By Jonna Parker and Sally Lyons Wyatt, IRI

In the past, grocery fresh departments relied mainly on commodity products. But new opportunities for premiumization have emerged from the pandemic as consumers continue to eat more meals at home. Many are also now more confident as chefs — and more willing to pay for premium ingredients to create their own high-end dining experiences at home for a fraction of the cost of a visit to a white-tablecloth restaurant.

IRI surveys show that, as of September 2021, consumers were still eating 79% of meals at home, a whopping 26 points over pre-pandemic levels. Shoppers are also still making fewer trips to the grocery but buying bigger baskets when they do.

And while we have seen traditional grocery stores continue to see growing sales in fresh, they’ve lost a point of market share in fresh foods since 2019. Over the same period, both the internet and club channels have each gained a point or more. It is probably not a coincidence that these gains have happened in channels that appeal to shoppers for their convenience and value-size offerings.

When it comes to the overall trends in fresh, we’re seeing a dance between some sectors of categories being priced aggressively and others that are offering growing opportunities for premiumization.

These dual trends are apparent even among the most economically challenged shoppers. In some cases, these low-income customers are willing to buy more premium products for special occasions or to alleviate boredom. They’re savvy shoppers who understand that buying premium foods at retail is still a great value compared to buying a similar product at a restaurant. We also see big generational differences in fresh-food spending by low-income shoppers.

Source: IRI Integrated Shopper Loyalty, Food Outlets, Data Ending 9/5/2021

To strike the right balance between premiumization and affordability in fresh, we recommend that manufacturers and retailers consider these eight key actions:

1. Realize the benefits that produce can play in driving frequency as an MVP of your store. Be ready to compete on price in core mainstays like fresh bananas, berries, tomatoes and lettuce.
2. Look at your data to see what appears most frequently in your shopper baskets today. Your shoppers will be the most aware of and sensitive to the price of those items.
3. Consider adding categories that are still growing in volume unit sales but are only sold in two-thirds of stores currently. These include bakery snack cakes, seafood deli entrees, cooking meal kits, filled croissants, and grab-and-go deli meats beyond turkey and ham (think beef, chicken and salami).
4. Make the most of recent high-performing premium fresh foods such as crab, lobster, prime beef, specialty cheeses, bakery cheesecakes and specialty fruit.
5. Win summer celebrations with sheet cakes because they trigger bigger baskets. Incentivize those party shoppers to spend across the store via promotion or signage.
6. Do the same for winter holidays with whole turkeys and breasts. We saw a record number of first-time holiday hosts buy birds in 2020, but they turned to center store for everything else. Incentivize them to go premium with fresh sides and desserts.
7. Win premium meals tailored for specific shopper segments (like millennials), and try to replace some of the more culinary, refined meals shoppers would pay more for at sit-down restaurants.
8. Offer high-quality new cuisines and ethnic cuisines in fresh. They can produce a tremendous halo effect with younger consumers.

These trends and others will help you win in fresh and better meet the needs of your customers. While consumers are still eating more at home, their cooking fatigue is real. If you support them with the right meal and occasion-based solutions, you can help make the everyday more special while also boosting your sales in fresh. And when fresh wins, so does the rest of the store.

For even more insights on how to strike the right affordability/premiumization balance in fresh, watch our recent webinar, the latest installment in our ongoing FMI and IRI “Top Trends in Fresh” series.