Category buyer Q&A: FreshDirect gets value from perishables

SN recently spoke with Ali Pugliese, co-lead of merchandising at FreshDirect, about trends in fresh categories at the online retailer, a New York-based division of Ahold Delhaize U.S.

Supermarket News: The overall trend in many fresh categories has been higher dollar sales, but a decline in units. How has that trend played out in the fresh food categories at FreshDirect?

Ali Pugliese: We’ve experienced a similar trend across the store and in select fresh categories. Customers are trading down in units, but basket sizes remain strong and continue to grow year-over-year. More recently, we’ve seen recovery in units in categories like produce, as inflation softens and the supply chain improves for key items like strawberries, broccoli, cauliflower, and romaine.

SN: How does FreshDirect seek to make shopping more affordable for its customers when prices for meat and other fresh items are rising?

AP: We’ve been hyper-focused on showcasing value-based products and private label throughout the shopping experience. In categories like meat, we’ve promoted more cost-effective cuts like fajita strips and sausages that are more attractive to cost-conscious customers.

Because of our direct relationships with local farmers, fishermen and ranchers, we’ve managed to offset some inflationary pressure, particularly regarding freight. In the summer we prioritize our local/East Coast partnerships and receive minimal product from California, so we do not incur high freight costs on vegetables.

Our ability to aggregate our seafood purchases with partners in New England, Nova Scotia and Iceland allows us to reduce the number of trucks and trips we average. We also aggregated the processing of our whole animal programs to two plants, once again reducing the number of trucks and trips necessary on a weekly basis. These direct relationships also cut out re-packers and distributors, keeping costs down and prioritizing freshness.

We constantly evaluate our supply chain and sourcing relationships to optimize cost, quality and freshness. For example, we sourced a winter variety strawberry from North Carolina in January through March with our partners at Happy Dirt to supplement the supply issues with California strawberries.

SN: How has consumer demand for convenient meal solutions impacted merchandising and assortment in fresh categories at FreshDirect?

AP: Innovation in prepared foods remains a strong focus at FreshDirect to meet the steady demand for convenient meal solutions. As customers return to the office and adjust to post-pandemic life, we’re seeing demand for even quicker meal solutions and shortcuts. Our recent launch of non-subscription meal kits features global inspired recipes that come together in as little as 15 minutes. Example meal kits include Green Falafel with Cabbage Tabouli Salad, Turkish Style Pizza with Herb & Vegetable Salad, and Pork Larb Lettuce Wraps with Rice & Cucumber.

Customers continue to gravitate toward transparent and clean ingredients, convenience and value. We are seeing strong demand for easy components for meal prep like rotisserie, cooked grains, ready-to-heat cut vegetables, marinated proteins, and sauces. As large gatherings resume, we’re also seeing incredibly strong demand for catering for events with fruit bowls, baked goods, sandwiches and finger foods.

SN: What are some of the other factors impacting sales trends in fresh categories?

AP: Demand for organic and regenerative growers and sustainably sourced products remains strong, despite higher relative retail prices. We see customers shopping with more intention and awareness, focusing on organic, sustainable and specialty programs.

SN: What are the biggest trends you expect to impact sales in fresh categories in the year ahead?

AP: I expect to see continued cost pressure in meat, seafood, and poultry such as turkey, along with continued unpredictability in California and other growing regions. Customers will continue to lean into promotions and private label to seek everyday value, and everyday shoppers will continue to prioritize lower retail prices rather than investing in family size, as we’ve seen a shift out of larger format items like 32-ounce soups or large family meals. There will also be continued trading from more discretionary categories into more accessible items, like trading from beef to poultry. Finally, I’ve seen a continued shift out of plant-based alternatives from prepared meals.