Surprises in Store

SURPRISES IN STORE

FRUIT LOGISTICA TREND REPORT 2019

PRESENTED AT

IN COOPERATION WITH PREFACE

IMPRESSUM Dear members of the fresh produce trade,

FRUIT LOGISTICA TREND REPORT 2019 Welcome to our third annual FRUIT LOGISTICA Trend Report. SURPRISES IN STORE As we continue to do our best to provide all of our exhibitors and visitors with useful business information, our intention with this A special trend report for the international fresh produce business, year’s publication Surprises in Store is to paint a detailed picture of commissioned by Fruit Logistica and produced by Oliver Wyman. the international fresh produce market and in particular two of its leading protagonists, namely shoppers and retailers. REPORT AUTHORS @ OLIVER WYMAN Rainer Münch Understanding why people purchase fresh fruit and vegetables in Alexander Pöhl the way they do is not always easy, so with the help of Oliver Wyman Germain Terreaux we have conducted one of the most in-depth consumer surveys ever Jens Torchalla undertaken in Europe and North America. The analysis contained in this report goes beyond a summary of consumer behaviour in EDITORIAL & DESIGN @ FRUITNET MEDIA INTERNATIONAL relation to fresh food, however; what it also does is to explore in Mike Knowles detail the various ways in which the world’s major grocery retail Simon Spreckley chains are attempting to keep pace with those consumer trends. In addition, it provides valuable insight into how companies can best PRODUCTION approach the opportunities and challenges that such trends and Oliver Wyman reactions will inevitably create. www.oliverwyman.com Tel +49 (0)89 939 490 The report’s findings will be presented at FRUIT LOGISTICA 2019 and then be made available to all as a free download from the PUBLISHER event’s official website. We hope that the information it contains Messe Berlin GmbH will be helpful to all of our customers and partners in the fresh Messedamm 22, 14055 Berlin produce sector, who together have enabled FRUIT LOGISTICA to [email protected] remain the leading global platform for the fresh fruit and vegetable www.fruitlogistica.com sector. As always, we want to keep sharing information with the fresh produce industry and to maintain close ties with all of you. Copyright © 2019 Oliver Wyman We therefore look forward to hearing your views on this new report All rights reserved. Unauthorised publication or reuse in any form whatsoever of all or and would welcome your suggestions for future studies. part of the content of this publication is expressly forbidden without the prior written permission of the publisher. With kind regards as always, Your FRUIT LOGISTICA team Printed in Germany

FRUIT LOGISTICA TREND REPORT 2019 3 METHODOLOGY

Surprises in Store, the Fruit FIGURE 1. Logistica Trend Report 2019, SURVEY RESPONDENTS takes a detailed look at the CONTENTS critical role that fresh fruit Europe PAGE and vegetables play in grocery Austria 300 METHODOLOGY 5 retail. The report is based on Belgium 500 an in-depth consumer survey Czech Republic 300 – examining the responses of France 1,000 INTRODUCTION 7 6,850 customers in 14 different Germany 500 markets across Europe and Italy 500 1. WHAT REALLY MAKES FRESH FOOD SHOPPERS HAPPY? 8-15 North America (see Figure Netherlands 500 Consumer attitudes to fresh produce �� 10 1) – combined with project Poland 300 The challenge at the heart of fresh produce �� 12 experience at Oliver Wyman Russia 500 Revitalising fresh food �� 13 and a series of 20 expert Spain 500 interviews (see Figure 2). Switzerland 450 UK 500 2. MAKING SENSE OF NEW CONSUMER DEMANDS 16-25 Easy-healthy: more convenient and healthy �� 18 North America Geographical difference: the power of fortified food �� 19 Canada 500 Emotional connections: learning from the top brands �� 21 US 500 Case Study: Passion for production on a smaller scale �� 23 Total 6,850 Consumption with a clear conscience �� 24

3. WHAT THIS ALL MEANS FOR RETAILERS 26-33 Rethinking fresh produce retailing �� 28 FIGURE 2. Bulding local and seasonal ranges �� 28 EXPERT INTERVIEWEES Boosting producer-retailer collaboration �� 29 Case Study: The right response �� 30 Company Interviewee Role Ecole et Académie du Fruit et Légume Frederic Jaunault Meilleur Ouvrier de France (Primeurs, 2011) Promoting sustainable processes �� 30 Auchan France Philippe Beyaert Head of Fruit and Vegetables Introducing emotive store design �� 31 Colruyt Annelies Middag Category Manager, Fruit and Vegetables Case Study: Tech-savvy retailing �� 32 Colruyt Annick Mievis Chief Buyer, Fresh Investing to motivate passionate staff �� 32 Coop CH Andreas Allenspach Category Manager, Fruit, Vegetables and Flowers Creating an emotional connection �� 33 Die Frischemanufaktur Dr Jenny Müller Chief Executive Officer and Founder Dream Harvest Farming Company Zain Shauk Chief Executive Officer and Co-founder Edeka Nordbayern-Sachsen-Thüringen Stefan Dittert Lead Buyer, F&V, Plants, Convenience and Eggs THE OPPORTUNITY IN FRUIT AND VEG 34 Globus Tim Strübing Assortment Manager, F&V, Flowers and Plants Migros Ostschweiz Dominique Lumpert Head of Supermarkets PKHA Dominique Barbet Partner PKHA Benoit Koutny Partner PKHA Gregoire Schellaert Partner Selgros Cash & Carry (Transgourmet) Kerstin Dalchau-Mettner Head of Sales Germany Rewe International Bahar Akca Lead Category Buyer, Convenience SanLucar Austria Alexander Thaller Managing Director Selgros Russia Dr Michael Zipfel Chief Executive Officer Selgros Russia Jens Frerichs Chief Merchandising Officer Sonae MC Tomás Lince Fernandes Head of Fresh Commercial Department UNCGFL Christian Berthe President

FRUIT LOGISTICA TREND REPORT 2019 5 INTRODUCTION The suggestion that fresh produce might play from, how they were produced, a critical role in the retail trade should not how fresh they really are: these surprise anyone in the industry. What might are of increasing relevance to not be so readily apparent, however, is just consumers in many markets. how quickly the market for fresh produce is At the same time, healthy changing. Customers now expect good quality eating and convenience are fresh produce in every store. As a result, while extremely relevant concerns grocery retail is seeking to use fresh produce to for many. As trends, they are achieve market advantage, doing so is proving not as contradictory as they ever more challenging. might first appear: customers in certain segments want to Within this changing environment, fresh fruit eat healthily with the greatest and vegetables are becoming central to the possible convenience. This is success of any retail store. Welcome news for providing producers, suppliers the sector, but there is a catch: as last and retailers with new year’s Fruit Logistica Trend Report opportunities and challenges. Disruption in Fruit and Vegetable Distribution highlighted, supply This year’s Fruit Logistica chains are evolving in new Trend Report Surprises in Store directions; and perceptions will explain more about these of what matters in fruit and challenges and opportunities, vegetables are shifting, as are offering suggestions as to expectations about the range of how producers, suppliers and products on offer. retailers might best react.

