Competing for fresh-perimeter dollars

Consumers are shifting where they’re buying their fresh-perimeter items, stretching their budgets by buying less meat and fish and choosing private labels more often. But fresh remains a top priority as they cope with inflation at 40-year highs.

For lower-income consumers, fresh produce in particular is a priority—and an area of growth for stores in lower-income areas, according to a September report from IRI. This continues a trend that market researcher Symphony RetailAI noted early in 2022, with price-sensitive shoppers placing a greater emphasis on fresh produce than on fresh proteins. Reaching lower-income shoppers with meaningful promotions on staple items and essential meal-makers within fresh produce can help retailers earn repeat visits and build community trust that is essential to long-term growth.  

Another indicator of the fresh department’s strength: While most grocery categories and subcategories have seen volume declines as prices have risen, volume slides have been sharper outside of fresh produce and fresh meat. As of August, volume sales for frozen dinners and entrees were down 11.1% year over year; volumes for cookies were down almost 9%; and volumes for coffee were down 6%. All three saw prices soar more than 17% from August 2021. 

The shifting pricing landscape has meant that mass and club stores like Walmart and Costco (as well as discounters like Aldi) have gained a firmer foothold with a wider variety of shoppers as consumers hunt for deals on nonperishables first and then take advantage of lower prices in the fresh department while they’re there. Mass merchandisers in particular have seen share gains in grocery “because they lead in center store, and (their fresh) isn’t the best fresh ever, but it’s good fresh,” says IRI’s Jonna Parker.

To that point: Customers, and especially younger customers, know where they want to splurge, and they’re increasingly willing to head to multiple destinations to get both what they want and the prices they’re seeking. “An under-age-40 consumer will think nothing of going to Whole Foods for wild-caught salmon because they’re having their friends over for game night and they want to grill, but then getting the rest of their stuff at Walmart,” says Parker. “My mother would never have done that.”