Deloitte, New York, released the “Future of Fresh” study, which surveyed 2,000 consumers and 153 fresh food industry executives to gain insights into consumer behavior and how manufacturers and retailers can grow the fresh food category.
Key takeaways from the study:
- Over the last two years, two-thirds of consumers increased spending on the fresh food category.
- Over 60% of consumers spend up to 30% of their average monthly grocery budget on this category.
- Price is one of the most important considerations of fresh food purchases, with 92% of consumers citing cost as an important aspect in their purchasing decisions.
- 80% of consumers actively seek healthier versions of the food they purchase and 77% avoid preservatives and chemicals in their food.
- When purchasing perishables, 58% of consumers actively consider sustainability aspects, such as local sourcing, recyclable packaging and water neutrality.
With two in three consumers reporting more fresh food purchases, retailers are increasing the space allotted to fresh foods in their stores. But, despite these trends, total fresh food sales continue to be outpaced in growth compared to overall food sales.
“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,” says Barb Renner, vice chairman and U.S. consumer products leader.
How Americans shop (or don’t shop) for fresh foods
Advanced analysis on U.S. fresh food consumers’ attitudes and behavioral patterns revealed three distinct buying personas:
- Forwards (31%). Consumers who are very committed to health and wellness actively choose health over convenience, place a high value on sustainability and are more willing to pay a premium for fresh foods.
- Followers (47%). Consumers who display interest in healthier options and sustainability and have a willingness and ability to purchase fresh foods, but aren’t as enthusiastic as Forwards.
- Neutrals (22%). Consumers who show the lowest commitment to health and wellness, prioritizing price and convenience over health.
How retailers and manufacturers are prioritizing fresh foods
Much like consumers, companies in the retail and manufacturing space are also embracing the fresh food category at varying levels. When assessing companies on the criteria of percentage of revenue from fresh foods in relation to the annual budget for technology and supporting processes, four types of organizations emerge—Leaders, Learners, Aspirers and Testers.
Leaders achieve higher fresh food sales with smaller teams and greater investment in technology and supporting processes. Leaders are more than three times as likely to have a centralized staff for fresh foods (20%) than Learners (6%) and tend to have smaller teams, with 71% having less than 20 people managing their fresh foods categories. Leaders also tend to have a slower growth in fresh food staff with only a 27% annual increase compared to 53% for Learners. Leaders also show more caution when growing their budgets, with a 57% annual increase compared to 79% for Learners.
When it comes to managing fresh foods, manufacturers cite the following challenges—quality control of raw materials on the factory floor (25%), processing (20%) and procurement of raw materials (13%). For retailers, key challenges are spoilage (32%), product pricing (16%) and shelf life (15%). Storage is also a key concern for both manufacturers (20%) and retailers (24%).
Implementation of more advanced technologies is low
Technology can be a key enabler, but most organizations are in their nascent stages of implementing more advanced technologies. For example, only 38% have partially or fully implemented artificial intelligence-based warehouse management to monitor fresh food stocks, with 3% using in-store technologies that allow for consumers to access product information using a smartphone. Further, only 9% are using big data and analytics to identify actionable insights and trends, and only 4% are using blockchain to track the movement of fresh foods throughout the supply chain.
Across all organizations, the most common barriers to technology implementation include the extent of time required to implement technology (78%) and a lack of skilled workers (28%).
“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,” says Stephen Rogers, executive director, Deloitte Insights Consumer Industry Center.