Consumers are generally becoming much more sophisticated in terms of how they shop. Not only are they more environmentally conscious, but they demand more information about the products they choose to buy. Just where their fresh fruit and vegetables come

6 FRUIT LOGISTICA TREND REPORT 2018 FRUIT LOGISTICA TREND REPORT 2019 7 1. WHAT REALLY MAKES FRESH FOOD SHOPPERS HAPPY? 8 FRUIT LOGISTICA TREND REPORT 2018 FRUIT LOGISTICA TREND REPORT 2018 9 Consumer attitudes to fresh produce FIGURE 4. DETAILED SURVEY RESULTS BY COUNTRY The quality of a store’s fresh food plays a key role in determining where customers Source: Oliver Wyman, Fresh Survey, August-September 2018 choose to shop for their groceries. This is underlined in our consumer survey: 59 per cent of our respondents told us quality in the fresh food department was the Importance of product categories Importance of satisfaction criteria Best place to buy fresh products most important factor in determining their choice of store (see Figure 3). for overall satisfaction with fresh for F&V satisfaction Share of loyal customers rating Correlation, fresh satisfaction Correlation, category satisfaction store as best store to buy Fresh Looking a bit deeper, our survey reveals that fresh food quality determines vs category satisfaction vs satisfaction criteria products basket size as well as footfall. Customers satisfied with a store’s fresh food Austria 1. F&V 28% 1. Quality 48% 1. Interspar 61% quality will visit it 7 per cent more frequently than those who are not. Even more 2. Meat and cold cuts 22% 2. Assortment 26% 2. Merkur 61% significantly, their average basket is 24 per cent larger. Consider also the fact that 3. Cheese 17% 3. Price and promotions 11% 3. Billa 48% 47 per cent say they are willing to pay more for higher quality fresh food, and the importance of fresh fruit and vegetables to the profitability of a food retail Belgium 1. F&V 39% 1. Quality 39% 1. Delhaize 75% 2. Meat and cold cuts 22% 2. Assortment 26% 2. Carrefour 60% business becomes crystal clear. 3. Cheese 13% 3. Product presentation 10% 3. Albert Heijn 60%

Satisfaction with fresh food appears to have a more profound impact on shoppers Czech Rep 1. Meat and cold cuts 33% 1. Assortment 28% 1. Globus 74% 2. F&V 24% 2. Quality 20% 2. Kaufland59% with more money to spend, playing an even greater role in determining where 3. Bread and pastries 16% 3. Product availability 15% 3. Lidl 57% they shop in many of Europe’s more affluent market segments. In Germany, for example, around 68 per cent of high-income families say that fresh food is the France 1. F&V 41% 1. Quality 43% 1. Grand Frais 2. Meat and cold cuts 37% 2. Assortment 15% 2. Auchan most important reason for choosing a store. Those families not only make 6 per 3. Cheese 10% 3. Price and promotions 10% 3. Cora/ Match cent more visits than the average, they also spend 53 per cent more. In short, no store should ever neglect quality when it comes to fresh products. Germany 1. F&V 31% 1. Assortment 34% 1. Globus 79% 2. Meat and cold cuts 29% 2. Quality 31% 2. Edeka 70% 3. Cheese 14% 3. Product presentation 11% 3. Kaufland61% The crucial question, therefore, is what drives customer satisfaction within the fresh food department? The answer turns out to be surprisingly simple: the most Italy 1. Convenience food 23% 1. Quality 38% 1. Esselunga 70% important thing for consumers is quality itself. As Figure 3 shows, quality alone 2. Cheese 20% 2. Assortment 24% 2. Coop, Ipercoop 65% 3. F&V/Meat and cold cuts 19% 3. Environmental commitment 6% 3. Conad 65% accounts for 33 per cent of the total satisfaction (we will come to the second most- important factor, the range of products, later in this report). Although the idea of Netherlands 1. F&V 42% 1. Assortment 35% 1. Albert Heijn 76% quality as shoppers’ top priority is by no means unexpected, a closer analysis of 2. Meat and cold cuts 17% 2. Quality 33% 2. Lidl 75% 3. Convenience food 12% 3. Product presentation 7% 3. Emte 61% their attitudes to quality reveals a number of surprises. Behind this apparently simple answer, there have been some notable changes in expectation, shifts in Poland 1. F&V 28% 1. Quality 36% 1. Lidl 64% demand that are central to this report’s findings. » 2. Convenience food 19% 2. Assortment 18% 2. Kaufland62% 3. Meat & cold cuts 15% 3. Product presentation 14% 3. Delikatesy Centrum 60%

Russia 1. Meat and cold cuts 20% 1. Assortment 35% 1. Metro 80% FIGURE 3. 2. Cheese/Convenience food 18% 2. Quality 15% 2. Karusel 76% RELATIVE IMPORTANCE OF SATISFACTION CRITERIA FOR FRESH FOOD 3. F&V 18% 3. Product presentation 12% 3. Lenta 64% CORRELATION, FRESH PRODUCE SATISFACTION VS SATISFACTION CRITERIA Spain 1. F&V 22% 1. Quality 47% 1. Bonpreu 83% Source: Oliver Wyman, Fresh Survey, August-September 2018, average across all 14 geographies 2. Convenience food 18% 2. Price and promotions 10% 2. Hipercor 80% 3. Meat and cold cuts 13% 3. Assortment 9% 3. Carrefour 67%

Switzerland 1. F&V 38% 1. Quality 42% 1. Migros 66% 2. Meat and cold cuts 22% 2. Assortment 27% 2. Coop 61% 3. Cheese 11% 3. Product presentation 10% 3. Lidl 47%

UK 1. F&V 22% 1. Quality 47% 1. Waitrose 76% 2. Convenience food 18% 2. Price and promotions 10% 2. Morrisons 65% 3. Meat and cold cuts 13% 3. Assortment 9% 3. Tesco 63%

Canada 1. Cheese 24% 1. Quality 32% 1. Save-on-Foods 68% 2. F&V 16% 2. Product presentation 23% 2. Super C 67% 3. Convenience food 14% 3. Assortment 22% 3. Loblaws 65%

US 1. F&V 32% 1. Assortment 30% 1. Whole Foods 86% 2. Meat and cold cuts 16% 2. Product presentation 22% 2. Wegmans 82% 3. Cheese 12% 3. Quality 21% 3. Meijer 77%

10 FRUIT LOGISTICA TREND REPORT 2019 FRUIT LOGISTICA TREND REPORT 2019 11 The challenge at the heart of fresh produce Revitalising fresh food

