By Jonna Parker, Team Lead, Circana’s Fresh Foods Group

It’s no secret that consumer behavior has changed since COVID-19 and the subsequent high-inflation period. Nowhere is this more apparent than when we look at store trips for grocery items. Consumers are making 10 more trips per year on average than they were pre-pandemic. Now driven by nearly two years of price pressures both in and beyond the store, they’ve made finding the best value a top priority.

As consumer behavior changes, so has the competition in the fresh produce department. Even dollar and convenience stores now offer some fresh produce, and Circana surveys find that young shoppers have grown increasingly happy with the quality of the produce they can buy at discount grocers, big-box retailers, and club stores.

At the same time, price sensitivity to fresh produce has increased even as it has been decreasing across center-store categories. In part, this is because the big CPG companies that rule center-store food and beverage are not doing BOGO pantry-loading/high unit volume deals anymore. In fact, U.S. shoppers are carrying 10% less food and beverages on hand, according Circana’s 2023 Kitchen Audit Study. So strategic CPG companies have gotten surgical with their pricing in response, optimizing it for today’s just-in-time shopping trends.

As I discussed during my recent appearance on The Produce Retail Podcast, some traditional grocers aren’t doing this yet. Instead, they’re still adhering to conventional pricing and promotional approaches that sometimes work against them.

It’s time for a new approach.

Grocers can now access more data on fresh produce than ever before. We know how price sensitive people are at different times of year for different products and at different stores. And that information can — and should — inform your fresh produce pricing and promotional strategies.

Know the Role Each Product Plays

As grocers compete in fresh with more retailers that offer everyday low pricing on fresh produce, you need to know the role each fruit or vegetable plays in the store and basket to price them appropriately. For example, some are important everyday essentials and trip drivers. In fact, fresh produce is the most frequently purchased fresh department. It’s in the basket for 29% of all shopping trips. As our recent Top Trends in Fresh webinar with FMI detailed, fresh produce also dominates the list of the top 10 most-purchase fresh foods, with fresh bananas, berries, tomatoes, lettuce, onions, potatoes, apples, and potatoes all making the list.

Stay Competitive on Essentials

For these staples, it’s important to be competitive on price, and to advertise that fact regularly and effectively. After in-store signage, the second-most popular way that shoppers look for deals today is through retailer apps. Hot promotional prices can drive foot traffic, but erratic pricing with too-high regular pricing can give your store an overall halo of having expensive produce. And that’s a price cliff you can’t afford to tumble over.

Find Margin in Premium Indulgences

At the same time, while people are cost-conscious, they’re also willing to upgrade to a more premium tier of produce for a little treat or escape especially if it feels special, unique, or high quality. One example would be Rainier cherries. In an abundant crop year, nearly every type of retailer was carrying traditional cherries in addition to the premium Ranier variety. However, these upgrades saw an impressive volume sales increase of 79.7% YOY in the 52 weeks ending July 16, 2023. Pomegranates are another example. Despite being a very expensive fruit, their dollar sales were up 15.8% and volume sales up 14.1% over the same period. You can still drive sales on fruits you can position effectively as premium indulgences. Everything isn’t just a race to the bottom.

Seize the Data Opportunity

Grocers that sell fresh produce have a tremendous opportunity right now. Center-store CPG companies are crushing it because they’ve seized the moment to use data for more strategic pricing and promotions. The time is right for grocers to take this approach to fresh produce too. Given the role produce plays as a trip driver, excellence in this area can spur better performance in both fresh sales and total-store results.

To kick off your new approach to informed produce pricing and promotional strategies, contact Jonna.Parker@Circana.com or freshfoods@circana.com today.