Merchandisers who emphasize convenience in value-added offerings will have an advantage

Retailers face an increasingly competitive market for fresh foods and those merchandisers who emphasize convenience in value-added offerings will have an advantage in the marketplace.

That was one key concept explored in an April 3 web seminar by Chicago-based Nielsen and Nielsen Perishables.

The event, hosted by Jeff Gregori, vice president of consumer and shopper practice, Nielsen retail and Sherry Frey, vice president of account services, Nielsen Perishables Group, also exlored how retailers can use center-store brand power in joint promotions with the produce, meat, bakery and deli.

“There are huge growth opportunities for the fresh market from where we have been and where we see it going,” Gregori said.

Total fresh food retail sales in the U.S. are estimated by Nielsen at $216 billion, Gregori said. The perishables departments (deli, produce, meat, bakery and seafood) have been gaining contribution to total store sales, Nielsen statistics show. The share for the fresh segment is up 2% since 2006 to nearly 30% of the store,

The speakers suggested retailers can create “meal solution centers” that cross-merchandise fresh and center store categories.

Gregori said U.S. consumers are focused on food, and food at home. He said food and cooking websites are attracting between 67 million and 91 million unique visitors per month. The Food Network attracted a viewership of 1.2 million people in the fourth quarter of 2011, and cookbook sales are outperforming the general book market by a wide margin.

“Shoppers are much more engaged and interested in food preparation,” he said.

In fact, Nielsen research reports that 50% of households fall into either the “foodie” category (extremely interested in cooking) or the “young family cook” (interested in cooking but values convenience). Nielsen research reveals “foodies” spend nearly twice as much on fresh vegetables as the average household.

Reflecting the interest in fresh food, consumers now have access to fresh foods in all channels and all forms, such as premium salads in quick-serve operations, or sushi in a Walgreens.

“There really are no rules, it is just about who your shopper is and what their needs are and delivering on that need,” Gregori said.

The strongest sales growth in fresh produce categories has been seen in organic produce, which posted double-digit dollar growth and positive volume growth on the fourth quarter of 2010. Nielsen reports that the value-added vegetable category saw a 7% increase in dollars and volume.

Other retail outlets

Gregori said that grocery stores control 71% of fresh produce sales, compared with 13% for mass merchandisers, 9% in club stores and 7% in all other channels.

Looking ahead, Gregori said Nielsen project a decline for grocery stores’s market share of all fresh food, from 64.2% in 2011 to 62.2% in 2015. Club stores are expected to increase their market share for fresh food from 9.7% in 2011 to 11.2% in 2015. Mass merchandisers will also grow their share of total fresh sales, from 13.5% in 2011 to 14.4% in 2015.

“While there is a lot of upside for club and mass in the future, it is going to be tough in some of these markets where they have a real tough competitor among leading grocers,” he said.