Almost universally, fresh produce has come fresh produce, across all markets covered by Retailers are faced with something of a quandary. While the fresh food to play a much more central role in retail. The our survey the task seems even more difficult. department is more important than ever before as a way of attracting customers, days when space expansion and promotion In Germany, for instance, whereas in 2012 some and with quality continuing to be a major driver of sales in that arena, more and share could be used to drive sales now seem 68 per cent of customers said they saw major more shoppers are coming to expect quality as a matter of course, regarding it as long gone. Store expansion has largely come differences in the quality of fresh produce merely something related to hygiene which they take for granted. to an end in most mature markets, having sold by different retailers, today this figure has reached its natural limit. Likewise, promotions dropped to only 31 per cent – less than half that This is making the battle for differentiation in fresh quality an increasingly are increasingly cannibalising other sales. seen just a few years’ earlier. intense one, forcing retailers to search for new ways of standing out from an Consequently, fresh food in general has increasingly competitive crowd. Our survey shows that, as far as customers are assumed a new, more central importance. This clearly reflects the market consolidation concerned, all is not equal in the world of fresh. When ranking the fresh categories seen over the last few years. Weaker players that are most important to them, it is the fruit and vegetable department that Driving greater sales in this area is no simple have been forced out of the market and matters most, ahead of all others including meat and bakery (Figure 6). matter, however. On the one hand, discounters those remaining are developing more and Portrait are keeping up the pressure in terms of more sophisticated operations. While quality value for money, making further gains from differences do continue to score higher in less Exhibit 3: Importance of product categories traditional vendors. On the other hand, online consolidated grocery markets such as Russia FIGUREfor fresh6. satisfaction fresh food sales are chipping away at the edge (see Figure 5), for most, quality has dropped IMPORTANCE OF PRODUCT CATEGORIES FOR FRESH FOOD SATISFACTION of the market, placing additional pressure on below 40 per cent. CORRELATION, CATEGORY SATISFACTION VS. FRESH SATISFACTION bricks-and-mortar retailers. Source:Importance Oliver of Wyman, product Fresh categories Survey, August-Septemberfor fresh satisfaction 2018, average across all 14 geographies As already mentioned, this does not mean fresh Correlation, category satisfaction vs. fresh satisfaction Quality as a means of differentiating a store’s food is unimportant; far from it, as it remains offer is not an easy answer either. Whereas the most important differentiator. What it 1 F&V 28% once upon a time a retailer could have expected highlights is that the field of fresh is becoming to distinguish itself solely by the quality of its an increasingly competitive one. Portrait 2 Meat & cold cuts 20% Exhibit 2: International comparison of perceived differences in fresh 3 Cheese 13%

FIGURE 5. Convenience food 4 (fresh only) 13% INTERNATIONALPerceived COMPARISON differences OF PERCEIVEDbetween retailers DIFFERENCES in Fresh IN FRESH FOOD Source: Oliver %Wyman, of customers Fresh Survey, seeing August-September big differences in the 2018 Fresh offer between the retailers in their country 5 Bread and pastries 10% Russia 54%

Spain 40% 6 Fish 7%

Poland 39% Source: Oliver Wyman, Fresh Survey, August-September 2018, average across all 14 geographies Switzerland 38%

Austria 36% As all retailers are aware, shoppers tend to treat fresh fruits and vegetables Italy 32% very differently depending on the category, type or variety. Some are regarded Germany 31% very much as shopping list essentials, never missing from a customer’s basket. © Oliver Wyman 1 US 28% Other varieties may be perceived as harder to come by but are increasingly being sought by lots of customers. Whenever these varieties are absent from a store’s Belgium 25% fresh produce department, they are the products most missed (see Figure 7). » Canada 23%

Czech Rep 22%

UK 22%

Netherlands 19%

Source: Oliver Wyman, Fresh Survey, August-September 2018

12 FRUIT LOGISTICA TREND REPORT 2019 FRUIT LOGISTICA TREND REPORT 2019 13 FIGURE 7. In our consumer survey, the responses we had from higher-income customers CUSTOMER REFLECTIONS ON DIFFERENT F&V VARIETIES (SIZE = MENTIONS) might contain an important clue for beleaguered retailers. The data show Source: Oliver Wyman, Fresh Survey, August-September 2018, only F&V mentioned five times or more these customers care more about service, have a stronger commitment to the environment, and demand more specialised ranging than the average consumer. F&V never missing from the shopping basket F&V consumers miss in many retail stores With a little imagination, this has the potential to translate into the core of a strategy for potential differentiation in two distinct areas: first, product range; and second, shopping experience.

Most retailers will of course be aware that both product range and shopping experience can be powerful points of difference: as Figure 6 showed, assortment, in particular, is an established driver of consumer satisfaction with fresh food, and this centres around three new and critical things that shoppers want:

• Fresh produce that is both more convenient and healthier • Fruit and veg with an emotional connection, to which they can relate like brands • A clear conscience, with greater origin transparency and less environmental impact

Each of these three consumer demands can considered in relation to both product range and shopping experience, revealing an array of different potential Digging a bit deeper into what it is that determines customer satisfaction with responses (see Figure 9). While a few retailers and suppliers are beginning to regard to fruit and vegetables quality, our research reveals that the top three respond to these new requirements, to our knowledge, none has yet done so fully. drivers are the appearance of the produce, its taste, and its size and shape (see Figure 8). Here customer preferences are also undergoing something of a In the remainder of this report, we first explore each of these areas in more detail change. Experts confirm that whereas consumers have long associated produce before examining what they mean in practice for the retailers themselves. _ appearance with quality, taste is now playing an increasingly important role in how they assess quality. These changes are at the heart of dynamics rippling across the entire value chain.

FIGURE 9. FIGURE 8. EMERGING DIFFERENTIATORS OF FRUIT AND VEGETABLE SATISFACTION QUALITY AS A DRIVER OF SATISFACTION WITH FRUIT AND VEGETABLES Source: Oliver Wyman, Fresh Survey, August-September 2018 Source: Oliver Wyman, Fresh Survey, August-September 2018, average across all 14 geographies

Importance of satisfaction criteria for F&V Determining factors in F&V quality satisfaction What are The response we expect to see in stores… Correlation, satisfaction criteria vs F&V satisfaction Correlation, satisfaction criteria vs F&V satisfaction consumers asking for? Assortment Experience

Faster, easier, / Larger convenience range / Modular convenience, ‘putting your healthier meal together’ / New easier-to-cook varieties / Suggestions about ‘what to eat’ / More ready prepared (cut, peeled, etc.) / Quick and easy shopping / Fortiﬁed vegetables / More information on health / Re-discovery of Frozen / Encouragements to live a healthier life Emotional / Better tasting varieties / ‘Theatrical’ presentations connection / Brands that convey trust in their / Increased interaction: advice, food superior quality tastings, cooking classes, etc. / More in-store gastronomy and production

Fruit and veg / More local products / Greater transparency in the supply with a good chain / More seasonal products conscience / Increased centrality of local and / Environmentally friendly packaging seasonal fruit and vegetables / More information on sustainability of products and eﬀorts to achieve this

14 FRUIT LOGISTICA TREND REPORT 2019 FRUIT LOGISTICA TREND REPORT 2019 15

! 2. MAKING SENSE OF NEW CONSUMER DEMANDS 16 FRUIT LOGISTICA TREND REPORT 2018 FRUIT LOGISTICA TREND REPORT 2018 17 Easy-healthy: more convenient and healthier

