FMI recently announced its renewed brand identity as FMI - The Food Industry Association, reflecting its strategy to more broadly represent the food marketplace and embrace a more interconnected supply chain. They have been a tremendous positive force in our industry by not only advocating and educating on important issues that affect our Fresh Food industry, but has been particularly successful in bringing together retailers, product and service providers in order to discuss our common challenges and develop solutions for all.
As part of this effort, the FMI’s Fresh Food Leadership Council met last week. This Council is composed by over 80 representatives of the most influential members of our industry (roughly half of them being retailers and the other half product and service providers), and today I would like to share some of the most interesting insights that came out of that meeting and provide a useful perspective of the relevant issues tackled by the group.
New plant-based products are here to stay.
The popularity of plant-based meat substitutes continues to grow by double digits consistently in all regions of the country. More than 70% of grocery retailers have plans to increase their shelf space of this type of products within the next two years. Another interesting finding is that most retailers report a low degree of cannibalization of regular meats, making this category a significant contributor to incremental sales and margin. The last nugget of valuable information shared was the advice against marketing this category as “vegan” food but instead as “plant-based protein”, which will speak better to the general consumer.
Innovation in packaging is contributing to waste reduction.
Even though many consumers want to do the right thing and save the planet, the facts show that they aren’t willing to pay extra for it. Thankfully, new packing materials and plastics are promising to extend the shelf life of produce and prepared food items without a substantial impact on cost. Although some providers are experimenting with corrugated paper containers instead of plastic, these bring their own set of issues and might be more wasteful. It was noted that our industry needs to address the reduction of plastic waste, not necessarily the elimination of plastics. Other areas of interest for the packaging industry are biodegradable materials and compatibility across plastics to simplify recycling.
The new marketplace in grocery.
According to a study from Kurt Salomon/Accenture, there has been an explosion of investments by grocery businesses related to Food Services. The implementation of Artificial Intelligence (AI), process automation, and use of robotics across the store have disrupted traditional models and created new trends on the marketplace. These investments have prepared retailers to be able to execute properly on now common processes such as click-and-collect, made to order, and all their variations. Now we should expect soon new ideas such as “meal subscriptions”, in which through AI and personalized customer info grocers will be expected to recommend full meals based on customer preferences. The study also found that these following elements are essential to succeed in this new marketplace:
- Clear purpose of your brand: Understand what your brand stands for and communicate it to your customer across the board.
- Parallel Innovation: Keep up with tackling the daily challenges of your operation but also dedicate resources and attention in how to improve your business in the long run.
- Operational agility: Streamline your operation and technology as much as possible. Choose services and partners that can evolve quickly as the business demands it.
Food Services are a key element for future sales growth.
AT Kearney along with FMI have joined forces to develop a blueprint for retailers that want to expand their Food Services business. The opportunity is huge, they estimate that the market for Food Services will triple within the next three year to reach $360B per year. These are the key areas of attention they recommend for success:
- Aspiration and Strategy: Carefully evaluate your capabilities and choose what type of Fresh Food offerings you’ll be able to excel in. Do not expect to become a destination overnight, plan for small but consistent increments in sales. Consider partnerships with other providers such as commissaries or local restaurants. Listen to your customers and be flexible, tailor your offerings to what type of meals they want: ready to cook, ready to heat or ready to eat.
- Choose your Operational Model: Whether you decide to implement a Fast Casual restaurant or just a grab ‘n go table, make sure to have the appropriate technology tools and processes to consistently execute on your recipes in order to maintain the quality of your offerings. That concept applies not only to the store level production, but to your extended supply chain as well.
- Customer experience and communication: Ensure that all the elements of your operational model are aligned for what your customer is looking for: A grab ‘n go table should be placed on high traffic areas, a self-service table must be cleaned and properly stocked at all times, a fast casual operation should have enough lines and extra help at pick hours. Customer communications to create awareness of your offerings should be properly complemented by in store signage to reinforce discovery of products and customer engagement.
A thorough analysis of this white paper will be presented at the FMI’s Fresh Forward event in August. We look forward to continuing our participation on this event and all future efforts by FMI in defining what the future of the Fresh industry will be.
ADC is proud to mark our 30th year in the industry with the launch of our new FIM platform, FreshIQ, showing our longstanding commitment to improving fresh by investing in innovation. ADC has solutions for recipe management, labeling, production planning, inventory/waste management, food traceability, and fresh ordering. If you’d like to see a demo, please contact us today.
Global Head of Retail Solutions
813.849.1818 ext. 22597