The perimeter of the store has continued having a big effect on brands and retailers, outpacing other food and beverage departments in the last four years. Currently, dollar growth along the perimeter is 2.1 times greater than other areas of the store, according to IRI's latest report, 2017 Top Trends in Fresh Foods, published last week.
The report outlines the major trends that are driving perimeter sales outperformance, and how the perimeter will directly effect the long-term success of retailers and suppliers in the next three to five years.
Own Brands Now breaks down the report with three of IRI's strategies that private label suppliers can employ to align the convenience and value inherent in their product offerings with what consumers are looking for in their fresh food purchases.
1. Holistic health
The escalating costs of health care and the continued migration of that burden from employers to employees have driven many consumers to find alternative ways of improving their overall health and well-being. And a lot of them are turning to the produce aisle.
"A broad series of empowerment activities has emerged to ensure that consumers can stay well or return to wellness as they integrate their lifestyle and food choices," the report noted. "Consumers' desires to manage or prevent disease have driven growth not only in personalized medicine, but also in personalized nutrition."
And that means boosting the health-and-wellness benefits of your products. "Education and communication are the keys to delivering on a holistic-health strategy," IRI noted. For example, consumers gravitate toward protein options with positive health claims such as "antibiotic-free" or "grass-fed."
By 2025, IRI projects more than half of Americans will be living holistic lifestyles. "For manufacturers, packaging plays a huge role," the report added. "As the holistic trend extends its reach across markets and demographics, manufacturers can use health-focused programs to connect at more touchpoints on the shopper journey. Potentially, perimeters could house benefits-focused sections, with new categorization of products that typically don't shelve together but share benefits."
2. Atomization of personalization
Demographic changes and the effects of technology are driving the need for personalization across CPG and at retail. Minority groups will be the majority of the population by 2060, with a projected total U.S. population of 420 million.
"The influence of cultures across the population has inspired changing flavor profiles and product demands, as well as the need for retailers to deliver appropriate, customized experiences," IRI suggested. "Real-time personalization is key to consistent customer activation. Fortunately, there are a number of ways to approach this, making it imperative to identify the most appropriate approach and combination for a particular consumer, market or outlet."
This calls for collaboration between retailers and suppliers so they can deliver a unique, personalized experience. "Collaboration between retailers and suppliers will provide a 360-degree understanding of consumers and point to opportunities for meaningful growth," IRI said. "Connect with consumers [via] personalized offers, selection and in-store and online experiences. The result will be meaningful, long-term relationships with high-lifetime-value shoppers."
3. Social and Cultural Alignment
"Antibiotic-free" is an example of a claim that extends well beyond a health message and into cultural alignment, IRI noted. "In less than a decade, there has been tremendous change in the consideration of animal welfare practices and in consumer demands and expectations pertaining to them," the report read. "This consumer demand, intensified by activist pressure, [snowballed] to make an indelible change on the food industry."
As of January 2017, 12.5% of U.S. flocks were advertised as cage-free environments for the delivery of eggs. As much as 15% of pork was sold under a gestation crate-free pledge in 2015, and that's expected to climb to 50% of sales by 2022. And similarly, the term "antibiotic-free" featured on the packaging of 15% of beef sold in 2015, and is expected to climb to 40% by 2022.
Today, 30% of consumers consider these pledges important or extremely important, and 50% are willing to pay a premium for these products, IRI noted.
"Supporting all aspects of business with humanitarian and social action efforts is becoming a business imperative," the report noted. "Much of these social-impact reforms will be the basis for perimeter growth and change during the next five to 10 years."