In the past, convenience foods have not fewer people regularly cook for themselves. GEOGRAPHICAL DIFFERENCE: necessarily been associated with health Those who do generally have less time to awareness. In that sense, convenient fresh spend on cooking than they did in the past (see fruit and vegetables mentioned here have Figure 10). The same is true of the amount of THE POWER OF FORTIFIED FOOD little or nothing to do with the majority of time spent shopping. Yet simultaneously, the such products. The demand is for healthy current generation has emerged as more health fresh produce that is packaged in a convenient conscious than ever before, and this is driving format for people who are short of time and consumers to seek out healthy and convenient Exactly how producers and counter the impact of the often in a hurry, both when shopping in the fresh foods – easy to prepare healthy foods that retailers respond to demands country’s notoriously cloudy store and when cooking at home. Although can be put on the table quickly but which the for easy-healthy foods will winter days on the number of family mealtimes remain important to many, consumer knows will do their family good. Portrait depend in part on the specific sunlight hours. geography involved. Outside Exhibit 6: Time pressures impinge on home cooking Europe, there is already a The challenge in Europe is FIGURE 10. growing retail trend involving that extensive EU regulation EMERGING DIFFERENTIATORS OF FRUIT AND VEGETABLE SATISFACTION foods that deliver improved limits the scope of such Source:People withGfK perceivedConsumerScan, stress/lack Bundesagentur of time für Arbeit, Euromonitor International“Why do you (2012)purchase ready meals versus preparing a meal nutritional qualities – for labelling, making it more Share within population group with time stress in % in Germany from scratch?”¹ example, broccoli containing difficult to promote health People with perceived stress / lack of time “Why do you purchase ready meals instead of an increased number of benefits associated with Share within population group in Germany preparing a meal from scratch?”¹ antioxidant elements, or such products. According “I do not have lettuce with higher vitamin to a summary provided by levels. In the US, for instance, The Food Safety Authority 45% time to cook” Inventure has launched a of Ireland, “the labelling, 48.6 % fortified product made from presentation and advertising 44.3 % frozen fruit berries with of foods to which vitamins 40.8 % added vitamins, sold as ‘fruit and minerals have been added or deceive the consumer as to the nutritional 36.8 % plus vitamins’. must not include any mention merit of a food that may result from the stating, or implying, that addition of these nutrients.” This type of food is already a balanced and varied diet generating significant cannot provide appropriate Clearly this does not in itself prohibit the Number of shopping trips per year and person revenue in Asia and the first quantities of nutrients.” advertising and sale of fortified products. Total number in Germany such products are now making Furthermore, it says, “the Tesco, for one, has found a way to comply their way to Europe. In the UK, labelling, presentation and with these regulations, stating boldly in its 9.0 % 9.1 % -1,9% p.a. for instance, Tesco is selling advertising of foods to which advertising that “mushrooms enriched with 241 mushrooms with additional vitamins and minerals have Vitamin D [can] help keep you healthy during 235 231 228 223 Vitamin D that is said to help been added must not mislead the darker winter months”.

2011 2014

Young Middle-aged Old 2012 2013 2014 2015 2016 seamless ways to keep customers informed We expect these demands to play out in a about what constitutes a healthy diet. Such broader and more innovative easy-healthy 1. Share of respondents agreeing with the statement below, global survey Source: GfK ConsumerScan, Bundesagentur für Arbeit, Euromnitor International (2012) advice, necessarily, will have to be tailored to convenience offer in stores. That evolution in

Number of shopping trips per year and person an individual’s needs; this could comprise a terms of product range is likely to mirror the The 2018 Fruit Logistica Trend report provided hurryTotal number with in Germanyas much convenience as possible. mixture of advice from knowledgeable staff following trends: insights into the continued growth of out-of- This will require a trade-off with displays and the use of modern communication tools, © Oliver Wyman 1 home consumption. Simultaneously, that same that encourage traditional store journeys, such as smartphone apps. • Easy-to-prepare fruit and vegetable trend will also lead to changes in the way people because many consumers will be looking for varieties – such as Bimi / Tenderstem, a purchase fresh produce for home cooking, with immediate access to the produce they need Similarly, trustworthiness will be at a premium – convenient form of broccoli major implications for retailers. They will need and will resist being led through the store to it is likely that consumers will look increasingly • Ready-to-cook fruit and vegetables (pre- to devote as much effort to reinventing how find it. Increasingly, customers will also be to the reassurance of trusted brands, branding prepared, for example cut and peeled) they sell fresh produce as to what they sell. looking for healthy foods that can sustain that can reassure the consumer about the • Greater product choice, centred around their health-conscious diets. Retailers and healthy, reliable nature of the fresh produce, local and seasonal demand These changes begin at the store’s door. To producers will need to respond to this demand, while at the same time making it possible for • Modularity, meaning the sale of readily attract busy consumers, it will need to stock without overloading their stores, finding them to quickly identify the exact product they recognisable fruit and vegetable product ranges that provide shoppers in a are looking for, and in the quantity they need. components for easy-to-assemble meals »

18 FRUIT LOGISTICA TREND REPORT 2019 FRUIT LOGISTICA TREND REPORT 2019 19 Fresh fruit and vegetable producers and Discounters like Aldi and Lidl are also retailers alike will need to stay one step ahead working to expand their fresh fruit and of emerging trends that are being driven by vegetable convenience ranges. Driven by EMOTIONAL CONNECTIONS: so-called influencers. In the recent past, one the price point, their initial targeting is for such trend has been the highly influential and medium- to high-income customers, with widespread promotion of superfoods. While the opportunity regarded as particularly LEARNING FROM TOP BRANDS the market for such products has been limited strong in urban stores. Time will tell if largely to specific countries and regions, a retailers can also reach the four in ten Portrait number of these superfoods has made the younger people with even less to spend. Beyond their physical and leap and become truly global. Exhibit 7: Uptake in select superfood sales, Germany practical attributes, powerful brands go out of their This segment is being shaped FIGURE 11. way to build an emotional in particular by influencers SALES OF SELECTED SUPERFOODS IN GERMANY (€ ,000) connection with consumers, Source: IRI (Superfood) across all types of media, one that establishes trust – especially where the food is in thousand EUR in Germany and consequently customer highlighted in magazines by loyalty, encouraging repeart celebrity chefs or by other 12,392 purchases and creating a brand Chia well-followed names on food 23,228 premium. This can play well blogs and social media feeds. for fresh foods, particularly for 8,494 On occasion, this has led to Quinoa the many fruit and vegetables impressive sales uptake (as 12,909 that appeal to so many of the highlighted by the examples senses. Bricks-and-mortar 2,763 in Figure 11). However, as Matcha Tea retailers and produce brand 7,006 retailers are all too aware, owners are increasingly

there is a very real risk that 1,193 concluding that such sensual Amaranth such trends can disappear as 2,961 appeal is a particularly quickly as they arrived. important avenue, one that 49 could potentially give them a ABOVE—Making fresh produce departments more theatrical could help to underline the value of real stores Almond flour Not all the action is among 145 competitive advantage over high-end shoppers. A large other channels. If customers superior quality. German supermarket Pink Lady seal of approval – the number have to manage on 27 wish to see, touch, feel and chain Globus, for example, selects fruit and pin heart-shaped sticker you Coconut fibres restricted budgets and are 76 smell fresh produce before vegetables it believes meet particularly high find on every one of our apples. effectively prevented from buying, what better place to do standards of quality and taste to be sold under It’s a symbol of authenticity and 2015 2016

eating the healthy foods Source: IRI (Superfood) that than in the store? its premium label Globus Gold. “We only work guarantees consistent quality.” they might otherwise wish to with producers who want the best and who we Portrait consume. This is particularly The sensual aspect of fresh know personally,” the company comments. Its For branded products to work in true for younger age groups: ExhibitFIGURE 8: 11.Budget constraints restricting a healthier produce contains another advertising also underlines an aspect that we fruit and vegetables, they have data from Statista© Oliver Wymansuggest diet SHARE OF RESPONDENTS SHORT OF MONEY TO PURSUE A HEALTHIER DIET 1 emerging trend: while will look at in further detail later in this report, to deliver consistent quality that in Germany, four in ten GERMANY, PERCENTAGE PER AGE BRACKET consumers still associate the the products’ seasonality. “Globus Gold fruit on each purchase occasion people below the age of 40 Source: Statista (2016) fresh appearance of fruit and and vegetable products are only available for a and provide visible, additional would eat more healthy foods Per age bracket in % vegetables with their quality, limited time in the season – only when they are value for the customer when if they could afford to do so taste is becoming a far more perfectly ripe.” compared with the alternatives.

