Trends: Part 1 – Fresh Presents Challenges to Center Store
No one knows with certainty what the hottest food trends
will be over the next several years, but The Hartman Group has focused on the
“why behind the buy” to look at four that may have a significant impact on the
business. RetailWire will explore each in this and upcoming Discussions.
Consumers equate fresh with quality and, as such, a trend is developing that will see a gradual replacement of processed and packaged items with “fresh counterparts.”
In the past, according to an article titled 4 hot food trends written by Jarrett Paschel, Ph.D., consumers were attracted to the convenience and consistent quality of processed foods. Increasingly, however, many of those very same consumers came to be put off by the qualities they previously desired.
The result, according to Dr. Paschel, is that consumers are looking for fresh alternatives to the processed foods they currently eat. In the past, those options may have been limited, but the realities of a global economy combined with “flexible production and distribution systems” are giving consumers access to fresh alternatives not previously available.
A consequence of the move from processed to fresh could be the decline of the
traditional center store in grocery environments. Some supermarket operators
— Dr. Paschel cites Albertsons and Winn-Dixie — failed to take notice of the
shift from processed to fresh and the results were unfortunate, but all too
predictable.
For perspective, Dr. Paschel does not predict the end or packaged foods. He does, however, conclude, “Packaged foods will continue to be increasingly marginalized in favor of fresh alternatives – the need to quickly transform their offerings, lest they be rendered irrelevant and obsolete in the years to come.”
Discussion Questions: Do you see fresh food alternatives
replacing processed/packaged items currently purchased by consumers? How do
you see the fresh food trend, identified by The Hartman Group, affecting grocers’
approach to center store?
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10 Comments on "Hot Food Trends: Part 1 – Fresh Presents Challenges to Center Store"
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Food Lion’s emphasis on fresh, Bloom has incorporated many of the features previously discussed.
Aisles have been shortened and non-grocery aisles are at 90-degree angles of the last grocery aisle and shortened as well, making for a very pleasant shopping experience.
The table top entry sets the pace for everything else fresh in the store, produce, meats, seafood and arranges the center store by ingredients, first condiments, then seasonings, then bake items, then snacks, cereals, etc.
A&P Fresh has also incorporated fresh into the center store while emphasizing fresh along the perimeter, as well.
The consumer is accepting these new, innovative store layouts in a big way. We will be seeing more of this in the future.
The future is fresh and fresh thinking is what it’s all about.
Processed and packaged foods aren’t ever going to disappear. Too many years of people believing that cooking is too difficult and time consuming, and not as interesting or important as their other activities, has taken its toll. Some people may want some fresh food some of the time and perhaps there are more now than there have been recently but there’s no chance that either manufacturers or retailers are ever going to be so neglected that their existence is threatened. Similarly, some retailers may take note of some customers and change some categories but no more than some.
Of course people prefer “fresh” versus “packaged”. They also prefer convenience versus spoilage and low cost versus high cost. The biggest threat to packaged foods is their tendency towards lower margins since they’re so easily comparison-shopped.
Yesterday I was in Arlington County VA so I stopped by Harris-Teeter; I’d never been, to see what the fuss is about. And I wasn’t really impressed.
It’s about segmentation, and after seeing the store, H-T seems to be just one rung above the typical supermarket
1. Cost-conscious — Sav-a-lot, Aldi, etc.
2. traditional — Safeway, Giant, etc.
3. stores like Harris-Teeter, maybe (their olive bar is done with pans, not crocks, etc.)
4. Zupans (Portland), Whole Foods, Trader Joes
5. Wegmans (even more exhibition than Whole Foods, huge eat-in area)
I think the trend will be more Farmers market-like stuff, but many companies will not be able to wrap their minds around it. Sort of like when Kmart tried to compete with TJ Maxx by creating Designer Depot, which was merchandised just like a Kmart with pipe racks and the like… needless to say, it failed.
“Fresh” presents both challenges and opportunities to the center store. With the growing preference for fresh and organic foods, the rush is on to accommodate it. Suppliers are increasingly creating and shipping fresh products to stores to replace the more traditional packaged and processed products. Soon most everything will be labeled “organic” or “fresh” which will put pressure on suppliers to be able to supply enough such “fresh” products to support marketing claims and consumer demand.
For retailers, this will alter the center store and convert it into a cross between a farmer’s market and a smorgasbord-type restaurant. This prevailing trend is already is motion at Whole Foods.
In Europe, we keep seeing the following: you ask consumers, in a variety of ingenious ways, how they feel about green (recycled) paper products and the answer is always, “YES, YES, YES”. So manufacturers try to capitalize on this and nobody ever buys the recycled products.
Reading the Hartman Group Web site, I get the same feeling here. We’ve asked some shoppers if the packaged stuff is any good or not and they all recognize it’s not fresh and that fresh might be better. Are they going to pay two to three times as much for the fresh version of their packaged favorites? I doubt it.
Do we ignore the “fresh” market? Of course not. Do we gut the center of the store to start putting in all things fresh? We’d probably want a lot more data on that before making such a move.
I see another alternative to shelf-stable packaged giving up space to fresh food alternatives. Trader Joe’s has moved many items that are often sold either fresh or shelf-stable packaged to refrigerated and frozen cases. Perhaps, we’ll see more of the store filled with items that “seem” closer to fresh than shelf stable but without some of the drawbacks (shelf life) of a purely fresh item.
In India there is an exactly opposite phenomenon happening. Considering that organized retail is just about getting into 2nd gear here, it is but natural fallout. Indian consumers typically rate “freshness” above all else. But with companies launching a slew of products, heavy duty advertising, changing consumer preferences, rising incomes and the organized retail wave sweeping through India now, if there is one category which has benefited the most, it is processed food and beverages.
These categories are seeing mind-boggling growth rates in supermarkets and so are some of the companies promoting such products. (Frito-Lay is a forerunner here)
It used to be “only fresh juice” a couple of years earlier, but mothers do not mind their young children having “packed” juice and in fact a company even promotes its product – Dabur Real juice, in “school packs of 6 – one for each day.”