Premium priced fresh food items are driving growth in the US produce department, according to new research released in the Perishables Group’s new Produce Department Drivers report.
Fresh food department sales, including fresh produce, deli, bakery, seafood and meat, represented a growing share of total store sales in recent years, and in 2010 the produce department posted dollar and volume growth despite higher prices.
The report, which integrates point-of-sale supermarket data, consumer demographic profiles, shopper loyalty card data with secondary research to determine the most important factors impacting department performance, attributes produce sales growth in part to consumers’ loyalty to the department.
“The produce department is unique in a store because all households purchase from the department,” said Bruce Axtman, Perishables Group president and CEO.
“It’s a major driver of customer traffic to a store, and consumers showed that they are willing to spend money on fruits and vegetables.”
According to the report, consumers are focusing less on promotions in produce as the percentage of volume sold on promotion declined last year for all of the top 10 produce categories, except cooking vegetables.
Ad counts also declined for seven of the top 10 produce categories, the report said.
Meanwhile, shoppers were willing to pay a premium for convenience, as sales of all prepared fruit and vegetable segments grew in the past year.
Despite higher price points, the percentage of households that purchased prepared fruits and vegetables increased, as did the frequency of those purchases.
Organic produce is also gaining ground, according to the report.
Between 2005 and 2010, organic packaged salads, berries, apples and tomatoes led growth with double- and triple-digit sales increases.
The Perishables Group said this growth was fuelled by more organic items available on the shelf, as item count increased between 46 per cent for tomatoes and 115 per cent for berries.
Organic sales now comprise 5.4 per cent of US produce department dollars.
The report suggested strategies for coping with growing competition for shelf space in the produce department.
“The number of fruit and vegetable items in stores increased 38 per cent and 33 per cent respectively between 2005 and 2010,” Mr Axtman said.
“Now more than ever, it’s essential to follow a sophisticated and deliberate process for new product development and rollout.”
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