(see Figure 12). 18–29 38% important factor in a shopper’s Some retailers have already purchasing decision. Experts Adopting a slightly different approach, some achieved success in this area. The situation in those lower tell us that in response to this growers have marketed particular varieties of Germany’s largest supermarket income brackets suggests 30–39 42% trend they expect producers produce under a universal brand, to ensure that chain Edeka has been aware of there is a large untapped and retailers to focus much consumers see the produce as distinctive. Pink the need for differentiation as market, a problem that of their future innovation on Lady apples, for instance, include a number of it introduces consumer brands could be addressed through 40–49 34% delivering superior taste in cultivars – the main one Cripps Pink was first to its fruit and vegetable offer. innovative and alternative fresh produce. The key here produced in 1973 in Western Australia – that are For instance, unlike others, approaches. Frozen fruit and is to build consumers’ trust all marketed under the same umbrella brand. the limes it markets under vegetables, for instance, can 50–59 32% in the superior quality of Pink Lady apples are grown around the world, the Havana Club brand do provide a convenient and fresh produce. A number of but careful marketing means that consumers still not have waxed skins, making healthy alternative to fresh producers and retailers have get consistent appearance, flavour and quality. them more suitable for use produce. Pricing is key for 60+ 33% already succeeded in doing As their advertising states: “Only the best of the in drinks. They can be sliced this segment. so by consistently delivering apples are selected, hand-picked and given the and dropped straight into »

20 FRUIT LOGISTICA TREND REPORT 2019 Source: Statista (2016), Germany FRUIT LOGISTICAFRUIT TREND LOGISTICA REPORT 2019TREND REPORT21 2019

© Oliver Wyman 1 a glass without having to be heat-scrubbed unlikely that European retail will replicate the first. Elsewhere, Rewe’s fresh oranges are sold exuberance of American displays, the majority in supermarkets under the name Valensina, a of the experts we interviewed said they well-known juice brand. The marketing strapline expected to see more focus on this kind of visual offers the customer a guarantee that the oranges merchandising for fresh fruit and vegetables have a superior taste and juice content, in Europe. Appearance is of increasing encouraging customers to use the importance. fruit to make their own fresh juice. As the major brands know, the secret Another way of creating a to strong emotional connection stronger emotional connection with consumers lies in the last of PASSION FOR PRODUCTION with fruit and vegetable three elements addressed here: consumers is to improve their the store’s staff. Interaction appearance and presentation. with a store employee can make ON A SMALLER SCALE A number of countries – the US a vital difference to how the and Canada in particular – have customer perceives the produce itself. a long history of creating elaborate By personally introducing consumers to Cooperatives form a well-established alternative for example, regularly arranges for customers and attractive in-store fresh produce displays. products, offering advice or suggesting appropriate to the more conventional food industry business to meet its artisan partners in its stores in These almost theatrical displays are designed to recipes, members of staff can trigger positive model. According to PK Halstead Associates, a Hauts-de-France and Ile-de-France, enabling captivate the consumer and elicit an emotional emotions. A strong relationship established with Brussels-based food industry consultancy that them to better understand how they produce reaction. A well-established element of North the store can create trust that then transmits to specialises in design and identity, the present their food, or simply to get more information American fruit and vegetable marketing, they are the produce itself. environment opens up new opportunities for about what they are eating. Concerned about a bright, fun and stylised way of communicating such ventures: “The cooperative model gives an ensuring transparency with their customers, the quality. Bricks-and-mortar retailers have a final card up alternative response to both new expectations cooperative posts extensive information about their sleeve: they can show people how great fresh of the consumer and the wishes of the producers its partners on a dedicated website, including the Elsewhere, presentation has yet to play as food is. A customer’s experiences in the store – to enhance their profession as custodians of the prices the cooperative pays producers for each of an important role in determining overall being shown how conveniently an easy-healthy earth.” This approach is exemplified in Belgium’s their products. satisfaction as it does in North America. In food fits with their busy lifestyle, or getting Paysans-Artisans. The cooperative focuses on most other markets, presentation accounts for involved in a gastronomical tasting or cooking marketing artisanal and local food products, A number of small-scale groups take this intimate around 10 per cent of customer satisfaction, class to learn how to make use of a new product but defines itself as a citizen movement that relationship one step further. To shop in Parisian

whereas it registers double that figure in the US – will strengthen their emotional connection with Portrait brings together farmers, artisan-processors and cooperative La Louve’s store, for example, a and Canada (see Figure 14). While it might appear the fresh produce itself and the retailer. » consumers around a shared vision of agriculture customer must first become a member. And it’s Exhibit 10: Importance of F&V presentation and food. This echoes PK Halstead’s own vision; not just in Europe that this kind of membership FIGURE 14. by “rejecting gigantism and focusing on the model is gaining currency. The same approach IMPORTANCE OF FRESH FRUIT AND VEGETABLE PRESENTATION IN STORE diversity and quality of the produce,” cooperatives is taken by the Park Slope Food Coop in the Source: Oliver Wyman, Fresh Survey, August-September 2018 can reinvigorate farming and restore passion to US, which aims to maximise the provision of Importance of F&V presentation small producers, farmers and craftsmen, at the foods that are grown organically, regionally or Correlation, category satisfaction vs. satisfaction criteria same time providing customers with healthy and both, as well as ethical sourced and otherwise Canada 23% sustainable food, and ensuring they are better environmentally friendly. To this end, it avoids informed about what they eat. products that involve the use of toxic substances US 22% such as chlorine bleach and petroleum, minimises The heart of this approach is the localism that the use of disposable products, and seeks out

Poland 14% supports close ties between the producer and the those suppliers which use recycled containers consumer. The French cooperative O’Tera du Sart, and environmentally sound packaging. Russia 12%

Germany 11%

Belgium 10%

Switzerland 10%

Spain 9%

UK 9%

Netherlands 7%

Italy 6%

Czech Rep 5%

Source: Oliver Wyman, Fresh Survey, August-September 2018 22 FRUIT LOGISTICA TREND REPORT 2019 FRUIT LOGISTICA TREND REPORT 2019 23

