The produce, deli, meat, seafood, dairy, bakery, foodservice, frozen and refrigerated departments are key shopper destinations and becoming increasingly important store differentiators.

Many analysts, meanwhile, are forecasting increased shopper interest in perishables as an aging population becomes more health conscious and consumers from a cross-section of demographic groups seek new, exciting and convenient food alternatives.

Yet, they also note that perishables retailers must adopt dynamic merchandising strategies if they are to keep pace with changing shopper trends while efficiently managing operations. 

Perishables Buyer spoke with five merchandising experts about the state of the perishables industry and how retailers can best leverage growth opportunities.

Bill Bishop is chief architect of Brick Meets Click, a Barrington, Ill.-based information advisory firm.

Richard George is professor of food marketing at St. Joseph’s University in Philadelphia.

Faye Greenberg is a San Jose, Calif.-based retail and foodservice consultant and a former marketing director for Jacksonville, Fla.-based Winn-Dixie Stores Inc.

Gene Hoffman is president of Corporate Strategies International, a Wayzata, Minn.-based retail consulting firm and former president of The Kroger Co.

Marcia Schurer is president of Culinary Connections, a Chicago-based food marketing and consulting firm.

PB: How important are perishables to overall supermarket operations?

Greenberg: Perishables are the “engine” of the store. They have become the store’s brand and identity. Fresh departments have evolved over the years and today compete with the likes of fast food, casual dining, fine dining, coffee houses and local hangouts for their share of the wallet. They also have become the go-to choice for meal solutions for all day parts.

Schurer: The quality and product mix and variety in supermarket perishables departments are probably the most important reason why a consumer chooses a particular store. And there still are strong growth opportunities in such areas as foodservice, value-added meat and seafood, the artisan bakery and cheese.

PB: In what ways have supermarket perishables departments evolved in recent years?

Greenberg: Fresh departments have reinvented themselves and have gone from just offering the basics to today’s selections of upscale and trendy choices for each day part. Delis, for instance, have expanded from rotisserie, fried chicken, pizza and potato salad, to fully prepared meals, side dishes, ethnic specialties and fresh seasonal salad offerings. Produce has more variety of fresh than ever. They include ready-to-cook-and-serve, pre-sliced, diced and seasoned items. It is a department that has vastly benefitted from advanced technology.

Schurer: There are a lot more hot foods and hot bars which also have expanded over the years to include all kinds of grains, ethnic foods, entrées, side dishes and soups. There also are more made-to-order stations that feature salads, wraps and sandwiches, Asian bowls, sushi, grilled items, pasta, pizza and rotisserie.

PB: How have shopper attitudes and behaviors toward perishables been changing?

Bishop: More people are now looking for meals that are part of a healthy diet. That creates a great opportunity for perishables. Meal solutions historically have been created by consumer packaged goods manufacturers with a focus on center store items. But we need to extend it to include perishables as well. Consumers now understand that what they eat at meals 21 times a week determines their health and not any individual item. They are buying vegetables as well as proteins from the dairy, meat and seafood departments. And illustrating the benefits of whole grains gives the bakery a chance to play in this arena as well.

George: Baby boomers are looking at anything that will extend their life and perishables are a way to talk about health and wellness. Generation Y shoppers are worried about obesity and are starting to think and eat differently. It is creating a real opportunity for supermarkets to differentiate themselves by working to attract health-oriented shoppers.

Hoffman: More people want access to their foods more promptly. Interest in nutrition is growing and changing demographics have led to increased interest in ethnic and specialty foods. And, of course, when people invest their time and dollars they want a dividend such as lower prices, better quality and some fun during their quest.

Schurer: Consumers are more concerned about where the perishables come from, especially for produce. For instance, are they buying locally sourced foods or do the items come from other parts of the U.S. or other countries? Safety also is very important to consumers. They want to know that their food is delivered from reliable sources. They also want to know all the ingredients in their products. Shoppers are reading labels more closely and asking store associates more questions about the items. In addition, they are more willing to experiment and try different foods.

PB: What are other ways that retailers can differentiate their perishables departments?

George: Through education of staffers and not just the perishables associates. Employees can talk to customers about recipes, nutrition and healthy eating. Perishables also can be fun and exciting. That can occur with displays featuring meal solutions, such as having a russet baked potato next to a sirloin of beef, or having bananas in the cereal aisle.

Hoffman: Astute marketing and in-store dynamics can create a niche. When I was at Kroger we re-designed our perishables departments with new, related personalities to win customer appeal and add fun to the mix. In the produce department we introduced “Dew-y the Rabbit” in animated displays in the “Lettuce Patch” and also gave kids “Dew-y” buttons and included “Dew-y” in animated cartoons in television advertising. Kids loved it and kept insisting that their mothers go visit “Dew-y the Rabbit” in the Kroger produce department. If I were active in the business today, I would create contemporary parallels of those loveable spokespersons as part of a new perishables mystique.

PB: Explain the key merchandising challenges facing perishables operators.

Bishop: A major issue is managing inventories at the store level so that the shopper has plenty of choices but there is a minimum of shrink. That is not a new issue but it’s a more important challenge. It is important to have food displays in the produce and deli departments that don’t require large amounts of inventory. The goal is to have attractive displays with strong marketing impact that require fewer products.

Greenberg: In addition to shrink and labor costs, operators also must be sure to offer products that fit the demographics of shoppers in each specific store. The departments also must keep pace with shopper trends and that includes having interesting food offerings and the latest equipment that gives them the ability to develop the right products for their customer bases.

PB: How can perishables merchandisers further increase revenues?

Bishop: In an era when marketing is becoming more important, perishables don’t have as many well-developed programs as other departments that market what they are doing. They have to step up and grab a greater share of peoples’ attention. Online marketing, including e-mail, social media and digital, is an area where perishables merchandisers can do more without the scale of a television ad.

Greenberg: Products should be of superior quality; there must be well-trained, friendly and engaging staff who can answer customers’ questions; products should be innovative as well as great-tasting; the design of the departments should make shopping easier; stores need to have sampling stations; and products need to stand out from those of competitors while showcasing the departments’ and stores’ unique brands.

Hoffman: Enhance on-site casual and nutritional dining. But daring ideas in grocery retailing are like chessmen moved forward. They may be beaten, just as many formats have been, but they also may start a winning game. Consider how Whole Foods has captured the imagination and the dollars of the expanding health food audience. Niche and focused grocers such as Whole Foods and Trader Joe’s are growing. Meanwhile, supermarkets are losing market share. 

PB: How will perishables departments evolve over the next few years?

Greenberg: The departments will continue to grow while creating and capturing new demand in the market. Customers also will have greater interest in fresh and locally sourced foods and will look to the departments for those items, as well as time-saving easy-to-prepare offerings to meet the resurgence in home-cooked meals.

Schurer: There will be continuing emphasis on healthy and nutritious foods, and also convenient offerings that are ready-to-eat, heat and cook. Retailers also will have to be price sensitive to consumers and find ways to offer them value and quality. In addition, there will be further interest in organic and natural products. The more educated the consumer, the more transparent the ingredient labeling will become. And, though not required by law, service prepared foods may start being labeled with calorie and nutrient data, such as fat, sodium and carbohydrate content. Foodservice operations with more than 20 units will have to start putting calorie information on their menu boards and that may create a greater demand from consumers for supermarkets to follow suit. Also, foods will become more portable, authentic and artisan. And there may also be more demand for meal planning as there still are plenty of people who don’t know how to cook, want to cook, or have time to cook.