Fragmented marketplace creates opportunities for produce suppliers
Fragmented marketplace creates opportunities for produce suppliers
PLEASANTON, CA -- Consumers have never had more choices than they have today regarding where to buy fresh produce, according to research gleaned from scan data, interviews and focus groups.
This is one of the major messages delivered to attendees of a recent Fresh Produce & Floral Council luncheon meeting by keynote speaker Steve Lutz of the Perishables Group. Mr. Lutz was speaking on trends with regard to fresh produce that his company has noted from the material it reviews on a regular basis.
The Perishables Group has access to scan data from more than 17,000 stores in 655 separate U.S. areas. It also conducts consumer interviews and some focus group studies for its clients.
"The marketplace is very fragmented," he told the approximately 200 people in attendance at the council's Northern California luncheon meeting held Sept. 18 in Pleasanton, CA.
Both the demographics of the consumers themselves and the places where they can buy their produce paint a picture of diversity. While there are still many consumers that represent the traditional family model shopping at the local supermarket, the numbers representing that group are declining.
Mr. Lutz revealed that 65 percent of U.S. households have only one or two occupants. Forty-five percent of households are empty nesters and close to 30 percent are headed by Gen Xers (the generation of U.S. citizens that are currently between their mid-20s and about 40.)
These consumers still shop at the supermarket, but they do so less frequently. Supermarket trips per year have dropped from 72 trips per person in 2001 to just 61 in 2006. At the same time, consumers are buying more food items from other venues, such as general merchandise stores, supercenters, convenience stores and dollar stores.
He said that only one in three shoppers follows the traditional model of doing a weekly stock-up shopping trip. Today's consumer tends to shop for tonight or tomorrow rather than for the whole week.
While it doesn't bode well for supermarkets that people are shopping less often in that venue and buying less each time as well, it does mean more opportunities for suppliers of fresh produce.
Mr. Lutz said that consumers are spending less time in the stores and less time preparing their meals, but they are willing to spend more money if there is a perceived value. He said that they are willing to be sold-up when they arrive at the retail outlet.
He touched on a number of other consumer trends as well, including the rise in organic sales and the emergence of the Hispanic shopper.
Mr. Lutz said that 75 percent of consumers under the age of 25 believe that organic produce is healthier than conventional products. While he expressed regret that one segment of the produce industry has been able to capitalize on the health issue at the expense of another, he said that the advantage is real and will come into play, especially as these young shoppers mature. The growth in the Hispanic community is well documented. By 2020, Hispanics are expected to represent 20 percent of U.S. households. This is one trend that definitely favors the produce industry and supermarkets since Hispanic customers shop more often and spend more than their non- Hispanic counterparts.
"On average, they take 26 more trips every year to the supermarket," Mr. Lutz said.
Although consumers of all stripes are looking for convenience and value, they are not looking for brands - or at least they are not willing to pay more for branded product. Mr. Lutz said that private labels, or store labels, have realized tremendous growth in recent years and that trend should continue. He said that the average consumer has 20 private-label items in his or her pantry. "Consumers say the main problem with private-label items is that they can't get enough."
Retailers are responding by adding new private-label items at a very quick pace, he said.
Mr. Lutz concluded that many of these consumer trends work very well for the produce industry. For example, one of the major ways that supermarkets can differentiate themselves is through their produce departments. He said that retailers do understand this and are moving toward customizing their stores to fit the surrounding communities. He also advised shippers and suppliers to help retailers find new products and find new ways to appeal to today's consumer.
He said that to survive and grow, conventional retailers have to find ways to fill the needs of the quick-trip shoppers who stop in to buy that evening's meal.
This is one of the major messages delivered to attendees of a recent Fresh Produce & Floral Council luncheon meeting by keynote speaker Steve Lutz of the Perishables Group. Mr. Lutz was speaking on trends with regard to fresh produce that his company has noted from the material it reviews on a regular basis.
The Perishables Group has access to scan data from more than 17,000 stores in 655 separate U.S. areas. It also conducts consumer interviews and some focus group studies for its clients.
"The marketplace is very fragmented," he told the approximately 200 people in attendance at the council's Northern California luncheon meeting held Sept. 18 in Pleasanton, CA.
Both the demographics of the consumers themselves and the places where they can buy their produce paint a picture of diversity. While there are still many consumers that represent the traditional family model shopping at the local supermarket, the numbers representing that group are declining.
Mr. Lutz revealed that 65 percent of U.S. households have only one or two occupants. Forty-five percent of households are empty nesters and close to 30 percent are headed by Gen Xers (the generation of U.S. citizens that are currently between their mid-20s and about 40.)
These consumers still shop at the supermarket, but they do so less frequently. Supermarket trips per year have dropped from 72 trips per person in 2001 to just 61 in 2006. At the same time, consumers are buying more food items from other venues, such as general merchandise stores, supercenters, convenience stores and dollar stores.
He said that only one in three shoppers follows the traditional model of doing a weekly stock-up shopping trip. Today's consumer tends to shop for tonight or tomorrow rather than for the whole week.
While it doesn't bode well for supermarkets that people are shopping less often in that venue and buying less each time as well, it does mean more opportunities for suppliers of fresh produce.
Mr. Lutz said that consumers are spending less time in the stores and less time preparing their meals, but they are willing to spend more money if there is a perceived value. He said that they are willing to be sold-up when they arrive at the retail outlet.
He touched on a number of other consumer trends as well, including the rise in organic sales and the emergence of the Hispanic shopper.
Mr. Lutz said that 75 percent of consumers under the age of 25 believe that organic produce is healthier than conventional products. While he expressed regret that one segment of the produce industry has been able to capitalize on the health issue at the expense of another, he said that the advantage is real and will come into play, especially as these young shoppers mature. The growth in the Hispanic community is well documented. By 2020, Hispanics are expected to represent 20 percent of U.S. households. This is one trend that definitely favors the produce industry and supermarkets since Hispanic customers shop more often and spend more than their non- Hispanic counterparts.
"On average, they take 26 more trips every year to the supermarket," Mr. Lutz said.
Although consumers of all stripes are looking for convenience and value, they are not looking for brands - or at least they are not willing to pay more for branded product. Mr. Lutz said that private labels, or store labels, have realized tremendous growth in recent years and that trend should continue. He said that the average consumer has 20 private-label items in his or her pantry. "Consumers say the main problem with private-label items is that they can't get enough."
Retailers are responding by adding new private-label items at a very quick pace, he said.
Mr. Lutz concluded that many of these consumer trends work very well for the produce industry. For example, one of the major ways that supermarkets can differentiate themselves is through their produce departments. He said that retailers do understand this and are moving toward customizing their stores to fit the surrounding communities. He also advised shippers and suppliers to help retailers find new products and find new ways to appeal to today's consumer.
He said that to survive and grow, conventional retailers have to find ways to fill the needs of the quick-trip shoppers who stop in to buy that evening's meal.