© Oliver Wyman 1 Portrait Exhibit 11: Increased environmental consciousness Consumption with a clear conscience FIGURE 15. INCREASING CONSUMER AWARENESS OF FOOD’S IMPACT ON THE ENVIRONMENT InSource: € BN in Agrarmarkt Germany Informations – Arbeitskreis Biomarkt, European CommissionConducted by (2017), SPLENDID Statista RESEARCH Survey GmbH (2016), Splendid Research (2018) Consumers are changing. Slow food, farmers’ fresh produce thrown away and in terms of how markets and street food are all trends that point ecologically sound its packaging might be, is an Retail sales of organic-certified food Survey results towards a different attitude to consumption, increasing concern. By happy coincidence, this is as Germany, € bn Conducted by Splendid Research one which means that we expect whatever we much a priority for retailers as it is for consumers. eat to give us great enjoyment but at the same Significantly, a survey carried out in April 2018 by time to leave us with a clear conscience, secure Splendid Research found that consumers were Would consider buying unpackaged food 5.5 5.9 in the knowledge that we have not harmed the willing to take action to back up these concerns. 4.1 4.2 4.8 environment. This is consumption very much as Around 90 per cent said they would be willing to 2013 2014 2015 2016 2017 virtue, eating as identity. buy aesthetically imperfect fruit and vegetables (so-called wonky or ugly produce). What’s more, 78 Would consider bringing their own containers to fill with food in the Environmental commitment, in particular, is per cent of women and 72 per cent of men would “I am concerned about the impact of plastics in everyday supermarket becoming an important criterion in store selection consider buying loose fresh food, especially when products on the environment“ EU, percentage share in Europe. In the UK, for example, 43 per cent it came to fruit and vegetables. Plastic packaging of consumers say their choice is shaped by how is seen as a major issue: 87 per cent of respondents 45% 42% environmentally sustainable they believe the said they were concerned about its impact on the Hope to minimize the usage of packing store to be. That figure is even higher for high- environment – particularly so with regard to the 8% 3% 2% income families. As a result, all of the retailers we plastics used in everyday products – and 73 per Fully agree Tend to Tend to Fully Unsure agree disagree disagree interviewed now see an emphasis on sustainability cent said they hoped to minimise the amount of as a high priority for their company. packaging they used. However, when it comes to Willingness to buy deformed vegetables or fruit Would like to protect the environment paying for this, the response was less assured: only EU, percentage share Sustainability plays into yet another aspect of food half said they would be willing to pay more for

consumption, namely its seasonality and locality. biodegradable packaging (see Figure 15). Yes 90 As food becomes increasingly associated with Are willing to pay more for biodegradable both identity and environmental sustainability, Consumers want advice too No 10 packed products the specific questions of when and where food While reducing the amount of plastic packaging has been produced take on a new resonance. remains a priority for most, this can also be at Consumers are turning to foods with lower odds with the primary aim of sustainability. Cheap Source: Agrarmarkt Informations-Gesellschaft mbH – Arbeitskreis Biomarkt, European Commission (2017), Statista Survey (2016), Splendid Research GmbH (2018) environmental impact from sustainable sources; and effective, plastic packaging has done much The goal of reducing plastic waste has set many retailers and producers on the hunt for Share among respondents in % locally produced, grown in season. However, these to increase the longevity of fresh produce, often © Oliver Wyman viable alternatives. While some are lookingShare to biodegradableof respondents in agreement plastics with as thean above alternative statement 1 in % in the EU demands are clearly not equally important to all substantially prolonging product shelf-life and source of packaging material, others are using more traditional materials such as paper and consumers in all markets. Customers in certain protecting it against contamination and damage cardboard carton in order to avoid transforming food sources such as corn and rapeseed countries such as the Netherlands, Belgium and during transportation and display. Additionally, into packaging. These choices can lead to a complex matrix of outcomes, all of which are Italy place a premium on the seasonality of their it creates convenience in terms of handling and produce-specific. How each retailer resolves these challenges will be determined by what fresh fruit and vegetables. For others, particularly purchasing, producing standard units of purchase they perceive the balance to be between each competing objective. In Switzerland, Coop those in countries like Germany and Switzerland that customers readily recognise. For all these has investigated the impact of packaging on shelf-life and identified that it can eliminate that have strong regional identities around food, reasons, eliminating plastic packaging could packaging for root vegetables without any negative consequences. In contrast, the way locality plays a far more critical role. potentially lead to an increase in food waste. it packages broccoli has not changed. The retailer says it took the decision not to change its packaging in this case because it believed that such a change would have an unduly Connected to this is a further emotional aspect of Those caveats aside, the amount of produce being negative impact on the product’s quality and increase food waste. fresh fruit and vegetable consumption: customers sold without packaging is increasing steadily, want to know not only that their produce is fresh, even if there are likely to be limits on how far This points to another lesson from the top brands: suppliers and retailers need to respond but also that it is ephemeral and unique, located in this can be extended. While it is a fairly simple to such challenges by building deeper relationships with their customers. The objective a specific time and place and inherently linked to matter to reduce the amount of plastic packaging should be to use communications to build trust and loyalty, two key facets of brand the experience of producing it and consuming it. used for certain varieties of fresh fruit and strength. The simple place to start is by interacting more with consumers to ensure that For high-end consumers, particularly the young, vegetables, instead selling much of it loose, any they are not only better informed but more actively involved. This can take many forms, food’s identity and the purity of its supply are major reduction for others like soft fruit and salad ranging from point-of-sale communication to interaction with knowledgeable staff and becoming increasingly intertwined with a sense of vegetables might well result in higher amounts mobile, interactive links online. The key here is for the retailer to see its communications personal identity. of waste and increased cost. In addition, easy- as being about building a relationship, all the while remembering that this rests as much healthy foods demand convenience and prepared on its emotive content as the information it conveys. _ Greater awareness of the modern food industry’s produced requires reliable packaging. This is one environmental impact is affecting fresh fruit and major reason why we expect that, for the short vegetable retailing in other ways too. The avoidance term at least, the amount of plastic in use is likely of waste, both in terms of reducing the volume of to continue rising.

24 FRUIT LOGISTICA TREND REPORT 2019 FRUIT LOGISTICA TREND REPORT 2019 25 3. WHAT THIS ALL MEANS FOR THE RETAILERS 26 FRUIT LOGISTICA TREND REPORT 2018 FRUIT LOGISTICA TREND REPORT 2018 27 Rethinking fresh produce retailing

At first sight, the ideas around improved We believe that any retail chain that responds fully There is no simple answer as to how retailers SUSTAINABLE assortment and greater emotional connection to these demands will not only need to change the should tackle this emerging demand. Because of that we have discussed in this report might appear way they think about fresh fruit and vegetables, the segmentation discussed above, offer the same to mean relatively little in terms of how a store but will also find that this leads to their stores being range in every store is not an option, and even if SUPER-FRESH actually functions. However, we could not disagree redesigned from front to back (see Figure 16). In space restrictions did not preclude this, the demand more. To challenge such misconceptions, in this doing so, they will have to address six specific areas in several stores would be insufficient, leading to section we examine what it takes for a store to of store function: product range, collaboration increased waste. Any solution, therefore, requires meet customer demand for easy-healthy produce, with producers, packaging, store design, staff and the retailer to respond to variations in demand at for fresh fruit and vegetables that make an store communications. Over the next few pages, a local level, tailoring its assortment accordingly in emotional connection, and for produce that leaves we will examine each of these areas in turn. order to meet the needs of a local customer base.

