Shoppers are feeling pain in the produce department as the cost of fruit and vegetables has soared.
The latest consumer tracking study by Numerator found that about 78% of Ontarians noticed prices go up for fresh vegetables and 75% noticed this for fresh fruits. The price hikes are “moderately to extremely concerning” for more than half (55%) of Ontario consumers.
As a result, 46% of consumers say they’re buying more fresh fruits and vegetables only when they’re on sale, 32% are cutting back on fresh fruits and vegetables, and 30% have switched to less expensive types. In addition, 30% are buying more frozen fruits and vegetables, more than 27% are buying less produce overall, and 13% are buying more canned fruits and vegetables.
“Food inflation was already a reality because of COVID disruptions to the supply chain. As a result, favourite produce commodities may not be available,” says Sean Martin, general manager, international business, at Numerator. “If they are available, the quality may be poorer than what shoppers have grown accustomed to—and prices will be higher.”
As shoppers seek more bang for their grocery buck, they’re also shifting to discount and club retailers for their produce purchases. Data from Numerator shows that 9% more Ontarians bought produce in the club channel in Q4 2021 versus the same time the previous year, while discount saw an increase of 2.2%.
“For the truly price-sensitive households, who only have so much to spend on groceries each week, discount channels and promotions are going to play a bigger role in maintaining some access to fresh produce as prices go up,” says Martin. “Although households with more purchasing power may not feel the impact as much as price-sensitive households, we already are seeing a significant shift in produce spend to the club channel, where basket sizes are larger but quality per dollar spent provides much better value than other channels.”
While Canadians are looking for value, that doesn’t mean innovation should get tossed. For example, nearly 11% more Ontario households bought salad kits in the last quarter, while those buying salad greens declined 8.4%. Salad kits are now purchased by almost one third of Ontario households, while salad greens are at 50%.
“Value as a principle does not rule out premiumization for produce,” says Brian Ettkin, Canadian lead, strategy & solutions consulting, at Numerator. “Shoppers are still looking for innovation that creates better value for their families. Produce marketers and retailers can capitalize on this trend by continuing to find solutions that meet consumer needs beyond price, such as time savings, convenience or new flavour profiles.”
To overcome some of the challenges in the produce department, Ettkin has this advice for grocery retailers:
Understand the shopper: A holistic understanding of the shopper has never been so important for produce departments. It’s critical to understand what is driving sales in your produce departments, which of your shoppers are not buying in your stores and why, and which categories have fundamentally changed but you are not capturing.
Ask the shopper: Canadians have more choices than we think and are willing to use them. Understand why a current retail shopper buys their produce in a different store, or why a loyal produce shopper has suddenly switched. Ask consumers questions to understand how to improve in the face of changing behaviours.
Quality versus price struggle: Understand the key shelf and feature price points and how they impact shopping behaviour for each category. It’s important to understand that not all categories are the same and treat them accordingly. It is the age-old truth in produce: it is about value not price.