In the Fresh Category, Health and Wellness is No Longer a Side Dish

July 10, 2024

By Phil Lempert, SupermarketGuru, Consumer Trend Tracker, Food Trends Editor, NBC’s Today, and Author

In the ever-evolving landscape of retail, staying on top of the latest trends in the Fresh/store-perimeter departments is crucial for category managers, especially those working within supermarkets, convenience stores (c-stores), and mass merchandisers like Walmart and Target, or marketing their products in these departments.

These trends have a unique opportunity to shape consumer behavior and impact the broader market’s dynamics in bringing shoppers into these stores.  ARC’s Summer of Fresh kicked off in June and offers category managers a plethora of facts and members-only reports that offers solutions to capture the Fresh opportunities.

One of the prominent trends reshaping the Fresh departments in retail environments is the increasing consumer focus on health and wellness. Shoppers are becoming more health-conscious, and they are seeking out Fresh options that align with their dietary preferences and health goals. Deloitte’s Fresh Food as Medicine for the Heartburn of High Prices reinforces the consistent demand and opportunities for health and wellness products. The shift is apparent in the rising demand for organic produce, plant-based, and items with clean labels. According to a report by the Organic Trade Association, organic food sales in the U.S. have consistently grown, surpassing $60 billion in 2023.

For category managers, this trend implies the need to expand organic and plant-based offerings. Placing emphasis on stocking a diverse range of fresh, healthy products can meet customer demand and differentiate retailers from competitors. NielsenIQ highlights the growing demand for plant-based offerings especially in the fresh foods departments.

Today’s consumer (of all generations) seeks convenience, driving the growth of ready-to-eat (RTE) and ready-to-cook (RTC) options within Fresh departments. Time-pressed shoppers appreciate the value of pre-prepared meals and easy-to-cook ingredients that maintain the quality and freshness expected in the periphery of the store.

The demographics of supermarket shoppers who frequent fresh foods departments can vary widely. The Food Industry Association (FMI) annual Speaks offers in-depth analysis on fresh foods purchasing; here are several key shopper trends and characteristics:

  1. Millennials (25-40 years old):
    • This age group places a high value on health and wellness, often seeking fresh, organic, and non-GMO products.
    • Many millennials appreciate ready-to-eat and ready-to-cook meal options due to busy lifestyles.
    • They tend to prefer products with eco-friendly packaging and sustainable sourcing.
  2. Generation X (41-56 years old):
    • Often buying for families, this group is highly interested in the quality and nutritional value of fresh foods.
    • They look for a balance between price and quality, often seeking in-season fresh products.
  3. Baby Boomers (57-75 years old):
    • This group often has specific dietary needs or restrictions and looks for fresh foods that support health conditions like heart health or diabetes.
    • They are typically more value-conscious and look for promotions and discounts on fresh goods.

Sustainability is no longer a niche concern; it is a mainstream expectation. Customers are increasingly considering the environmental impact of their purchases, compelling retailers to adapt. In the context of Fresh departments, this trend manifests in the demand for sustainably sourced produce and eco-friendly packaging. A comprehensive report by McKinsey & Co. indicates that sustainable packaging can influence purchase decisions for up to 60% of consumers.

For category managers, prioritizing sustainably sourced items in the fresh foods department and transitioning to biodegradable, recyclable, or reusable packaging will enhance brand loyalty and attract those valuable environmentally conscious younger consumers. 

Technology is revolutionizing the retail landscape, and Fresh departments are no exception. The integration of technology, from smart shelves (SELs) to inventory management systems, is streamlining operations and enhancing the shopping experience. Additionally, the rise of omnichannel strategies —seamless integration of online and offline experiences — is particularly vital in fresh departments. Ensuring a robust omnichannel presence allows customers to purchase fresh products online with ease, driving sales and satisfaction.

Consumers are increasingly valuing locally sourced and artisanal products, viewing them as fresh, trustworthy, and supportive of their local economies. This trend is particularly relevant for fresh departments, where the perceived freshness and authenticity of products are paramount. A successful example can be seen in Target’s Forward strategy to increase its assortment of locally-sourced products, which bolstered local supplier relationships and resonated with customers seeking unique, high-quality items.

Personalization is transforming how consumers interact with Fresh departments as well. Leveraging data to offer personalized recommendations, discounts, and tailored shopping experiences can significantly increase customer engagement and loyalty; most grocers are exploring how adding Generative AI tools (like Spoon Guru/Google Gen AI) to their websites can further enhance the shopping experience and increase basket size. Accenture’s report on retail personalization for fashion highlights that personalized shopping experiences can lead to a 20% increase in sales and why retailers outside of the luxury segment should offer more personalized services.

Category managers should harness customer data to create segmented marketing campaigns and personalized recommendations. Loyalty programs and in-store apps that offer tailored suggestions based on previous purchases can enhance the shopping experience and drive repeat visits.

The Fresh/store-perimeter departments are dynamic and integral to the overall success of supermarkets, C-stores, and mass merchandisers. For category managers, staying abreast of trends such as health and wellness, convenience, sustainability, technology integration, local sourcing, and personalization. By strategically aligning with these trends, category managers can enhance the customer experience, drive sales, and position their retailers as leaders in the Fresh category.