the consumer with a clear conscience. Portrait There are two potentially complementary ways to achieve this. First, the retailer might FIGURE 16. give greater independence to its local store LIKELY IMPACT OF INITIATIVES IN RESPONSE TO EMERGING DEMAND management, trusting local partners to know their Source: Oliver Wyman own customers and adapt their product range accordingly. This could potentially be guided by central recommendations based on experience Located in Houston, Texas, Dream Harvest is from stores in similar situations and locations. involved in indoor, vertical hydroponic farming, The alternative would be for the retailer to adopt an emerging industry in which layers of growing a fully automated solution based on statistical racks are stacked one above each other within an

analysis and point-of-sale tools. This would enable artificially lit growing chamber. The industry is on the retailer to create a local assortment planogram the way to being profitable as the cost of lighting for each store, following well-defined rules that are systems comes down. For Dream Harvest, the based on consistent analytics. innovative technology enables it to produce very sustainable green produce such as lettuce and kale using just 1 per cent of the water used on a normal Boosting producer-retailer collaboration farm. Its growing chambers are powered solely by renewable, wind-generated energy and its farms We expect the level of collaboration with producers use zero pesticides. and growers to increase during the next few years because of the need for faster innovation and the Chief executive Zain Shauk claims local has now Building local and seasonal ranges retailer’s desire to secure differentiated quality surpassed organic as a relevant consumer trend. over the longer term. Retailers and producers make “It has better freshness, better taste, better quality. It would be misleading to give the impression that some segments of the population will be looking a good partnership when it comes to achieving Every chef in the world uses local ingredients. the entire population of Europe is suddenly going for an emotive connection, alongside with others faster-paced and more significant innovation. People are looking past the brand name, looking at to start consuming easy-healthy fresh produce, who are not. Some will require consumption with a Typically, retailers are best placed to have an in- what is important, the ingredients. More scrutiny or indeed that they will consume this and this clear conscience, others will not give such concerns depth understanding of the pattern of consumer is going into what the brand represents. Quality © Oliver Wyman alone. Instead, what we see is an emerging trend, much thought. 1 demand and how this is changing, while producers has to underline the brand.” With vertically farmed a trend we believe will make greater and greater are the experts in product development. The produce comes the promise of longer shelf-life, inroads into the fresh fruit and vegetable market So, who will consume according to the new challenge, however, is that it can currently take up superior quality and greater nutritional value. Seven in years to come. Even as it does so, we are likely to paradigm? Who will want the new easy-healthy to nine months to introduce new products into a days from harvest, salad greens have apparently see uneven progress across different countries and varieties and look for greater convenience, store. This lengthy lead time is largely the result lost all their Vitamin C, while other nutrients are segments. emotional connection and sustainability? Our of the fact that the development process is highly degrading at a steady, albeit slower, rate. Once study suggests that all these trends are likely to iterative. First, the retailer studies the customer harvested, Dream Harvest greens are triple-washed We expect some parts of the population to continue manifest most strongly in similar segments: the figures and feedback as well as the competitive and delivered to stores within hours of harvesting. to demand and consume the traditional fresh fruit metropolitan and urban, high-income, younger landscape in depth and develops suggestions and vegetable offer for the foreseeable future. generations. These consumers will be looking for within the category management team. These Shauk believes the challenge for Dream Harvest The majority of consumers will continue to buy ready-to-cook fresh foods – think particularly of ideas are then communicated to the producers, will be to reach people at a moment when they bananas, apples and pears. In other words, even busy parents with young families to care for – and who might or might not accept the challenge at are willing to change. In-store demos have proved in the target segments, it is likely that for some likewise, the ready-to-eat segment is more likely this stage. Alternatively, they might turn down the successful. “When people taste it, they immediately time we will see the same customer consuming to involve single, young, urban professionals – proposition due to, for example, potential technical see the difference,” he says. But such breakthroughs traditional fruit and vegetables and the new those with a higher disposable income and busy issues, or suggest modifications or alternatives. are only possible in store, so the company is using produce from the emerging paradigm. Similarly, lifestyles but without family responsibilities. This process is then repeated through a number » social media and messaging to reach its target group.

28 FRUIT LOGISTICA TREND REPORT 2019 FRUIT LOGISTICA TREND REPORT 2019 29 of iterations. Even once development is underway, there is no guarantee that the project will lead to THE RIGHT the desired product, as there can be many further challenges along the way.

RESPONSE The advantage of developing new products as a collaborative team is that much of this time delay can be eliminated by reducing the length of the feedback loops. By having customer understanding and production expertise under the same roof, especially when this is paired with agile development methods – which make intensive efforts over short sprints – the development process can be reduced to just three months. This can produce significant advantages. Increased speed to market can prove crucial in the fast-moving easy-healthy, convenience and health segments as these often feature short-term trends. One start-up that is already responding to emerging trends in the fresh fruit and The second aspect driving increased collaboration ABOVE—Muji’s flagship store in Yurakucho, Tokyo, offered traditional supermarkets plenty of fresh ideas about how to display fresh fruit and vegetables vegetable business is Germany group Die between retailers and suppliers is the desire to Frischemanufaktur. The company is seeking secure differentiated quality over the long term. also often fails to reduce quality deterioration of increasing convenience and in furthering to deepen its relationships with customers Doing so offers the opportunity for retailers and adequately. The current nature of supply emotional connection. The time has passed when by responding to their concerns about the suppliers to secure competitive advantage. The chains adds to the problem, with lengthy retailers could reasonably expect customers to environmental impact of plastic packaging. basis for such differentiation is to be found in times spent in transit leading to loss of take a journey through the entire store, winding In particular, it is looking to make its fruit and developing desirable qualities in the new easy- product quality and nutritional value. All of their way past tempting promotions before vegetables more convenient, treating the produce healthy produce, such as superior taste and these factors result in short shelf-life and high finally reaching their basket basics. The easy- to extend its shelf-life and using 100 per cent improved appearance. levels of waste. These issues become critical healthy consumer wants to quickly find what recycled plastic in its packaging. in the easy-healthy convenience range, where he or she is looking for. Displays need to be In order to secure that longer-term differentiation, freshness is directly related to premium. conveniently positioned and readily intelligible. The company has combined two technologies in retailers will need to enter into much more The new consumer will also want assistance its production process, namely Vitamin C coating intensive collaboration with their producers than In response, we expect to see significant in speeding up their purchases, possibly even and modified atmosphere packaging. For the is usual at present. Establishing secure and deep innovation in three areas. Firstly, while guiding them in how to put together the coating, potassium carbonate is used as an acid relationships requires robust contracts and longer- minimising the overall use of plastic, we elements of a meal (for example, by choosing buffer, so that the vitamin itself is constantly term commitment underpinned by investment. expect to see increased use of recycled from a modular menu), or maybe by pairing a distributed to ensure longer shelf-life of up to one Longer-term contracts that guarantee quantities plastics in the packaging of easy-healthy ready meal with a hot beverage. And then they week. This reduces shrinkage and food waste. and entail exclusivity agreements can provide the convenience products. Secondly, we expect want to be able to leave the store as quickly as basis for securing such a relationship. the introduction of modified production they arrived. Queues are as unacceptable as Die Frischemanufaktur believes its customers processes in combination with new forms long, winding store journeys to the easy-healthy also need greater transparency when it comes of stable packaging, including packaging consumer. Faced with such a prospect, they will to fresh produce supply. The company wants Promoting sustainable processes within a protective atmosphere. Thirdly, go elsewhere. its customers to be able to trace the source we expect innovative forms of supply, such The second role of store and furniture design is of its products all the way back to producers Packaging is currently in the news. Increased as the increased use of urban (vertical) in furthering emotive connection. Customers and growers. What’s more, customers keen awareness about the environmental impact of farming. These new sources of supply will who choose to dwell a little longer might wish to purchase seasonal fruit and vegetables are plastic packaging has placed it under the scrutiny not only reduce transportation distances and to taste the products and feel inspired. They will looking for information about exactly what from environmental pressure groups, and the supply times but will also fulfill emerging want to have their feelings of ethical purchase produce is in season at the time they are shopping. reality is that fresh food retailers are already expectations of proximate locality. In affirmed. They want the locality and seasonality responding to this challenge. Some even say this combination, these innovations will improve of their purchase underlined. Opportunities for growing concern should be welcomed, as it adds quality and greatly increase shelf-life. degustation or cooking classes can add another increased impetus to resolving the challenges dimension. of the present generation of packaging. There are plenty of challenges that need to be Introducing emotive store design As we have already highlighted, not every overcome. Current packaging for easy-healthy, store will have the same furniture and layout. fresh convenience products breaks easily; the Store layout and furniture design will play Geographic and demographic considerations produce can then leak into a customer’s bag, a critical role in how retailers respond to will define exactly how the store should seek inconveniencing the customer. The packaging the emerging trends in fresh, both in terms to meet the expectations of its customer »

30 FRUIT LOGISTICA TREND REPORT 2019 FRUIT LOGISTICA TREND REPORT 2019 31 segmentation. For some, a longer customer journey will be acceptable. Opportunities TECH-SAVVY for tasting products can further emotional connection. Others will be catering to those who wish to dash in and out in as short a time RETAILING as possible. In certain locations, stores will need to cater to both. How the emotional connection is made and how the customer flow is steered will be determined by the segment profile but in either case, the furniture will need to be modular in form. This will offer flexibility for one-off events such as cooking classes, as well as aiding the store’s natural evolution and ensuring it sustains each shopper’s interest.

