The boom in fresh drives up grocery salaries but also margins and will transform today’s grocers (2/2)
Continued from our previous blogpost:
The boom in fresh drives up grocery salaries but also margins and will transform today’s grocers (1/2)
And for trends such as in store retail theatre and small brand story telling to play out, knowledgeable store staff are essential. They have to work hand in hand with suppliers to have the right information at hand and the best possible insights into the category, provenance and production processes. The best stories sell products, the more they can demonstrate “authenticity“, the better. More knowledgeable sales staff will require better training and also higher salaries.
This trend is already observable now, before minimum wage rises are starting to kick in. On the one hand online is making significant inroads into the sector. This pushes b&m grocers to invest into stores and staff and highlight their freshness USPs. The other major driver behind the outperformance of chilled and fresh categories is the health & wellness trend. This seems closely correlated to the obesity rates going up in the West.
Fresh is perceived as healthy and this taps into government education campaigns around better for you, such as the “five fruit/vegetables a day” campaigns. There is also heightened demand for local products, widely perceived to be healthier and tastier. For obvious reasons, such as a short supply chain, local ranges are perceived as fresher also. These two topics, local and fresh, go together well, the quicker products arrive from the farm at stores, the fresher they are and the longer their shelf life should be.
From a bricks and mortar retailer the most enticing aspect of the outperformance of the fresh and chilled ranges is the antidote these provide to online retailing. Fresh categories can get shoppers through the door, who will still want to be inspired, see, perhaps touch and choose these products themselves – or even consume them then and there. Moreover, the margin opportunity in fresh categories (mostly private label) is also much better than in shelf stable products, which have seen most competition from online.
The preconditions are perfect for moving today’s often bland mass market grocers to a more premium positioning with better range depth in fresh categories, better in store theatre, higher paid and more satisfied sales staff.