mardi 26 mars 2013

BrainTrust Query: How Can Supermarkets Hold Off Fresh Food Rivals?


Through a special arrangement, presented here for discussion is a summary of a current article from the Mark Heckman Consulting blog.
A recent study conducted by the Nielsen Perishables Group details how fresh categories are transitioning from a reliance on commodity markets and seasonal strategies to more of a packaged goods approach, imperiling one of the traditional supermarket's long-standing advantages over its supercenter competition.
"Suppliers and retailers are slowly but surely transitioning to the consumer packaged goods style of category management based on the knowledge of both consumer and performance data to better understand how various consumer groups purchase fresh foods differently, at which stores, and at what price points," wrote Bruce Axtman, president of the Nielsen Perishables Group, inWhy Retailers Are Keeping It Fresh.
Mr. Axtman's comments are significant. Previously sold as predominantly bulk products, pre-packaged and sealed meat, deli and produce items are now taking on the personalities of sister departments like grocery, general merchandise and health & beauty care. That implies that fresh departments are now subject to category management principles, pricing models and even supply chain functions that resemble non-fresh departments, all of which can provide efficiencies for grocery retailers, both traditional and big box formats.
Clearly, however, the consumer acceptance of pre-packaged meats, produce, deli, and seafood product plays right into the hands of the volume-oriented big boxes that lack the expertise and the business model to support more traditional open market-type fresh presentations. Their models favor the labor savings inherent with pre-packaged perishables.
Indeed, the Nielsen study predicts warehouse stores will gain two percent share of the fresh business and supercenters will gain one percent over the next three years, while traditional supermarkets will lose two percent. By 2016, grocery will control only 64 percent of fresh dollar market share at retail; while mass/supercenters will have16 percent; and warehouse clubs, 12 percent.
So what does this mean for the business?
Once again, traditional grocers will need to re-invent their fresh departments and services in order to defend this very critical and profitable part of their business. It's a daunting task given consumers' growing acceptance of packaged fresh product and the resources of the big box stores to provide an ever-improving alternative to bulk produce and the service meat, deli, and seafood cases.

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