Investing to motivate passionate staff

The retail experts we interviewed all highlighted that one of the major challenges facing retailers is to create a team of passionate people to staff their stores, people who actively sell to customers as well as take care of the shelves throughout the day. This passion can make all the difference, Chinese grocery retailer JD’s advanced especially when seeking to forge an emotional technologies played a key role in the recent connection with customers. All the retailers we ABOVE—Bringing together teams of passionate, knowledgeable staff in stores represents a major challenge for today’s retail chains roll-out of its 7Fresh brand. Identifying patterns talked to say they are making investments in from customer profiles, it determines optimum education programs to address the changing locations and layouts for its stores, while nature of store jobs. Many are also seeking to A second aspect to this challenge is that If the store is going to avoid a situation where analysis of other data helps it improve inventory make such jobs more attractive to their staff. shrinkage targets can create perverse incentives. its customers simply reject the point-of-sale management by selecting the most appropriate The role description itself is changing: it used to The object of such targets is to reduce waste. communication coming their way, then those amounts and types of sku according to each store’s be largely about filling shelves whereas it now However, if too rigorously enforced the targets messages will need to be targeted with extreme needs. JD’s logistics capabilities, meanwhile, also entails having an understanding of the can lead to products being left on the shelves precision. The goal is to tailor the communication enable it to offer 30-minute delivery for online products on offer and being in a position to advise until they sell at a point well past their prime, to the specific needs of a specific customer shoppers. In the stores, meanwhile, ‘magic mirror’ customers on their purchases. Even filling the while good quality Fresh produce deteriorates in segment, or even to an individual customer, and screens sense when a customer picks up an item shelves is increasingly about ensuring attractive the stock room. Though this ensures the shrink to do this in the store just as it is done online. of fresh produce and automatically provide that presentation. This requires teaching new skills. targets are being met, a just as significant impact Depending on geography, this could include customer with product information. Visible light is to create dissatisfied customers who have been highlighting seasonal produce, for example, or communication technology supports in-store The real desire of the stores we talked to is to sold sub-standard fresh produce. This provides promoting the products of a (very) local producer. navigation, next-generation Scan2Go personal have passionate staff who will actively encourage no longer-term benefit to the store. It is clear shopper systems and convertible self-checkout customers to try something new, people who that many retailers require a complete rethink of Overall, the key to solving this riddle is to match systems. leave the customer with a positive experience of both staffing and incentives. communication push with communication pull. their shop. There is a huge stretch here: how do If the customer sees something that attracts Elsewhere, a dedicated experiential corner you get store staff to respond in an appropriate their eye in the store, they could then, for showcases new retail technology to provide an way to customer needs and at the same time Creating an emotional connection instance, be given the opportunity to access interactive and immersive shopping experience. ensure they keep the shelves stocked? further information in real time, for example by This plots a route for customers through the We live in an age saturated with advertising. scanning a QR code on their smartphone. The store according to its product inventory, so they This is a particular challenge for many retailers Experts estimate that the average person is problem of communication overload can be can collect their shopping easily. This is made due to the lack of match between staff availability exposed to between 5,000 and 10,000 adverts resolved by ensuring that the additional possible by integrating navigation technology and demand. Given the present resource each day. The result is we have all become information is actually something that the and visible light communication (vlc) technology, pressures, combined with poor allocation of experts at filtering out unwanted information; customer wants and actively seeks out. This not which communicates with the mobile app via hours, urban stores often find that while they in short, we ignore the ads. This leaves room for only communicates what the retailer wants that the customer’s smartphone camera. The app also have a good number of people ramping up their information that is actually wanted, however. specific customer to know, but it also provides an allows customers to browse the store’s products stock in the morning, they have few people So the challenge for retailers is to ensure the opportunity for the retailer to build trust and remotely, check stock availability, and create available when the bulk of customers come information they communicate to customers is create a real emotional rapport with the customised shopping lists. during evening hours. information they want. customer. _

32 FRUIT LOGISTICA TREND REPORT 2019 FRUIT LOGISTICA TREND REPORT 2019 33 THE OPPORTUNITY IN FRUIT AND VEG

In conclusion, it is clear that customers are asking for distinctive products that are authentic in terms of their origin, as well as complete reliability from repeat purchases. They want to have their conscience appeased and yet demand increasing convenience. This Fruit Logistica Trend Report shows how these apparent contradictions can all be met, and indeed how they are already being met by innovative producers and retailers. Fruit Logistica Oliver Wyman Fruitnet Those at the leading edge have understood that success is not just about improved product ranges Fruit Logistica is the world’s leading Oliver Wyman is a global leader Fruitnet Media International is but also about developing relationships with trade fair for the fresh fruit and in management consulting that the world’s leading publisher those customers. Being completely reliable on vegetable business. The event combines deep industry knowledge and congress organiser for the quality is no longer enough to set retailers apart covers every single sector of that with specialised expertise in strategy, international fresh fruit and and enable them to win market share. Repeat business and provides a complete operations, risk management, and vegetable business. As the only custom comes from drawing people back into picture of the latest innovations, organisation transformation. In the media provider that can deliver store for the experience of shopping for food, products and services at every link Retail & Consumer Goods Practice, informed and high-profile coverage especially fruit and vegetables, and increasingly in the international supply chain; it we draw on unrivalled customer of the entire industry, its aim is to to enjoy the theatre of retail. These are lessons the also offers superb networking and and strategic insight and state-of- help the fresh produce business industry is learning from the top brands. contact opportunities to the key the-art analytical techniques to to grow worldwide by providing decision-makers in every area of deliver better results for our clients. useful information, insight and Though root vegetables and bananas will continue the industry. We understand what it takes to win ideas via a broad and varied range of to play a prominent and vital role in the fresh in retail: an obsession with serving media channels. Fruitnet is also the produce basket, there are going to be many www.fruitlogistica.com the customer, constant dedication official cooperation partner of Fruit surprises in store beyond the basket basics. The to better execution, and a relentless Logistica, Asia Fruit Logistica and emergence of those first easy-healthy convenience drive to improve capabilities. We China Fruit Logistica. products is a sign of things to come. With all this in believe our hands-on approach mind, these are certainly exciting times for the to making change happen is truly www.fruitnet.com fresh fruit and vegetable business. _ unique – and over the last 20 years, we’ve built our business by helping retailers build theirs.

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