Consumers are going back to the basics when it comes to eating, with organics, natural and fresh increasingly important attributes. This is especially true for millennials, who are the biggest purchaser of organic products. 

So they like the experience of brick-and-mortar stores, but what about online shopping? It seems every store these days touts its online, pick-up and delivery programs.

O’Connor: There’s no question that shopper demand is rising for convenience. Our research shows that 23 percent of households are purchasing food online, with 60 percent of these consumers expecting to spend 25 percent of their food dollars through an online channel by 2026. It’s the center-store categories that are migrating online. There’s not much of an experience with picking out a box of cereal or can of soup. Finding that perfect tomato or marbled steak requires a visit to the store. Fresh is a competitive weapon for traditional grocery retailers.

Where does health and wellness play into these shopping behaviors?

O’Connor: There’s a lot of data out there. Our report cites research showing that more than half of consumers will pay more for foods that promote health benefits. Consumers view health and wellness in two ways: fresh, less-processed (i.e., clean labeling, inherently nutrient-dense, organic); and “premiumization” (i.e., high-quality ingredients, storytelling, transparency). These are opportunities retailers can address throughout the perimeter of the store.


What are the top trends driving growth in the bakery, dairy and deli departments?

O’Connor: American households are now comprised of one to two people, who are less likely to purchase family-sized or larger-portioned products. Bakers have taken note of the growing interest in mini, single-serve and smaller-sized varieties of baked goods. Despite greater interest in healthier offerings, indulgence is still a factor in consumer purchases. Specialty cakes from in-store bakeries resonate strongly with higher-income young consumers.

Near the bakery is the deli, which is becoming a destination spot for shoppers. Operators are growing their offerings and trying to stay on trend with new products and flavors. They are reinventing the physical deli and trying to provide more culinary-inspired foods. Deli department sales totaled $25.1 billion in the 52-weeks ended July 1, 2017, representing 17 percent of total perishable sales, according to Nielsen Fresh. From 2012 to 2016, total deli dollar sales increased 27 percent and volume grew 21 percent, outpacing the 19 percent growth in total fresh dollar sales and 11 percent growth in volume.

Despite these booming numbers, just 12 percent of shoppers think of regularly visiting the deli as an alternative to cooking dinner. The deli is in a unique position to become the destination consumers crave for food and experiences. Deli meat trends include “clean” and “clear” labels; stories behind specialty meats; and merchandising through pairings and tastings. In addition to using local ingredients and sharing their story, delis need to appeal to resident audiences with menu items that are eaten locally and host community cultural and social elements.

When it comes to cheese, which is sold in both the deli and dairy departments, it appears Americans cannot get enough. Per capita cheese consumption in the US continues to grow, reaching more than 35 lbs. per year in 2015, double the amount consumed in 1975, but only about 60 percent of the cheese consumed in France. So we can eat more. There’s opportunity in new flavors and forms. After shoppers experience new cheese flavors in restaurants, they often look for the new cheeses at retail. Sampling events raise awareness and provide an experience you cannot get online.